How much inventory is the right amount of inventory?
In October 2009, The Vitamin Shoppe, Inc. became the first retailer to IPO in almost two years.
In the years leading up to their successful public offering, the company faced a common retail dilemma: How much inventory is the right amount of inventory? The company had a successful store model and had been scaling it effectively. However, it had challenges in precisely managing its inventory. The Vitamin Shoppe turned to 4R Systems and implemented 4R’s Store and DC Replenishment Optimized Inventory Service to help them answer this critical inventory question.
“4R’s Store and DC Solutions have helped us drive significant improvements in our inventory efficiency and in-stocks over the last two years,” said Tony Truesdale, Chief Executive Officer of The Vitamin Shoppe. “4R helped us drive in-stocks from the low 90’s to 96.8% while simultaneously increasing turn from 3.1 to 3.95. The service based solution gave us an unprecedented level of connection between our inventory management decisions and their impact on our business.”
The Vitamin Shoppe sends 4R sales and inventory data on a weekly basis. 4R in turn applies its advanced inventory and supply chain algorithms to that data to generate profit optimized inventory levels. These results are merged into The Vitamin Shoppe’s existing systems and drive store shipments and vendor orders. In terms of implementation, since the system leverages the existing infrastructure, there was very little development required to implement.
The Vitamin Shoppe team was focused on making their company a world-class retailer with great business performance. They were focused on results and when they found an answer that worked they moved quickly to capitalize on it. 4R completed its 3-step process (evaluate, prove, implement) in 7 months. During that period 4R analyzed historical data to estimate the profit improvement opportunity, then implemented a live pilot to prove out the results. The store inventory service was completed in April 2008 and the DC service in the summer of 2008. Since then, The Vitamin Shoppe has been ordering directly off of 4R’s DC inventory models.
“4R has allowed us to refocus our resources on not just managing our inventory but improving our supply chain,” said Jason Scheffer, Vice President, Inventory and Transportation at The Vitamin Shoppe. “When we implemented 4R, we quickly saw 4R’s models set inventory levels that made more sense and performed better. That allowed us to free up people who had been managing those levels and refocus them on working with vendors to drive better vendor service levels and lead-times. The combination of 4R, with our own supply chain improvement efforts has been the key to managing our aggressive inventory management goals.”
The Vitamin Shoppe had a successful store model and had been scaling it effectively. However, it had challenges in precisely managing its inventory.
- Store Replenishment
- DC Replenishment
4R’s Profit Optimized Inventory Service helped The Vitamin Shoppe drive increased productivity and performance.
- Improved in-stocks from low 90’s to 96.8%
- Increased turns from 3.1 to 3.95
- Improved supply chain focus
Company: Specialty Retailer
Headquarters: North Bergen, NJ, USA
Description: The Vitamin Shoppe is a leading specialty retailer and direct marketer of nutritional products. The Vitamin Shoppe conducts business through more than 560 company-owned retail stores, national mail order catalog and website. The company sells vitamins, minerals, nutritional supplements, herbs, sports nutrition formulas, homeopathic remedies, green living products, and health and beauty aids to customers located primarily in the United States. It carries national brand products as well as exclusive products under The Vitamin Shoppe, BodyTech and True Athlete proprietary brands. For more information please visit www.vitaminshoppe.com.
“4R has allowed us to refocus our resources on not just managing our inventory but improving our supply chain.”
—Jason Scheffer, Vice President Inventory and Transportation