Case study

A big box store prepares for big change with a connected supply chain

Client: A Fortune 500 retailer

Our goal: Develop a differentiated supply chain and segmented distribution center designed to delight customers, support company growth and deliver shareholder value.

Industry: Consumer Markets

Services: Fit for Growth, Operations Benchmarking

Solution: Connected Supply Chain

Client Challenge:

Shopping for a new strategy

From big ticket items to the smallest purchase, anything can fit in a virtual shopping cart. Our client, a Fortune 500 retailer with more than 2,000 stores, offered customers an online channel, along with a number of delivery options. Still, an aging, store-focused supply chain was not flexible enough to support the company’s growth aspirations. The company wanted to create a true omni-channel environment, but in its current state, the supply chain couldn’t support this transformation. While meeting customers’ expectations—lots of options and lightning speed service—could grow revenues, addressing these demands would also have significant costs and major implications for the workforce. It was time for a new supply chain strategy: a plan for today and, in a world of change and disruption, for tomorrow.

“Improving customer experience was important to our client. Integrated Decision Analysis helped us identify the highest value decisions around the supply transformation, including the impact on consumers, both today and for the future.”

Brian Houck, Advisory, Partner, PwC

Approach:

Unlocking omni-channel growth with an integrated approach

A big transformation calls for a holistic approach. PwC’s Connected Supply Chain and Integrated Business Planning solutions, which help align business decision making and supply chain processes from end to end, appealed to the company’s Chief Operating Officer. With the goal of assisting from strategy through execution, we brought together leaders from across PwC with deep retail expertise and vast experience in supply chain operations and customer strategy.

We began by assessing the current state, benchmarking and developing a baseline for supply chain performance. What would it take to outperform the competition? Next up, we undertook market research and organized a survey of more than 3,500 consumers. How did customers want to order and receive their purchases, and what fulfillment requirements would be needed to meet these expectations? Then came charting growth over the long term. What product mix would be needed, at what volume, and what were the implications across the supply chain? Bringing it all together, we defined our strategy: to create a differentiated supply chain and segmented distribution center designed to delight customers, support company growth and deliver shareholder value.

Distinct supply chains would enable the company to offer consumers a true omni-channel experience. A dedicated delivery network would streamline and fast-track service and consolidate inventory for better control and management. Additional delivery services, including new direct-to-consumer options, would improve efficiency and service to customers. Finally, a new system for managing returns (reverse logistics) would reduce losses and optimize space.

Creating multiple supply chains would have a significant impact on IT. Working closely with the company’s internal teams, we designed a new IT architecture, detailing the upgrades and enhancements to systems and software that would be needed to support the differentiated supply chain. Finally, front-line employees would be as critical as back-office operations for the new supply chain strategy to be effective. Working closely with the company’s HR staff and leaders, as well as directly with in-store and distribution center employees, our dedicated change management team helped create and execute a strategy to support the transformation, including set-up and staffing of the new buy online/pick-up in-store (BOPIS) desk and back-of-store functions associated with the new system for liquidating product returns. We worked with our client to design apps to help streamline decisions about facility locations and drive short-term value by improving inventory policies.

Impact:

Delivering the goods: savings, service and a roadmap for the future

Transforming the supply chain was a top priority for the company. The new strategy will help the company meet its profitability goals, while delivering a winning customer experience. Thinking outside the box will help this big box store address challenges today and for the long term.

  • The differentiated supply chain can support an estimated 43% increase in revenue over the long term
  • Greater efficiency will enable up to a 10% decrease store and supply chain operating expense, resulting in multi-billion dollar savings
  • A clear IT roadmap paves the way for addressing evolving technology needs
  • Creating a Distribution Center of the future design supports growth in key product categories for the long term
  • Inventory visibility enables better decision making and service
  • Next-day delivery, flexibility in fulfillment options and an enhanced digital experience have improved the customer experience

Ready to maximize for the future—becoming smarter, more agile and adaptive? 
See how we can help elevate your operations, visit www.pwc.com/us/en/library/fit-for-growth/connected-supply-chain.html.

Contact us

Peter Wietfeldt

Partner, PwC US

Brian Matthew Houck

Partner, PwC US

Thomas Johnson

Partner, PwC US

PJ Ritters

Partner, PwC US