India’s leading leisure goods retail chain (books, toys, music, movies and stationery), Landmark runs 18 large format stores across 10 cities in India apart from numerous small format outlets at hotels and airports. Landmark was grappling with the challenges of high inventory and significant unavailability across its stores as also the challenge of managing over 400,000 SKUs in its chain. In the first year of TOC implementation with Vector, Landmark has reduced its chain-wide inventory by over 30% even as it has added a central warehouse, which did not exist before. The availability of goods in stores has increased to over 90% and decline in sales has been arrested. The company has put in place robust mechanisms to manage its portfolio across categories and is effectively managing the product mix in stores. The results of this are evident in the trend of sales growth and high inventory turns.
The following are the results experienced so far –
The rapid replenishment and replacement processes of Theory of Constraints helped us correct our portfolio in time and avoid the fate of near bankruptcy.
A: Books and music are unique in terms of demand pattern. A new launch can be a massive hit, then the demand could drop dramatically, and stay stable at very low levels, following an ‘L’ curve. Publishers launch 2,000 new titles every year; it is difficult to decide which ones and how much to buy. At the same time, we are up against the phenomenon of people buying books and CDs from e-portals. The combined effect of the two was huge. Non-moving inventory was only growing.
A:With help from Vector Consulting Group, besides the system of pull replenishment, we implemented a process of range control and dynamic churning of categories. We changed from being a destination store for books and music to becoming a family entertainment store by focusing on toys and gaming. These changes gave the business a new direction.
A:Setting up a DC was a big challenge. Later, the continuous churning of large number of SKUs increased the load on merchandisers and buyers responsible for maintaining availability with lower inventory. The warehouse also had to be geared up to handle many orders nearly every day from each store as against handling weekly orders from every store. The pick-and-pack processes at the warehouse had to be geared up for high volumes.