Retail

Industry Overview

Oliver Wight provides business process improvement solutions to leading organizations across a range of industries, including consumer packaged goods, industrial manufacturing, pharmaceuticals, chemicals, and retail. Whether your organization operates from a single site or spans a multi-site global network, our team develops customized programs with our exclusive Proven Path methodology tailored for success. Our approach empowers you to enhance operational performance within your organization and throughout the broader supply chain.

About Retail

Retailers have not had a “model of the business.” Manufacturers have had these systems since the 1970s. Consequently, retailers suffer from lower on-shelf availability, increased inventory, and reduced productivity. A comprehensive business model that integrates all core functions.

This “model of the business” gives projections of sales, purchases, inventory, labor, and transportation (both units and dollars).

Without such an integrated model, retailers suffer from disconnected sets of internal plans. For example, buyers get a bonus by purchasing large quantities of frozen vegetables. At the same time, logistics providers are penalized for exceeding their budgets because they must rent external storage space and incur double handling to store items purchased by buyers. A “model of the business” addresses this by projecting frozen storage requirements and evaluating the cost of external storage against the cost savings from higher quantities, enabling a decision that makes sense for the organization.

Additionally, retailers can now have a “rack and pinion” relationship between

high-level plans and day-to-day activities. Organizational effectiveness increases when people see that their work today contributes to the organization’s overall good. Without such a system, Integrated Business Planning in retail has no effective mechanism to translate high-level plans into day-to-day activities.

Retailers today face significant challenges due to the lack of utilization of a “model of the business” system. Unlike manufacturers, who have benefited from such systems since the 1970s, the retail sector often struggles with limited on-shelf availability, higher inventory levels, and declining productivity. This gap makes it difficult for retailers to anticipate and coordinate across the complexities of sales, purchasing, inventory management, labor, and transportation.

The absence of an integrated model results in fragmented internal planning. For instance, buyers may be incentivized to purchase large quantities of products, like frozen vegetables, without visibility into storage constraints. This disconnect can lead to costly logistics issues, such as the need for external storage and inefficiencies from double-handling, ultimately negating the intended cost savings and creating internal conflict.

With improved visibility, retailers can ensure that everyday actions contribute to broader organizational success. Without this link, translating high-level objectives into effective day-to-day activities remains a persistent pain point in the retail industry.

Challenges Facing the Retail Industry Today

Retailers have only recently had access to the kind of “model of the business” systems that manufacturers have had for decades.

These systems:

Typically improves in-stock by 5% or so, resulting in increased sales
Reduce DC inventory by 20-30% and often reduce store inventories as well
Improve productivity in planning

IBP Solution:

From an executive perspective, a valid model of the business provides an unprecedented degree of control, allowing top-level decisions to be effectively implemented – the process referred to as Integrated Business Planning (IBP) in manufacturing.