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Stein Mart’s Supply Chain Overhaul

NASSTRAC Shipper of the Year WebCast

Friday, February 17th, 2012 2  

Leading the Webinar Today

•  Rick Schart – Vice President, Supply Chain

•  Bill Stover – Director, Supply Chain Operations

•  Gregg Sayers – Director, Supply Chain Transportation

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Stein Mart Quick Facts •  Stein Mart is a national retailer offering fashion

merchandise, service and presentation of a better department or specialty store, at prices competitive with off-price retail chains.

•  Founded in 1908 as a single store in Greenville, MS

•  263 stores in 30 states •  Headquarters - Jacksonville, Florida •  2010 Sales = $1.2 Billion •  2010 EPS = $1.08

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Stein Mart Store Locations

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Alabama (9) Arizona (8) Arkansas (2) California (20) Colorado (2) Florida (45) Georgia (13) Illinois (5) Indiana (7) Kansas (2) Kentucky (2)

Louisiana (8) Massachusetts (1) Michigan (1) Mississippi (6) Missouri (3) Nevada (4) New Jersey (4) New York (3) North Carolina (20) Ohio (9) Oklahoma (4)

Pennsylvania (4) South Carolina (12) Tennessee (13) Texas (42) Utah (1) Virginia (11) Wisconsin (1)

What Started the Stein Mart Supply Chain Transformation Conversation?

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•  2005 Net Income = $51 Million profit •  2008 Net Income = $71 Million loss •  High expense structure and high inventory

levels •  Consulting team brought in to review

company expenses from top to bottom •  Supply Chain identified as key opportunity •  Unlike most major retailers no Supply Chain

team

Stein Mart’s Transformation Process

•  Identify the Opportunity •  Build the Right Team •  Validate Savings and Develop

Implementation Strategy •  Select the right Provider Partners •  Identify internal/external processes and

systems effected by the change •  Develop a communication strategy for

EVERYONE effected by the change

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What’s the Opportunity?

Consulting Team Identified the Need to: •  Take work out of the store’s receiving

process •  Transition from vendor to store direct

shipments to a cost effective logistics network

•  Build a Supply Chain Team •  Implement Cost Effective Technology

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Old Supply Chain Process Vendor Ships Directly to Each Store

Purchase Order to Vendor

Vendor Prepares

Individual Store Orders for Shipment

Carrier Picks up from Vendor and Transports

to Store

Store Receives -

Very manually intensive

Vendor Expectations?

Carrier Delivering On Time?

SMRT  

2000 Vendors Shipping to 276 Stores in 31 States – Quite a Picture

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Building The Team

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Hiring philosophy and organization November 2008:

•  Experienced retail supply chain managers for leadership team consisting of VP and three Directors

•  Operations/Transportation/Performance

•  Supplement with mix of mid-level managers with logistics experience and internal merchant experience

•  Build team out with new talent primarily from the UNF Coggin College of Business – Transportation & Logistics Majors (are you aligned with a local T&L program?)

Validating The Full Strategy

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Validated Savings Opportunity and Developed Full Implementation Strategy:

•  Use 3PL partners to operate new logistics facilities •  Move floor ready merchandise VAS work towards the most

efficient place – the vendor facility vs. the least efficient – the store

•  Educate vendors on business expectations and develop programs to monitor and measure their compliance

•  Take advantage of technology to replace manual processes •  Understand impact of previously hidden SC and Store costs

on merchandise margin •  Improve PO visibility and tracking – vendor to store •  Reduce our total vendor to store floor expense

Stein Mart’s New Supply Chain Process

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Vendor to Store Through Captured Logistics Network

EDI Purchase Order to Vendor

Vendor Consolidates Multiple Store Orders into Single Shipment

Local Carrier Picks up at Vendors and Delivers to Consolidation Center

Pickup Today

Transfer Today

CC’s sort cartons for the 3 SDC’s and loads full truckloads

Transfer Carrier Moves Loads from CC to SDC

Deliver Today

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SDC’s Audit Vendor Compliance, Prep, Process Inventory, Load for Store

Delivery Carrier will Execute Store Deliveries

on Schedule

Store Receives by Scan &

Moves to Floor

Our Network of Logistics Centers

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Los Angeles Consolidation Center Store Distribution Center – 34 Stores

Dallas Store Distribution Center – 65 Stores

Jacksonville Distribution Center Inventory Hold -All Stores

North Bergen, NJ Consolidation Center

Atlanta Consolidation Center Store Distribution Center – 164 Stores

Selecting Partners

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RFP’s were issued to potential partners for operations and transportation support: •  Consolidation Centers •  Store Distribution Centers •  Transportation

–  Vendor Inbound LTL or TL to CC’s –  CC to SDC line haul transfers –  SDC to Stores –  SDC to Pool Point line haul transfers –  Pool Point to Stores

Our Supply Chain Partners

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CENTURION SYSTEMS  INC.

Internal Processes and Systems

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All processes and systems had to be reviewed for impact and modifications: –  Internal

•  Finance – expense reporting •  Inventory control •  Purchase Order generation •  Store receiving

–  External •  Web portal for sharing information with vendors •  Several modified or new vendor EDI transactions •  EDI and other file transfers to/from new 3PL partners

   

Communicate

•  The transformation effected EVERYONE in Stein Mart’s organization, and they were anxious

•  Early in the process, the supply chain team members would meet weekly, sometimes daily with merchant, planning and allocation, finance, and IT associates to provide updates on the transition

•  Lesson learned was that you can never spend enough time communicating

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A Closer Look at the Three Significant Segments of our Network – Vendor

Performance, Operations, and Transportation –  Vendor Performance and Routing Guides

•  Established clear expectations on packing, ticketing, hangers, shipping

–  Vendor Portal •  Provides vendors with most recent information related to

Stein Mart’s networks, drives compliance

–  Systems •  EDI testing and enablement •  Low cost EDI/carton labeling solutions for smaller vendors •  POS ticketing capabilities •  Carton label certification and compliance •  Store hanger recycling •  Compliance data and glass pipeline for visibility

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A Closer Look at the Three Significant Segments of our Network – Vendor

Performance, Operations, and Transportation  •  Supply Chain Visibility

–  Provides carton level end-to-end visibility of purchase order data with date/time stamps at touch points along the way including:

– Start Ship/Stop Ship – Ex-factory dates – CC arrival date and completion dates – SDC arrival, completion, and ship dates – Store receipt date

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A Closer Look at the Three Significant Segments of our Network – Vendor

Performance, Operations, and Transportation  •  Consolidation Centers (CC’s)

–  Regionally consolidate LTL freight into full truckload freight moving to our Stores Distribution Centers

•  Stores Distribution Centers (SDC’s) –  Receiving

•  Vendor ASN’s provide data necessary to efficiently process receipts

•  Audit for vendor compliance –  VAS

•  Ticketing and QA work moved into the SDC’s who do it faster and more economical than stores

–  Shipping •  Scheduled deliveries allow for effective planning and

efficiencies in the flow of freight out of the SDC’s

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A Closer Look at the Three Significant Segments of our Network – Vendor

Performance, Operations, and Transportation  •  LTL

–  LTL network is set up regionally, with LTL providers aligned with specific CC’s/SDC’s

•  TL –  Truckloads move both direct vendor freight to our SDC’s as

well as CC to SDC trans-load freight •  Store Delivery

–  Store delivery network includes 3 dedicated networks servicing 60% of the stores, and 7 pool providers servicing the balance

–  Store deliveries are time definite/day definite, with 30 minute windows on either side of the target time

–  All stores have carton level scanning capability to account for carton receipts as well as measuring delivery on time performance; stores serviced by pool agents have supplemental scanning provided by Bearware

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The Results

•  $20 Million in Logistics Savings •  Vendor Performance Accountability •  More Control and Visibility on What is Moving

and When •  Improved Throughput from Vendor to Store •  Improved On Time Delivery Performance •  Stores Work Less on Processing Merchandise

and Work More on Selling it

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Questions?

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