Conn’s optimizes distribution for next-day delivery
Conn’s HomePlus is leveraging vendor-managed inventory (VMI) technology to ensure products are available for delivery the day after a customer order.
The specialty retailer of furniture, mattresses, home appliances and consumer electronics uses a “hub-and-spoke” distribution model, with product replenishment moving from a distribution network involving two regional distribution centers, 11 hub-spoke distribution centers, and 146 retail locations.
For almost 40 years, Conn’s had managed store replenishment allocation on a legacy mainframe system, requiring manual, spreadsheet-based forecasting. The company used a “min/max” replenishment strategy, waiting for inventory to reach minimum levels and then buying the maximum amount of replacement product. Seeking to improve store replenishment forecasting, eliminate manual effort, and support next-day delivery, the retailer decided to replace this legacy approach with automation.
As a result, Conn’s implemented the TrueCommerce vendor-managed inventory (VMI) solution to optimize store replenishment allocation and truck utilization. The retailer was already utilizing TrueCommerce electronic data interchange (EDI) technology, and saw potential synergies with the solution provider’s VMI application.
However, Conn’s implementation of the solution does not involve the usage of “true” VMI practices. Inventory goes out to the company’s own facilities, rather than coming in from vendors. The first implementation step was a controlled rollout to Conn’s regional DCs and hub-spoke DCs, where the new solution was accepted by managers. After a couple of months, Conn’s expanded the new replenishment solution to its retail stores.
Benefits of the new VMI solution have included better store replenishment forecasting, resulting in fewer product returns and stock-outs, helping to increase sales. In addition, Conn’s has improved its ability to build full truckloads, resulting in more efficient truck utilization and lower truck counts.
The company has also reduced allocation change requests from stores, improved on-demand inventory visibility at distribution centers, and increased efficiency of product movement.
Mr. Christmas, a designer of holiday decorations that sells merchandise via an e-commerce site as well as through third-party retail partners, is also electronically streamlining vendor communications with TrueCommerce technology. TrueCommerce manages the onboarding process for new Mr. Christmas trading partners, as well as the ongoing management of trading partner-specific mapping and labeling changes. As a result, Mr. Christmas obtains real-time supply chain visibility for improved efficiency, resilience, and customer service.
“Conn’s claim to fame is our next-day delivery model,” said Michael H. Luckett II, executive director of logistics and IT management, Conn’s. “That drives a lot of complexity in ensuring we have the right products in the right places at the right times to support that benefit to our customer base. We were looking to arrive at something that would allow us to see inventory more clearly and move inventory without a lot of manual intervention.”
“The VMI system’s truck rounding automation is its top feature for us,” said Patrick Wehby, industrial engineer, Conn’s. “This enables us to round out trucks and cube space and even multiple trucks, to use build-to thresholds and to reprioritize the product based on our truck schedule. We rely on the truck rounding capability constantly throughout the day to maximize efficiency, especially with all our large cube items like furniture and appliances.”
Headquartered in The Woodlands, Texas, Conn's HomePlus operates 146 retail locations across 15 Southern and Western states.