Previous

Page - 5

The legendary management professor Sumanthra Ghosal had opined that we cannot create third generation strategies with second generation system and with first generation people. In the same way, organizations trying to mitigate the uncertainty in demand (third generation) through second generation (system and
structures) and through first generation organization design are doomed to failure.

A Success Story - West Marine

A case study of West Marine, one of the leading boat supply retailer, could illustrate the importance of organization design system in improving the forecasting process. West Marine was one among the retail company, which was carrying huge amount of inventory on account of activities such as promotion. West Marine, in order to solve the problem of inventory overhang and to improve the effectiveness of promotion process, laid emphasis on improving the process and cross function working by utilizing technology to improve the forecasting process. When the company was grappling with the problem of inventory overhang, the retail merchandising organization was split into two functional silos namely buying and replenishment. The silo approach of organization thinking resulted in poor communication and information sharing between category managers and merchandising functions and prevented holistic decision-making. In addition, silo approach resulted in merchandising associates focusing on sales and margin and replenishment associates focusing on inventory and replenishment level thereby leading to ill-defined responsibility and role conflict.

The company in order to improve the information sharing process formed cross-functional team between merchandising and replenishment team. The company made merchandise planner responsible for financial plans and forecasts, key item forecasts, store assortments, lifecycle management, and promotional management and analysis.

Next

* Contributed by: -
Uppili. R,
Alumnus of Great Lakes Institute of Management & M.A. (Economics) from Madras University,
Currently working as Research Analyst at Vistasoft India Private Limited.