Supply chains can make or break businesses. Efficiency and ways to reduce operating costs, should be at the top of every businesses priority list. Implementing supply chain strategy and supply chain solutions requires an in-depth understanding of how to move products from A to B or manage large scale events? Read on to discover how HMV came back from the brink of extinction and the lessons we can all learn from their experience.
Back in the early nineties, when I began my purchasing and supply chain career with record retailer HMV, EDI (Electronic Data Interchange), inventory management and centralised distribution was utilised to maximum effect to create competitive advantage.
HMV had modelled it's self on Marks & Spencer, paying high wages and developing and internally promoting their people. The customer was king. ALL staff bonuses were dependent on customer experience and large enough to incentivise great service for all customers, including the annoying ones. HMV created a luxury brand, charging premium prices because every kid wanted to be seen carrying a HMV bag.
The introduction of the World Wide Web, enhancements in technology and connectivity, introduced a world where consumers could shop for goods and services, 24 hours a day, 365 days a year. This tore down barriers to entry and new entrants flooded into previously stable markets, providing consumers with greater choice, instant gratification and lower prices.
Ultimately this led to HMV's downfall. Although perfectly placed to lead the digital music market, they mistakingly thought digital music would never catch on. Apple and Amazon created supply chains to capitalise on digital music and consumers lapped it up, downloading and listening to music on their iPods. HMV limped on for a decade, helped only by offloading, loss making Waterstones and the demise of each and every one of their physical music competitors.
When HMV entered administration in 2013, a 'save HMV' campaign was launched on FaceBook. Those years of loving every customer and treating employees well, paid off. Millions of customers, musicians and ex employees (me included) showed their love for HMV. Public outcry, ensured a new investor was quickly found. A couple of tweaks to the supply chain and HMV was back in business, regaining market share with a transactional-based website and a reduced number of stores. HMV is indeed a great come back story.
Consumers rarely see, the processes, systems, procedures and people who make supply chains what they are. A few bad decisions and missed opportunities, as in HMV's case, can completely derail an otherwise successful business.
Great supply chains are the secret to success. Zara, adapts couture designs, manufactures, distributes (2,200 stores in 96 countries) and retails clothes, within two weeks of the original design appearing on the catwalk.
Amazon, one of the most profitable retailers in the world, can now ship practically anything from A to B, in 2 hours or less. Both these companies have reaped success from creating a supply chains that satisfies the instant gratification consumers know and love.
You may mistakingly think, supply chain management is a pipe dream, just for large organisations with deep pockets. This is simply not true, mighty oaks from little acorns grow, Amazon originally, only sold books.
Business owners need only to be brave, take calculated risks, keep innovating and work with the right partners who have the knowledge, skills and experience to create efficiencies and improved profitability in their supply chain.
If you enjoyed this blog post you can read more about supply chain management and procurement on my blog: https://www.naomiclewsconsultancy.com/blog which is all about saving money, securing business and developing skills.
by Naomi Clews
Naomi Clews Consultancy
Procurement, Tendering, Business Skills