Business Success
Case Study
Cost Plus: Winning Strategies for
Supply Chain Import Management – Visibility and Beyond
Automating supply chain visibility and ocean transportation management processes delivers costsavings and increased control for a specialty retailer.
Aberdeen benchmark research has found that companies’ top concern for their global supply chains
is the continued lack of supply chain visibility due to manual-driven processes. Fully 79% of large
enterprises cite this as a major concern. This lack of visibility and automation is impacting the performance of a number of supply chain processes, including transportation spend management and
shipment tracking and planning.
Specialty retailer Cost Plus, Inc., has successfully automated its global supply chain processes to
drive greatly improved visibility, transportation cost savings, as well as significant cross-functional
staff productivity improvements.
Cost Plus’s Import Business Challenges
Cost Plus, Inc., imports a wide variety of consumer products from over 50 countries for its 286
World Market stores in 35 states. Products include furniture, home décor, toys, and collectibles.
To provide visibility to imports, the retailer had built an Access database system and uploaded
status information from its consolidators twice a week. However, poor timeliness and accuracy of
the data was a big issue. “We needed to drive more confidence in our visibility system,” explains
Rhona Lishinsky, senior director of logistics and customs compliance. “Our merchants and inventory controllers didn’t trust the data in our old system, so our logistics team was constantly barraged
with questions from them on shipment status.”
Strategy
© 2007 AberdeenGroup, Inc.
260 Franklin Street
Boston, Massachusetts 02110-3112
Overview
In 2005, Cost Plus decided to move to an on-demand
supply chain visibility system to enable better import
visibility. “This wasn’t just an import team initiative,”
explains Lishinsky. “It was also for finance, inventory
control, our distribution centers, and our merchants.
Better visibility would help us manage down our inventories and intervene earlier in the shipment process when unexpected events or delays occurred.” The
company wanted to gain better at-origin visibility to
its international suppliers in addition to better visibility to in-transit activity. Cost Plus also wanted to
streamline its manual process for ocean contract rate
negotiation and improve its “what-if” capabilities
around allocation decisions.
Cost Plus, Inc.
U.S.-based specialty retailer with 286 World
Market stores in 35 states. Annual sales of
$970 million. www.worldmarket.com
Solution Provider
GT Nexus (www.gtnexus.com) provides
Cost Plus with on-demand supply chain
visibility and ocean contract rate negotiation.
Value Achieved
Improved import visibility and staff productivity. Achieved ocean freight savings. Able to
manage import growth without adding headcount.
Telephone: 617 723 7890
Fax: 617 723 7897
www.aberdeen.com
Cost Plus: Winning Strategies for Supply Chain Import Management
2
Transformation
•
Selecting a technology vendor. Cost Plus wanted an on-demand solution provider with a
strong track record of data quality management and pre-existing carrier relationships. Cost Plus
selected GT Nexus to deliver on-demand supply chain visibility as well as online ocean contract rate negotiation functionality.
•
Managing the transition. Data quality improvement was a primary area of focus for Cost Plus
as it transitioned from its internal system to the GT Nexus platform. “When we first activated
the on-demand solution, it was like pulling teeth to get timely data from the steamship lines,”
says Lishinsky. “They were giving us about 60%
data quality [as measured by the timeliness and
Cost Plus has been able to improve
completeness of data]. We now have most providers
data quality from its logistics providdelivering data quality in the high 90s. Data quality
is an on-going process; it will start to dip down
ers from an initial 60% up to a curagain, and we will have to go back to our providers
rent level in the high 90s.
and have them fix it.”
“The ocean carrier may think it is not a big deal to
have a delayed estimated time of arrival update. We have to explain that our distribution centers are doing their labor planning off this information, so it is a big deal,” says Lishinsky.
“Visibility is an initiative that touches our finance, inventory control, merchants, distribution
center, and logistics teams, so the domino effect of poor data is extensive.”
Business Results
With improved confidence in the on-demand visibility system’s data quality, Cost Plus’ staff can
now manage by exception. “It is much faster for our merchants to identify purchase order issues,”
explains Lishinsky. “Our merchants can scan for orders that are in jeopardy of missing their ship
window versus having to look at each purchase order. Or they can use the system’s filtering capabilities to look at the status of just the purchase orders that are in-transit over the water and that are
for a specific advertising campaign.”
Cost Plus is now monitoring 10 to 15 milestones per transaction. These milestones include: booking
requested by supplier, booking made, advance shipment notice, outgate, customs submitted, customs cleared, FDA receipt, vessel departure, vessel arrival, and distribution center received. Cost
Plus receives the status information from its four consolidator partners as well as the ocean carriers
and drayage companies.
Cost Plus’s logistics, customs, merchants, and cost accounting staff are among the frequent users of
the GT Nexus system. The company’s consolidator partners also access and use the system. Because the logistics team now has better tools for managing the import business, Cost Plus has not
had to add headcount to support the company’s business growth.
In addition, the company is receiving ocean freight savings by using GT Nexus’s ocean contract
rate negotiation application. In particular, the application has helped the Cost Plus logistics staff
analyze better some of the lower-volume origins that were too time-consuming to analyze fully under the manual process. The application’s what-if scenario capabilities has also helped Cost Plus
improve its carrier awarding and allocation decisions.
© 2007 AberdeenGroup, Inc.
260 Franklin Street
Boston, Massachusetts 02110-3112
Telephone: 617 723 7890
Fax: 617 723 7897
www.aberdeen.com
Cost Plus: Winning Strategies for Supply Chain Import Management
AberdeenGroup, Inc.
260 Franklin Street
Boston, Massachusetts
02110-3112
USA
Telephone: 617 723 7890
Fax: 617 723 7897
www.aberdeen.com
© 2007 AberdeenGroup, Inc.
All rights reserved
March 2007
3
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