Retail giant Kmart say they turned around their fortune from nearly bankrupt to a $4 billion retailer by undertaking a complete overhaul of their supply chain.
At the company’s recent supplier conference managing director, Guy Russo said the chain was facing tough times and was on the verge of closing down.
“Only five years ago, Kmart was on the verge of bankruptcy, now we are one of the most profitable retailers in Australia,” he said.
Russo said a success was achieved through a combination of clear focus, leadership, and a strong strategy, which included a complete overhaul of their sourcing and supply chain process.
As Russo noted, central to their turnaround strategy, Kmart focused on streamlining the supply chain and growing their direct sourcing and private label mix to maintain their core philosophy of “low prices every day.”
This meant reworking their store layout, reducing the number of products and getting the right selection of products on the shelf. They also focused on increasing volumes and working with suppliers to innovate so as to bring prices down for consumers.
By implementing a lean methodology, they reduced supply chain costs by over $60 million.
Russo said to the drive their sourcing initiative Kmart implemented a Direct Sourcing System (DSS) utilising Core Solutions’ CBX extended supply chain software platform.
This system helped the company to streamline their operations, reduce costs and triple the volume of direct sourcing without a corresponding increase in headcount.