Tsc Stores Analysis

SCM495

Individual case #1

TSC Stores

TSC Stores is a Canadian owned and operated company headquartered in London, Ontario with retail stores in Ontario and Manitoba. David Roussy and Greg Hicks are the chief executive officer and the chief operations officer respectively. The corporate objective is to have between 200-300 stores in the nation but the supply chain strategy adopted by the company is not quite adequate to support this expansion. The issue that the company encounters is that they have insufficient tools and processes for effective inventory management discipline, stock-outs, as well as a low percentage of service levels at the distribution center. To fix these problems, the organization needs to come up first with strategies to improve the poor replenishment logic and the lack of inventory integrity. The major corporate goal is to reduce store holes, increase the level of service, and increase purchases from foreign suppliers to reduce their cost and gain more flexibility.

Questions:

1. According to the data in Exhibit 3, I can interpret that during the seasonal and highly seasonal periods the cost of High Cube SKUs increases significantly from representing 35%  of the whole cost in the year round period to 41% and 51% respectively. There is also an important decrease in the Pick & Pack SKUs from 31% in the year round period down to 11% in the highly seasoned period. Among the alternative options that Brad Twiddy had presented, as a beginning I’d suggest as a solution to set up a hybrid DC that will handle only High Cube SKUs and also expand the current DC in order to have enough space to meet the increased future demand and support TSC’s expansion strategy.

1. According to the last Exhibits, I’ll rely on cost and capacity by linking the portion of cost each one of the SKUs represents of the overall cost to the capacity analysis showing the space occupied during different periods of the year in order to have an idea about the holding cost associated with every SKU.

1. For a company which would like to expand, I personally think that they should start by implementing a system which will make the flow of information and goods circulate quickly between at least the distribution center, the suppliers, and the different stores so that the demand of each and every store can be tracked and be responded accordingly in order to avoid high holding costs. Second, the company should start considering building new DCs close to the new stores to make shipping more rapid, less costly, and more importantly, make the products constantly available to the clients so that they won’t have to switch their consumption to another competitor which offers substitute products. Expansion and/or having hybrid centers as said in the first question might also be an interesting cheaper option comparing to building a new DC in order to prevent any stock-out problems from happening. Having suppliers ship to TSC stores directly is a good opportunity to reduce additional shipping and inventory costs. At last, the company should start looking for foreign suppliers that will provide the company with a cost advantage or a value advantage or maybe both.