We started our journey of TOC implementation along with our consulting partners, Vector Consulting Group a couple of years ago in 2013. We have aligned our central planning function, hard luggage production, raw material purchasing, soft luggage purchase from India and China, and logistics function (network design and movement of goods up to the branches) to the principles of TOC. This has led to increase in stock availability across our branches from earlier ~60 – 65% to over 90% consistently. Introduction of new products is now tightly linked with the inventory of products getting discontinued resulting in significantly less sludge inventory.
We enabled auto replenishment along with churning of SKUs across ~250 co-owned exclusive stores which has led to over 20% same store sales growth which is much higher than the growth before TOC implementation. We are now enabling the same process across our franchisee-owned exclusive stores which would benefit from improvements in merchandise assortment that are enabled by TOC.
In our modern trade channel, higher availability at our branches has led to significant increase in our fill rates to the weekly orders received (from ~60% earlier to ~85% now) resulting in higher secondary sales growth in the channel.
In our distribution channel, initial pilot with select distributors has shown potential results with more than four times increase in reach with over 50% increase in secondary sales of our distributor.
Beyond improving fill-rates and availability, the Vector TOC project helped highlight to our sales team the importance of secondary sales focus and the negative impact of over-stocking the channel. I’m confident that this important cultural change will lead to higher growth and market share.