Bed Bath & Beyond’s legacy supply chain infrastructure hampered inventory flow

Diving letter:

  • Supply chain stress and unavailable supplies at Bed Bath & Beyond had a $ 100 million impact on the retailer’s third quarter results, according to President and CEO Mark Tritton referred to as “the perfect storm” short-term problems.
  • Outdated supply chain infrastructure with limited visibility, supplier restrictions, and issues with inventory flow to distribution centers and stores prevented the company from meeting full customer demand. Tritton said during a phone conversation. The retailer was experiencing shelf availability issues for its 200 key items, including kitchen gadgets and personal electronics.
  • To address the challenges of timing inventory receipt, Bed Bath & Beyond has “developed new transfer processes that increase third-party logistics capacity and decrease inventory levels to support the flow of goods”. Tritton said. For improved transparency, digital functions are added that automatically relocate inventory procurement based on availability.

Dive Insight:

Bed Bath & Beyond is facing the same transportation and delivery challenges that many other retailers are facing – all while transforming their own supply chain.

“We know we are starting with an existing supply chain infrastructure and the investments we are making now will be more effective in the second half of 2022,” said Tritton. “So it hits us a little earlier than our preparation.”

The company is investing $ 250 million in its supply chain to achieve multiple goals, including reducing replenishment times from 35 days to 10 days and opening four regional distribution centers to reduce reliance on cross docks. Bed Bath & Beyond began operations in its first regional DC in Pennsylvania in the third quarter and signed a lease for another DC in California, both operated by Ryder Systems, the earnings report said.

Bed Bath & Beyond is also using the investment to transform its technological capabilities. Better tools and processes will help balance supply and demand more effectively, Tritton said.

The retailer is replacing its current technology with an ERP system from Oracle to provide real-time financial and operational insights. It began its final round of ERP testing in the third quarter, with launch on track for 2022 according to its results presentation.

Bed Bath & Beyond also launched its new cloud-based technology platform with Relex Solutions for automated forecasting, replenishment and allocation planning in the third quarter. Better supply chain visibility has helped companies like Microsoft stay ahead of logistical bottlenecks and redirect inventory when necessary.

“Our top priority is to keep changing our current systems and processes to free inventory faster and more efficiently to meet demand, beyond our medium- to long-term investments,” said Tritton.

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