Vendor Compliance at Geoffrey Ryans (A)

Geoffrey Ryan Retailer Summary Notes

Geoffrey Ryan was a regional deparment store that had a dilemma with their furniture division. Geoffrey Ryan department store had two major issues facing their furniture supply chain. 1)High customer returns and 2)furniture had high customer returns due to damage, missing key parts, dissatisfaction with color or set. Melissa Norwalk who was the packaging manager new something had to be done. She reached out to their major vendor FineFurniture and they told her more labor would be needed to keep up with production levels. If FineFurniture increased the labor pool and quality control requirements it would require significant investment. Melissa saw that if this was done it would implement a new initiative across their supplier base in East Asia which would be a challenge. Melissa had a dilemma thinking about the larger picture and wondered if suppliers would have to customize production lines to satisfy Geoffrey Ryans Regulations? How could Geoffrey Ryans induce increased quality without compromising future supplier relationships? Would the supplier base be willing to adapt to changes to existing practices?

Geoffrey Ryans decided to develop a vendor scorecard for supplier to help with compliance metrics, financials and historical performance. It would also allow suppliers to see how they could better improve and understand their performance patterns. They believed that training vendor to use the vendor scorecard they were providing vendor a forward-thinking communication tool and means of monitoring their own progress. Geoffrey Ryans apparel division had already implemented and used a vendor scorecard with their vendors despite the increasing numbers of metrics and up-to-date data and accessability the scorecard proved to be a very effective tool in increasing compliance and reducing the overall number of chargebacks to the supplier.

Melissa had a dilemma after talking with her supplier FIneFurniture. She knew that Geoffrey Ryans would need to increase vendor quality and compliance. The furniture division could not continue with its existing business having 4 customer returns per item. How could they implement quality control during manufacturing, transportation and distribution with their warehouses and increase profit margins per furniture piece. Melissa now had to prepare for a meeting with the President and Chief Merchandising Officer, Keith Hughes and his retail furniture team. The team wanted to ensure the furniture division that met or exceeded customer expectations. Melissa had to convince the team that they could do this and address the key issues facing their furniture division. Below is my question.

Question

How could Geoffrey Ryans correct the process flaws described in (1)? For each recommendation, do you foresee any implementation problems?

Year Total Sales Cost of Goods Sold Gross Profit SG & A EBIT 1993 87,548,329 49,906,987 45,085,344 4,861,358 1994 136,385,049 88,439,404 47,945,645 48,416,692 -462,306 48,630,214 -3,254,622 45,323,049 50,551,014 1995 1996 1997 1998 136,601,726 151,775,021 146,892,244 141,922,623 91,278,677 101,224,007 96,758,035 91,586,236 50,134,209 50,336,387 1999 136,027,534 94,232,245 41,795,290 51,603,507 -1,054,821 55,672,160 -5,605,175 57,762,507 -7,451,498 57,403,620 -15,632,419 61,262,322 -21,169,126 54,293,011 -18,793,035 45,223,062 -9,706,488 2000 136,746,255 96,708,203 2001 131,142,538 2002 107,163,655 40,038,052 35,561,904 35,523,678 42,017,016 49,527,937 46,554,967 2003 95,580,634 71,639,977 74,156,786 80,763,353 85,965,211 116,173,802 49,722,387 -7,685,536 2004 2005 130,291,290 132,520,178 51,986,225 55,525,955 -2,521,767 -8,943,592 Year Total Sales Cost of Goods Sold Gross Profit SG & A EBIT 1993 87,548,329 49,906,987 45,085,344 4,861,358 1994 136,385,049 88,439,404 47,945,645 48,416,692 -462,306 48,630,214 -3,254,622 45,323,049 50,551,014 1995 1996 1997 1998 136,601,726 151,775,021 146,892,244 141,922,623 91,278,677 101,224,007 96,758,035 91,586,236 50,134,209 50,336,387 1999 136,027,534 94,232,245 41,795,290 51,603,507 -1,054,821 55,672,160 -5,605,175 57,762,507 -7,451,498 57,403,620 -15,632,419 61,262,322 -21,169,126 54,293,011 -18,793,035 45,223,062 -9,706,488 2000 136,746,255 96,708,203 2001 131,142,538 2002 107,163,655 40,038,052 35,561,904 35,523,678 42,017,016 49,527,937 46,554,967 2003 95,580,634 71,639,977 74,156,786 80,763,353 85,965,211 116,173,802 49,722,387 -7,685,536 2004 2005 130,291,290 132,520,178 51,986,225 55,525,955 -2,521,767 -8,943,592