Boots: Supply Chain Transformation

UK health and beauty retailer Boots had an ambitious target: to have 95 percent on-shelf availability for key lines within five months. With Accenture's help, Boots is re-engineering its supply chain to meet these goals.

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Boots needed help in developing a business strategy for reducing costs while also boosting sales by improving on-shelf product availability. Also, the company found it increasingly difficult to keep store shelves stocked with key products, especially heavily promoted items.

The inventory challenge threatened to undermine the company's reputation and sales performance. Boots needed help in developing a business transformation vision, one that would enable the retailer to reduce costs, boost sales and achieve its goal of solidly positioning itself as the leader in the health and beauty market. The company recognized that in order for Boots to achieve sustainable growth and increased sales, it had to ensure that customers would find the products they wanted to buy on store shelves. Boots set an ambitious target of having 95 percent on-shelf availability for key lines within five months. The retailer also established a goal of increasing sales from US$7.7 billion to US$11.5 billion.

Accenture assembled a cross-functional team to increase sales by helping the company to better understand its customers. Based on its analysis, the team then devised customer pricing and promotions initiatives that included new market opportunities and ways to tailor individual retail stores to better serve their local customers' shopping needs.

Its supply chain and retail professionals crafted a comprehensive retail strategy that called for store makeovers to make them brighter and more inviting with new designs, product placement and layout. But the central piece in the strategy involved Boots' critical challenge of keeping store shelves stocked with top-selling products. After conducting a comprehensive review that identified the root problems in Boots' supply chain, Accenture helped devise a solution to confirm that sales wouldn't be lost because customers couldn't find products on the shelves.

The project covered more than 15 warehouses and affected all 50,000 store employees. The resulting end-to-end strategy included improvements to all of the retail supply chain, from new product introduction and promotional planning through replenishment and distribution. Accenture also helped implement and monitor key performance indicators weekly, targeting performance issues when necessary. The supply chain transformation required the galvanizing of the entire organization to focus on on-shelf availability.

Boots' vision is becoming a reality. The company's net income for 2004 was up by 59 percent over the previous year and sales growth increased by 16 percent. Aggressive price discounting helped boost holiday sales, and Boots is moving towards its goal of achieving US$191.7 million in business cost savings through job reductions and closure of unprofitable ventures.

A critical component of Boots' turnaround is its successful re-engineering of its supply chain. The retailer exceeded its ambitious target of achieving 95 percent on-shelf product availability by June 2002. A stock audit in all 1,400 stores confirmed a dramatic improvement in the availability of key products and promotional items. With Accenture's help, Boots has gained competitive positioning by realigning, redefining and rebuilding its supply chain. By teaming with Accenture to transform its business, Boots is equipped with the 21st century competitive tools needed to put it on the path to high performance.