Holt Renfrew Case Analysis:

Nausherwan Saleem (11020035)

Rukunuddin Aslam (11020163)

Case Summary:
1) Company Profile:
a. High-end retailer in Canada with ten stores in seven Canadian cities
b. Sells top quality, branded and private-label designer fashions as well as cosmetics
c. Owned by the Wittington Group headed by Galen Weston
d. Peak sales occurred in March/April, July/August and November/December
e. Publicity campaigns used throughout the year for promotional purposes
f. 21,500 orders a year at the company’s flagship store on Bloor Street, Toronto
g. 1000 suppliers approximately used in a year out of a total of 3000
h. 500,000 SKUs out of which 50% were active at any given time
i. New introductions accounted for 40 to 50% of SKUs ordered
2) The Logistics Function at Holt Renfrew:
a. Primary Distribution Center (DC)
i. A primary 80,000 square-foot Distribution Center (DC) in Mississauga,
Ontario where all merchandise ordered by Holt Renfrew’s buyers was
shipped.
ii. The DC was designed as a flow-through warehouse. All merchandise coming
in has to be processed immediately and subsequently, shipped to the
stores.
iii. Primary activities in the DC were lot picking, ticketing and tagging
merchandise.
iv. 55 hourly, full-time staff worked at the DC over two shifts.
v. DC received on average about 40$ million of inventory every month
(136,000 cartons and 32,000 sets of hanging merchandise every year).
vi. 3.3 million units of merchandise shipped from DC to stores every year.
b. Secondary Warehouse
i. A secondary 60,000 square-foot facility was also located in Mississauga
ii. This held inventory that was not sold in the stores and which was
subsequently sent to the Last Call, the stores located in Winnipeg and
Toronto where they were sold at a substantial discount.
 iii. If the merchandise was not sold at the Last Call, it was returned by the
stores to this secondary warehouse and kept there until disposed. Currently,
there was $1 million of such inventory in this secondary warehouse.
3) Problems faced by Holt Renfrew:
a. Order processing and tracking
i. This was a very poor and time-consuming process as the staff mostly spent
time on the phone confirming and adjusting their orders with suppliers.
ii. The store managers would also constantly call to check on the delivery
status of merchandise, as a result of which the staff had to follow up the
orders with suppliers and transportation service providers.
b. Inventory control
i. Both of the warehouses were running on full capacity, which increased the
cost of managing inventory for Holt Renfrew.
ii. The inventory was scattered all over the warehouses, making it very difficult
to find at times.
c. Inventory processing
i. With regards to suppliers delivering goods, they simply sent the goods
without any prior notification. This led to a variable rate of arrival of stock in
the warehouses.
ii. There was also no information that Holt Renfrew received about whether
the merchandise shipped by the suppliers was of the right quality or
quantity.
iii. Processing merchandise while leaving and entering the warehouses was in
itself a very inefficient and unfruitful task because of the bad state of
inventory management in the warehouse. This contributed to frequent
stock outs in the stores because of the lack of proper inventory processing.
4) Proposed Solutions
a. Long term:
i. Firstly, in order to improve the operating efficiency of Holt Renfrew and its
partners in the long term, a collaborative arrangement needs to be formed
to leverage strategic positioning. This arrangement needs to be made
between the suppliers, Holt Renfrew itself, the transportation service
providers and the stores. One possible arrangement could be the CPFR
whereby these trading partners could efficiently manage planning,
forecasting and logistics activities. They would have to align individual
 business processes by developing joint strategic business plans. This would
enable Holt Renfrew to better predict demand patterns and trends and
hence, be able to reduce inventory in its warehouses.
ii. Secondly, to facilitate the supply chain operations, there needs to be
implementation of a Management Information System (MIS) throughout the
supply chain by which information about each and every order can be
processed, shared and tracked at every level of the supply chain using
effective tracking methods such as RFID or bar coding. This would also
support the flow-warehouse design of the DC, which depends on efficient
information flows. It would take about 4-5 years which is the minimum time
to achieve an established information management system. The warehouse
expenditure should then be reassessed and optimized.
b. Short term
i. (Mezzanine Floor) In order to cater to the problem in the short run, Tony
Kelly needs to propose the expansion of the DC to include a mezzanine floor
as soon as possible so that the warehouse has more space. They face a
shortage of warehouse space which could lead to more stock outs if there
isn’t enough space to continue operations. The proposed mezzanine floor
would give them more space in the DC to operate their primary sales
procedures in the short run while they sorted out better inventory
management procedures that allow them to alter storage facilities in the
future.