An Integrated Business Approach and Implementing Change at Halfords - Chris Hall Head of Quality & Cost Reduction, Halfords
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An Integrated Business Approach and Implementing Change at Halfords Chris Hall Head of Quality & Cost Reduction, Halfords
Halfords Background
z UK Based
z “To deliver travel and leisure solutions to people on the move
through market leading knowledge, choice and service”
z FTSE 250 – Mkt Cap ~ ££800m
z Auto, Leisure and Cycling markets
z Sales £744m (+6.0% LFL)
z Gross Profit 51%, Operating Profit 13%
z Multi-site Retailer (423 stores)- UK, INTERNATIONAL
z 3 Central DC’s
z 90% Delivered from DC’s
z 20% Far East Sourcing
Key drivers for change
z High percentage of no fault found
z Higher value products being sold
z Little idea of the cost of the liberal customer
returns policy
z The structure of stores stock write-off and the
impact on behaviour
z Lack of visibility and management reporting
z Returns avoidance strategies not fully leveraged
z ~ £100k/mth write-off “lost in transit”
z Lack of accountability for faulty goods costs
management in the organisation
New Returns Process Implementation Timeline
Part 1
First Rev Share trials Launch
New Returns Process Implementation Timeline
Part 2
1st Period Returns Process Supplier Returns Terms & Conditions
Report issued to Exec and agreed w ith Trading Team
High returns product Senior Managers
range Corrective Action Improved "jamboree" box
Plans agreed disposal agreement
Daily collections,
Electric ride-on toys pilot significantly im proved
Returns started to be
Spares Helpline launched yield
70% reduction in integrated into usual business
returns over busiest Five top cost savings review s-ongoing
trading period opportunities agreed.
>£1m 06/07
Review of Customer
Returns/Refund Policy
Greater clarity and
Progress presentation to Exec visibility of policies for
custom ers and staff
Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07Presentation to the Executive Team z Reverse Logistics: A Vision for Best-Practice Returns Process z Costing and performance indicators were used as part of the justification for a new approach z Improvements to Financial KPIs and the bottom line z Received project approval z Approval to recruit Returns Manager in a Commercial role
Implementation approach: “Eating an
elephant!”New Returns Process Implementation Timeline
Part 1
First Rev Share trials LaunchNew Returns Process Implementation Timeline
Part 2
1st Period Returns Process Supplier Returns Terms & Conditions
Report issued to Exec and agreed w ith Trading Team
High returns product Senior Managers
range Corrective Action Improved "jamboree" box
Plans agreed disposal agreement
Daily collections,
Electric ride-on toys pilot significantly im proved
Returns started to be
Spares Helpline launched yield
70% reduction in integrated into usual business
returns over busiest Five top cost savings review s-ongoing
trading period opportunities agreed.
>£1m 06/07
Review of Customer
Returns/Refund Policy
Greater clarity and
Progress presentation to Exec visibility of policies for
custom ers and staff
Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07Questions to be answered z Use of quality costing ideas – prevention, appraisal and failure costs? z In the returns process – what are the failure costs? z In the returns process – what are the appropriate KPI’s related to the failure costs? z In the returns process – what are the prevention costs? z In the returns process – what are the appropriate KPI’s related to the prevention costs? z What about opportunity costs?
New Monthly/Period Returns Process
Report - Contents
Contents :-
Page 1. Contents Page
Page 2 to 4 Comments on Tables and Graphs included in P1 Returns Report
Page 5. FAGO Returned to DC volume graph YTD
Page 6.Top 40
Store In Car Technology Compliance on Returns P5 06/07 to P1
07/08
ICT Store Compliance P5 to P1
12000 18
16
% FAGO Charged Back to Stores
10000
14
Volume of ICT FAGO
8000 12
10 Total ICT FAGO
6000
8
% of ICT Charged
4000 6 Back to Store
4
2000
2
0 0
P5 P6 P7 P8 P9 P10 P11 P12 P1
Period
Trend :-
P1 shows an increase in non compliance from stores for the first time in seven months to 3.7% of all
ICT FAGO returns. Stores and Area Managers are vigilant in this area and this Period is expected to
be an anomaly.
Target for Chargeback for non-compliance less than 2%Some Costs of Failure and Prevention Failure costs: • Stock write-offs • Staff time involved • Transport • Warehouse space utilised • Triple-handling • Customer dissatisfaction Prevention costs: • Clearer instructions to both stores and customers • Training store staff to prevent customer returns • Monitoring and reporting
Some potential KPI’s
z Cycle time – returns from stores / money back from
supplier
z Cycle time – returns from stores / products sent back to
supplier
z % space taken up in warehouse by returned products
z Failed debit notes / Successful debit note
z Returns by stores relative to trained employees
z Store training cost relative to benchmarked cost
z % No fault found
z Reduced transport miles through collaboration with others
z Benchmarked figuresKey Performance Indicators
z Changing behaviour
z Use of league tables (stores, suppliers, products,
product managers,…)
z Use of non financial and financial measures of
performance (Balanced Scorecard)
z Use of sustainability measures?The way forward
Network Asset management
infrastructure
Supply chain Specialist service
strategy providers
Outbound / inbound Integrate Reduce Collaborate Shared services
Re-use Recycle
Process
Competitors
management
Te
Evaluate
ch
led
n
olo
ab
En
gy
Performance
Sustainability
measures
CostHalfords participation in the Dept for Transport
Reverse Logistics project
“The DfT reverse logistics project had a major influence
on the introduction of new reverse logistics processes
within Halfords. It helped increase awareness of the
issues and the large potential for improvement to both
bottom line performance and customer service, through
introduction of improved processes. The identification of
new tools and the support provided by discussions at the
workshops played a vital part in the implementation of
change at Halfords”Implementing Change: Halfords learning • engage Finance Director early! • gain full commitment from Senior Management • get VISIBILITY of issues • seek out quick-wins • approach: “eating an elephant”- bite-size chunks • regular progress reports to Senior Management • seek support to keep your motivation/energy • benchmark approaches • dedicated resource (self-funding)
Thank you for your attention. Any further questions?
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