Myer was operating in a highly competitive environment with retailers globally facing ongoing profitability issues due to declining retail volumes and competition with online pure-plays who have disrupted the retail landscape and are eroding margins.
Myer designed and operated one of the most efficient and low-cost supply chains in the country, however this resulted in lower replenishment capability than retail best practice. The global pandemic accelerated growth in online placing further pressure on store capacity and their gross margins.
The feasibility of establishing an efficient, centralized unit picking capability for online order fulfilment and store replenishment was required to be understood to optimize the current network. A number of actions were carried out to establish a feasible network strategy:
- A detailed flow path analysis was executed to determine the optimal mix of online fulfilment methods.
- Provided a comprehensive detailed margin and cost to serve analysis to determine optimal range to be held in a central DC.
- Modelled costs and benefits of an optimally designed central fulfilment DC.
- Produced a high-level project costing, including CAPEX, OPEX.
- Endorsement of network strategy completed by TMX and approval to commence DC design.
- Future network improved store service, cost and gross margin enabling ~15% net benefits in design year.