Rock-solid Inventory Management for Fragile Tableware

The world's largest retailer of old and new dinnerware, Replacements, Ltd., needs a supply chain that won't crack


By William Atkinson

Replacements Ltd. (Greensboro, N.C.) is the world's largest retailer of old and new china, crystal, silver and collectibles. It had humble beginnings, though. In the 1970s, Bob Page, a state auditor for North Carolina, began buying and selling china and crystal at flea markets as a weekend hobby. He left his job as auditor in 1981 and began the company in his attic. He is now chairman and CEO. In 1981, sales were $150,000. In 2009, sales were almost $80 million (down slightly from 2008 sales of $85 million).

Inbound Supply

The company acquires products from three main channels, including directly from domestic and global manufacturers such as Lennox, Wedgewood and Waterford. "We place orders with them, just like a regular retailer, and they fill those orders," explains Anne Embrey, vice president of fulfillment operations at the company. "In addition, if a manufacturer discontinues a pattern, they may offer us the opportunity to get the remnants of the pattern."

Another source is a network of about 700 independent suppliers that have established a relationship with Replacements over the years. "They pay a nominal fee to be part of the group," Embrey says. "In return, they are guaranteed the best daily prices on selling product to us." Most of these suppliers are located in the U.S. and Canada, and some of them have been doing business with Replacements for more than 20 years.

The third channel is from individuals who don't necessarily have a relationship with Replacements. "They may sell a pattern to us on a one-time basis that they no longer use," says Embrey. They don't get quite as much price-wise as the established suppliers, yet this group accounts for a small, but consistent, portion of the company's buying.

The manufacturers, suppliers and individuals shipping to Replacements elect their own methods of shipment. "We may get shipments from the Near and Far East, and we also get shipments from distribution centers in New Jersey," says Embrey.

While the company does like to keep a comprehensive inventory, it does have limits. "There are some times when we may just say 'No' to a whole offer," Embrey states. "We also have estimates of what we will buy. For example, we may usually only buy 24 of a certain piece, such as dinner plates. However, if there is a large demand, we may break our own rule." Overall, though, the company has metrics in place to keep it from making the wrong decisions.

Inventory Management

Rather than purchase technology from vendors, Replacements' in-house tech staff has written all of the company's computer programs. According to Embrey, this has provided a great advantage. "For example, if we need to change a program or create a new one, we have staff who can do this," she states. "In fact, we don't use any third-party vendor technology. It is all developed in-house."

Currently, company and inventory information is stored on 550 personal and laptop computers connected to two mainframe servers, which store information for over 13.5 million pieces inventory, representing over 300,000 patterns, some of them over 100 years old.

"When we receive product, we already have some history on it, such as how much of it we already have on hand, and what the annual demand is," states Embrey. "This helps us decide where to stock it." If there is a certain level of demand for the product, the company might stock it in the regular shelves, where order pickers can access it easily. If demand levels are lower, the product will probably be stored off-site. "We make these decisions when the product comes in," she notes.

For example, while the company stocks over 100,000 china patterns, about 1,600 of these patterns represent almost 60 percent of the company's china pattern order volume. As a result, about 40 percent of its china pattern order volume is split among over 98,000 patterns.

In the past, the company used to store everything open-stock on wooden shelves with metal uprights. Over the last six to ten years, it began to set up some bulk stock, where it could store excess stock and slow-moving stock. The trend toward bulk stocking continued over the years. "In the past year, we have actually taken stock that doesn't sell and store all of it off-site in bulk stock," she reports. "If it sells, we will go find it. However, we no longer store it open-stock on our shelves."

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