Case studies

Neiman Marcus

Project Description

  • Supply Chain Network Optimization
  • National Service Center - 90,000 sq.ft. expansion
  • Renovation of National Service Center - 200,000 sq.ft.
  • New Fulfillment Center - 300,000 sq.ft.
  • Renovation of Fulfillment Center - 600,000 sq.ft.
  • New East Coast Distribution Center - 200,000 sq. ft.

Business Problem

Johnson Stephens Consulting assisted Neiman Marcus Group, the premier retailer of specialty merchandise in the United States, with the development and analysis of a complete Supply Chain Network Plan. The study consisted of reviewing the seven year capacity requirements of the network versus the capabilities of the current network of distribution centers and regional service centers. Neiman Marcus Group currently operates four distribution centers and six service centers across the United States. The facilities are a mix of owned and leased sites. The sites use multiple warehouse management and order management systems to track inventory, assign logistics tasks, and fill orders.

Alternatives Recommended

The alternatives considered included reconfiguration of service centers, expansion of distribution centers, additional facilities, and transportation mode changes. Product flow scenarios including direct store delivery and daily contract store delivery were evaluated. Centralizing service center functions such as alterations and gift send programs was analyzed.

Actions Taken

Our professionals developed operating expense projections and capital investment requirements for several logistics network scenarios. The analysis and modeling included inbound freight, logistics center direct and indirect expenses, regional service center direct and indirect expenses, and occupancy expenses. This model was constructed to provide easy input and "what-if" analysis for Neiman Marcus to use as business conditions change. All operating scenarios were compared using a net present value approach and after tax internal rate of return analysis methods. Examination of subjective, non-quantitative factors was also taken into consideration using a quantitative scoring matrix exercise.

Results

The resulting seven year action plan, while confidential, is providing Neiman Marcus with step by step schedule for logistics and supply chain network changes and improvements as the business plan is executed. Johnson Stephens Consulting is actively involved with the planning, design, and implementation of the logistics and distribution facilities required for optimizing the Supply Chain.