Lord & Taylor (HBC):Big changes in our SC OperationsFinal Project Presentation

Gloria Yahouedeou

University of Maryland University College/ BMGT 372, October 30, 2015

Where Does Our Company Currently Stand?– Since January 2012, Lord&Taylor is a fully owned subsidiary of Hudson's Bay

Company (HBC).

– “Lord&Taylor offers high-quality and fashionable merchandise in 50 full-line department store locations, primarily in the northeastern and mid-Atlantic U.S., four Lord & Taylor outlet locations and lordandtaylor.com” (Hudson's Bay Company, 2015)

– As of October 30, 2015, our stock were selling for $22.73.

Operations Overview

The company (HBC) has being doing well based on its revenue of $2,038 million of Canadian dollars, as of August 1, 2015, and also because of its portfolio. However, the competitive environment of the industry brings to light that the company is perceived as “old”, and consequently not keeping up with change.

– Lacking in all-channel growth

– Use of RFID technology

– Entered an exclusive partnership with Xcel Brands, Inc. (XELB)

Our Supply Chain Management– Hudson’s Bay Company (HBC), and consequently Lord Taylor’s, supply chain is

vast because it also includes the pre-existing supply chain of Saks and Lord&Taylor.

– The main distribution center for Lord&Taylor is located in Wilkes-Barre, PA.

– Ethical sourcing

– For inventory management the company’s has recently started using the “Omni-channel” strategy

My Objective

As a Vice President of Supply Chain Management my key duties are to:

– Develop a supply chain strategy that supports and meets company strategy, company performance objectives and customer expectations

– Maintain routines to ensure delivery of core supply chain metrics in terms of cost and service

– Minimize company risk and maintains compliance in area of environment, health, and safety (EH&S)

– Identify and develops talent within the organization

Proposal for Changes

As a Vice President of SCM I propose that we change our current distribution system and that we update the current SC framework to include technology. This changes are proposed with the goal of aligning the supply chain strategy with the company strategy.

– Optimizing the current distribution network can be accomplished by reducing the number of remote distribution centers, and using third parties.

– Implementing a warehouse management system will contribute to bring our company to the digital age more effectively without sacrificing our customers need.

Why change?“Supply chain management (SCM) has been a major component of competitive strategy to enhance organizational productivity and profitability” (Gunasekaran, Patel, & McGaughey, 2004). Making decisions that will favorably lead the company to better productivity and profitability is a must to gain competitive advantage.

Supply Chain Drivers Affected

For the case of Lord&Taylor, the decision I proposed will affect:

– The facilities

– The inventory

– The information.

Performances Measures

Based on the long term and short-term goals of the SCM and the new decision, the organizational performance measures identified will be:

– Inventory Turnover rate

– % on-time delivery by suppliers (third-parties)

– IT availability/accuracy

Effect of Decision on Facilities

– Facilities are a key driver of supply chain performance in terms of responsiveness and efficiency.

– Centralizing the distribution system will increase Lord&Taylors’s efficiency.

– The cost reduction might consequently negatively impact responsiveness. Using

– Third-parties providers in remote markets as final distribution points will help create flexibility and compensate in speed for facilities.

Effect of Decision on Inventory– Inventory can help achieve more responsiveness (Ega, 2015)

– The company can also use inventory to make itself more efficient by reducing inventory through centralized stocking.

– The implied trade-off in the inventory driver is between the responsiveness that results from more inventory and the efficiency that results from less inventory. (Ega, 2015)

– It will increase the amount of demand that can be satisfied by having product ready and available when the customer wants it.

– Reduce cost (Ega, 2015)

Effect of Decision on Information– Information deeply affects every part of the supply chain and bringing light to its

importance will breathe new life to the SC

– Information will serves as the connection between the supply chains’ various stages

– It will allow them to coordinate and bring out many of the benefits of maximizing total supply chain profitability.

– The warehouse management system uses information to create visibility of the warehouse’s inventory.

– The company can then use this information to determine whether new orders can be filled.

Inventory Turnover Rate Measure

Pros– Simple to calculate

– Determines efficiency by which inventory converts merchandise into cash

– Shows how much money is tied up in inventory

Cons– Not always indicative of future

results

– Can be misinterpreted

Percentage on-time delivery by suppliers (third-parties) Measure

Pros– Provide a suppliers performance

– Indicates time and quantity that a supplier can handle

Cons– The measure may overlook special

circumstances such as, natural disaster, remote locations etc.

IT availability/accuracy Measure

Pros – Efficient use of information

– Efficient sharing capabilities

– Provide clearer forecast

– Provide more reliable data

– Allows connectivity (internally/externally)

Cons– Can become expensive to keep up

to date

– Presents issue of security of digital information

Summary

– Overall, it is difficult to assess only Lord&Taylor’s performance of the supply chain because they are a subsidiary of the Hudson’s Bay Company. Therefore, we will have to observe the entirety of the company to determine the performance of the SC. Using the performance measures proposed earlier we can say that:

– Inventory Turnover is 0.49 (As of Jul. 2015). That is a very low inventory turnover ratio, however it is important to put this information in context.

– % of on-time delivery by suppliers is not a readily available information, however we know that Lord&Taylor guaranties that the majority of orders shipped within the continental USA will arrive within 5 business days.

– IT Availability/Accuracy are not readily available, or quantitative information, however we can say that HBC is improving in that area because 70% of their sales comes from e-commerce.

References

APA Styling

Computerized Investing. (2015). Inventory Turnover. Retrieved October 30, 2015, from aaii.com Web site: https://www.aaii.com/computerized-investing/article/inventory-turnover.touch

Council of Supply Chain Management Professionals. (2011). Vice President of Supply Chain Management. Retrieved October 30, 2015, from Careersinsupplychain.org Web site: http://www.careersinsupplychain.org/job-roles-profiles/Profile/VPSCM.asp

Deshpande, A. (2012, April 16). Supply Chain Management Dimensions, Supply Chain Performance and Organizational Performance: An Integrated Framework . International Journal of Business Management, 7(8). doi:10.5539/ijbm.v7n8

Dorich, A. (2015). Hudson's Bay Company. Retrieved October 30, 2015, from Supply Chain World Web site: http://scw-mag.com/index.php/sections/manufacturing-retail/193-hudson-s-bay-company

Ega, A. (2015). Chapter 3 Supply Chain Drivers and Metrics. Retrieved October 30, 2015, from Academia Web site: https://www.academia.edu/8401827/Chapter_3_Supply_Chain_Drivers_and_Metrics

Gunasekaran, A., Patel, C., & McGaughey, R. E. (2004). A Framework for Supply Chain Performance Measurement. International Journal of Production Economics (87), 333-347. Retrieved October 30, 2015, from https://www.umassd.edu/media/umassdartmouth/businessinnovationresearchcenter/publications/pm_scm.pdf

GuruFocus. (2015). Hudson's Bay Co (TSX:HBC). Retrieved October 30, 2015, from GuruFocus web site: http://www.gurufocus.com/term/InventoryTurnover/TSX:HBC/Inventory%2BTurnover/Hudson%2527s%2BBay%2BCo

Hoover’s Inc., a Dun & Bradstreet Company. (2015). Lord & Taylor LLC Revenue and Financial Data. Retrieved October 30, 2015, from Hoovers Web site: http://www.hoovers.com/company-information/cs/revenue-financial.Lord__Taylor_LLC.1d0338b5b28e3663.html

Hudson's Bay Company. (2015). Financial Information: 2014 Annual Report. Retrieved October 30, 2015, from hbc.com Web site: http://files.shareholder.com/downloads/AMDA-1ETYKL/942722721x0x829940/51D95D62-7EB0-4E83-9753-0AE3C4FF51E2/SEDARHBCAnnualReport.pdf

Hudson's Bay Company. (2015, October 26). Hudson's Bay Company Announces New Off-Price Concept with launch of Find @ Lord & Taylor. Retrieved October 30, 2015, from Investor.hbc.com web site: http://investor.hbc.com/releasedetail.cfm?ReleaseID=938301

Hudson's Bay Company. (2015). Investor Relations. Retrieved October 30, 2015, from Investor.hbc.com web site: http://investor.hbc.com/

Nash, K. S. (2015, July 7). Saks, Lord & Taylor Personalize Websites, Email to Lure High-Spending Shoppers. Retrieved October 30, 2015, from The Wall Street Journal Web site: http://blogs.wsj.com/cio/2015/07/07/saks-lord-taylor-personalize-websites-email-to-lure-high-spending-shoppers/