West Marine: Driving Growth Through Shipshape Supply Chain Management
In January 2003, West Marine (the nation’s largest boating supply retailer) was on the verge of acquiring its biggest competitor — BoatUS. Several years earlier, the company had acquired E&B Marine, another boating supply company of a similar size. However, that transaction had proved to be too much for the organization to bear. Having nearly doubled its number of stores overnight, West Marine’s systems and processes, as well as the experience level of its management team, could not withstand the rapid growth. West Marine’s supply chain was especially hard-hit, which meant the company was unable to keep all 72 West Marine and 63 E&B Marine stores amply stocked during its critical peak season. Following the E&B Marine transaction, the company charted a new course, bringing in a deeply experienced management team, initiating a significant cultural change, and repairing systems and processes across the company. The new team placed special emphasis on implementing improvements to West Marine’s supply chain to combat low in stock levels in its stores, decrease late and incomplete shipments from vendors, resolve severe bottlenecks in the company’s distribution centers (DCs), and reduce overall supply chain costs (which had spiraled out of control as the company fought to catch up with its growth). To drive these improvements, West Marine launched a collaborative planning, forecasting, and replenishment (CPFR) program. By looking forward instead of back and engaging its vendors directly in the resolution of its greatest supply chain challenges, West Marine hoped to transform its supply chain from a liability into a competitive advantage. Years later, on the eve of another major acquisition, West Marine was proud of what the company had accomplished — particularly in the supply chain arena. Through its CPFR initiative, as well as other focused supply chain improvements, West Marine had achieved significant results. The company was actively collaborating with more than 150 of its largest vendors and had more than 350 EDI partners, representing 90 percent of the company’s supplier spend. In stock levels averaged 96 percent in every store, every day. Forecast accuracy (a critical aspect of any CPFR program) was close to 85 percent. West Marine’s DCs were operating in the top 10 percent relative to competitive benchmarks for warehouse efficiency and effectiveness. Yet, as the company prepared to again ramp up its growth engine on its way to becoming a $1 billion business, West Marine’s executive team wondered what “soft spots” might be discovered within its new and improved infrastructure.