Big Lots this week announced strong financial results for 2006, citing improvements in supply chain, inventory management and distribution efficiencies as key to the gains.
For the year, the Columbus, OH-based retailer saw operating profit jump from 4.5% of sales to 8.9% - a substantial increase.
A company press release highlighted improvement in several areas of the supply chain as contributing to the strong results. Improved inventory management led to significantly lower average store-level inventories (down 8%) and increased inventory turns. The improvements in inventory management led to increased gross margins from a reduced level of markdowns, and improved cash flow with less dollars tied up in inventory.
The company also cited improved distribution efficiencies, and better synchronization of inventory movements from distribution centers to stores, as playing a key role in the positive results.
This story illustrates the impact of supply chain excellence on company financials, and how even modest incremental improvement can add substantially to the bottom line and shareholder value.
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