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    Nordstrom Inventory Management

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    Maverick_raj
    Nordstrom started as a small shoe store in 1901 and grew through offering quality merchandise and good customer service. However, in the 2000s its superior customer service model became outdated, shareholder returns and profits began declining. The board realized their reluctance to adopt a proper inventory management system was the core problem. Implementing a perpetual inventory management system allowed for improved merchandise tracking, planning, and customer satisfaction. Corrective measures focused on inventory management, allocation, and training. This led to increased profits, sales, and revenue, reviving Nordstrom's performance.

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    Nordstrom Inventory Management

    Uploaded by

    Maverick_raj
    2K views14 pages
    Nordstrom started as a small shoe store in 1901 and grew through offering quality merchandise and good customer service. However, in the 2000s its superior customer service model became outdated, shareholder returns and profits began declining. The board realized their reluctance to adopt a proper inventory management system was the core problem. Implementing a perpetual inventory management system allowed for improved merchandise tracking, planning, and customer satisfaction. Corrective measures focused on inventory management, allocation, and training. This led to increased profits, sales, and revenue, reviving Nordstrom's performance.

    Original Description:

    Its my presentation for the Operations management paper in 2nd sem of my MBA.. chek it out..

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    Nordstrom started as a small shoe store in 1901 and grew through offering quality merchandise and good customer service. However, in the 2000s its superior customer service model became outdated, shareholder returns and profits began declining. The board realized their reluctance to adopt a proper inventory management system was the core problem. Implementing a perpetual inventory management system allowed for improved merchandise tracking, planning, and customer satisfaction. Corrective measures focused on inventory management, allocation, and training. This led to increased profits, sales, and revenue, reviving Nordstrom's performance.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    2K views14 pages

    Nordstrom Inventory Management

    Uploaded by

    Maverick_raj
    Nordstrom started as a small shoe store in 1901 and grew through offering quality merchandise and good customer service. However, in the 2000s its superior customer service model became outdated, shareholder returns and profits began declining. The board realized their reluctance to adopt a proper inventory management system was the core problem. Implementing a perpetual inventory management system allowed for improved merchandise tracking, planning, and customer satisfaction. Corrective measures focused on inventory management, allocation, and training. This led to increased profits, sales, and revenue, reviving Nordstrom's performance.

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    You are on page 1of 14

    About Nordstrom..

    • 1901- started as a small shoe store in


    Seattle
    • With a Motto- “ offering quality,
    value for money merchandise and
    better customer service even
    though there is stiff competition”
    • From shoes to apparel to specialty
    stores…
    About the case…
    • Shareholder’s return and net profits
    start declining
    • Board Meeting Chaos
    • Scaling Down growth plans
    • The problem???

    “Reluctance in adopting a proper


    inventory
    management system”
    • More problems
    What is Inventory management???
    • Inventaire- a detailed list of
    goods
    • The single largest asset in many
    retail and wholesale operations
    • “When the customer spends, you
    have got to be ready with the
    goods”.
    • Inventory Control and
    Management
    Perpetual Inventory Management

    • Continuous real-time tracking of


    quantities of a product
    • Exact inventory status!! At any given
    time!!
    • Integral aspect of the ‘Q’ system of
    Inventory management
    • Perpetual V/s Physical Count
    • Perpetual Inventory Modules
    Back to Nordstrom - sliding down…
    1990s- Nordstrom’s “ superior
    customer service” got outdated in
    the 2000s
    Reluctance to invest in Inventory
    Management
    Lacked the tools to support
    inventory management and pipeline
    management
    Operations personnel unaware of
    And the slide continues…
    Over confidence on “Nordstrom image”

    Decentralized- Key decisions to low-

    rung employees

    To avoid customer disappointment-

    huge inventory

    Huge holding cost, inventory carrying

    cost
    Realizing the mistakes…
    Ø Withdrew the wrong marketing initiative
    called " Reinvent Yourself“
    Ø Made large scale changes in the top
    management
    Ø Importance of INVENTORY MANAGEGMENT
    Ø Shift to Perpetual inventory-react to changes
    in fashion
    Ø Focus shifts to 3 core activities—
    Ø Drive top line growth
    Corrective Measures..
    • Productivity to be increased by—
    – Inventory Management
    – Inventory Allocation
    – In-stock Position
    – System Leverage
    – Expenses Leverage

    • Training on the New Inventory


    System- Mandatory
    • MONTHLY RECORDS OF
    – Sales and Gross Margins
    – Inventory Quality and Efficiency
    – SCM
    – Labour Savings
    The Nordstrom revival…
    Initial glitches
    vDeclining profits

    vFall in share prices

    vCustomer service!!!!

    vSevere Competition

    BUT!! The new inventory system was


    showing its results…
    vImproved MERCHANDISE tracking

    v
    BENEFITS OF PEPETUEL INVENTORY
    MANAGEMENT SYSTEM

    More time for Merchandise Buyers to


    plan.
    Planning regarding Discounts and
    Markdown.
    Reduction in time required to attend
    the Customers.
    Information about availability of goods
    AFTER EFFECTS
    Ø Increase in 2nd Quarter Profit from $36.3
    Million in 2002 to $65.9 Million in 2003.
    Ø Sales per square foot increased from $319
    in 2002 to $325 in 2003.
    Ø Net Income: $242.8 Million in 2003
    Ø Revenue: $6.4 Billion
    Ø Ranked No.1 by Fortune in 2005 in General
    Merchandise Category.
    Thank You….

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