3500 item lines. 220 shops having the optimal assortment on the shelves, and products on campaign. This defines VITA´s transformation concerning stock inventory and supply chain management. A complicated puzzle, whereby an interim leader with expertise in Supply Chain Management is an important and strategic piece of the puzzle.
Glenn Nilsen, Head of Supply Chain in VITA, Norway's largest chain in the field of beauty and well-being, has responsibility for the 3500 item lines, purchasing for 500 million a year and stock inventory worth 300 million kroner. That he takes the time to chat with us, in these hectic days of annual negotiations with suppliers, is noted with humble gratitude.
Much of the basis for next year's marketing and sales initiatives will be decided in a few intensive autumn months, a common activity for the retail sector. As for every other retailer, it's imperative for VITA to negotiate the highest return on investments now for optimal sales in the coming year. And margins are dependent on more than just purchase prices.
Inventories down, turnover rate up
Efficient logistics and smooth flow of goods, is the alpha and omega of profitability in any retail business. Large inventory with low turnover rate binds capital. With correct procedures costs can be cut, capital reduced, and earnings increased… but nothing happens by itself.
“We saw that we had a huge improvement potential in working smarter with the flow of goods. A paradox, but not unusual for a retailer, is that we have a high inventory in stores. But at the same time, and too often, run out of important items. Our Supply Chain transformation is first and foremost to create the right stock at the right time”, says Glenn Nilsen.
In the course of the year, VITA worked in parallel with changing the chain's retail system and building up a completely new department dedicated to supply management. The new department will start an automation process of orders to the store, increasing the service level and optimizing the flow of goods from warehouse to the stores. The main KPI's are increased turnover rate, accurate inventory and fewer sold out situations. The right assortment in stock at any given time also provides "true" margins in a highly competitive retail landscape.
Wanted to "kick-start" Supply Chain Management
Since VITA´s inception, 36 years ago, the flow of goods to stores has been fragmented, without a dedicated responsibility for the entire value chain. Total growth in store portfolio increasing from 100 to 220 in the course of the last nine years, and the need for better control around supply management, has naturally increased demand for control.
Initiating building a new department dedicated to supply management, including driving processes in the right direction, Glenn Nilsen contracted an experienced and competent interim manager. Naturally with strong supply chain management competencies that ensured immediate action, experience and knowledge.
“This was a new way of working for us with supply chain management. Our starting point was that we build up a new department, but we did not have enough expertise from before. It was therefore important for us to find someone quickly, with the right knowledge and experience, which could help us to "kick-start" the work of supply chain management”.
A home run
Interimleder AS was assigned the task to find the right person. Nilsen reports that he was presented with four strong CVs, two of which being extra relevant, and candidates were invited to interview. “The process from request to an interim leader starting took approximately two weeks”, recalls Nilsen.
“The chosen interim leader had extremely relevant experience and background, strong retail knowledge and specialist expertise in Supply Chain Management. Simply "a home run" and just what we needed”, says Nilsen.
The interim leader quickly realized our challenging situation, and was operative from day one, both on a highly strategic level and deep into the details. Neither the system or resources were in place when he started, so a great deal of analysis was necessary which he started immediately. That he was so self-reliant in obtaining the necessary information, has been extremely important for the progress of the project” says Nilsen, a clearly satisfied client.
Flexible expert
The new Supply Chain Management department in VITA has taken form, strongly assisted by the interim leader and his expertise and knowledge sharing to those working with supply. In September the newly created department recruited internally a department head. Along with Nilsen, the new department head has worked closely with the interim leader building skills and processes to stand steady on its own.
As a natural consequence, internal competencies have increased, and the need for interim expertise has become less. The interim leader now gradually phases out of the project, at the same time is available for ad-hoc needs.
“What´s also fantastic with interim management so that we can access expertise with complete flexibility and as needed”, said Glenn Nilsen.
As planned, VITA´s Supply Chain Management department is operational with the new retail system developing to full capacity as functionality becomes available. This transformation will also ensure further growth. If plans continue, the number of stores will increase from 220 to 300 over the next three to five-year period, and with the right stock at the right time ensuring current and future customer satisfaction and an even better customer experience in the stores. With such ambitions, our biggest advantage will be that supply chain will be just as “beautiful” as our customers and stores!
VITA and VITA EXCLUSIVE is Norway's largest chain in the field of beauty and well-being. The first VITA store opened in Oslo in 1981, and the chain currently has about 220 stores throughout Norway. Vita is owned by the Cosmetic Group AS. The owners of the Cosmetic Group As are Norwegian company FSN Capital IV (60%) and NorgesGruppen Retail AS (40%). VITA traded for 1.27 billion in 2016.
- Our starting point was that we build up a new department, but we did not have enough expertise from before. It was therefore important for us to find someone quickly, with the right knowledge and experience, which could help us to "kick-start" the work of supply chain management.
Glenn Nilsen
Head of Supply Chain
VITA