GNC Aims for Healthy Supply Chain

Vitamins retailer using supply chain execution solutions in bid to improve efficiency, customer service

Waukesha, WI — May 8, 2003 — Retailer General Nutrition Companies (GNC) is implementing a suite of supply chain execution solutions from RedPrairie in a bid to improve efficiency, customer service and overall operations.

Pittsburgh, Pa.-based, GNC is the largest nationwide specialty retailer of vitamin, mineral and herbal supplements, sports nutrition as well as personal care and related products. The company is a wholly owned subsidiary of Holland's Royal Numico.

GNC has grown from approximately 1,100 stores in 1991 to more than 4,500 stores worldwide today, according to Lee Karayusuf, the company's senior vice president of distribution and transportation. That growth led to scalability issues with the chain's DOS-based warehouse management system.

"Our scorecarding is done with Excel spreadsheets, and our labor management and transportation planning are done manually," Karayusuf said. "This program will help us in all of these areas so we can better serve our customers."

To help GNC define the specific areas for improvement and the potential financial impact of new logistics technology, RedPrairie conducted a logistics operations analysis of the retailer's distribution and transportation operations. The potential benefits and cost savings uncovered across multiple business areas were important in GNC's cost justification for the project.

The areas earmarked for improvement included warehouse, labor and transportation management, inventory visibility, and scorecarding of vendors and internal operations. The goal is to improve operations in all of these areas in order to better serve their customers — GNC corporate and franchise (domestic & international) stores — while reducing costs and working capital.

GNC is also looking to RedPrairie's DigitaLogistix applications to help the company better manage its business. "The scorecarding system is really important," said Karayusuf. "We needed a more robust system to analyze our costs and pull costs out of our operations. Internally, it will give us a more detailed, granular look at our business and help supervisors better understand what is going on in their departments. It will also allow us to measure the performance of our vendors — are they shipping the pallet configurations as we want them, are they following our rules for expiration date handling, are the shipments arriving in good shape, and are orders being over or under filled?"

Karayusuf added that the scorecarding and visibility tools would also help GNC's purchasing department. "They will have a real-time view of our inventory, including what is on [quality assurance] hold and what has been received within the past hour," he said. "Alerts will identify problems in the warehouse such as a truck not arriving with inbound goods or for a planned outbound shipment."

GNC will use RedPrairie's productivity management solution to measure and increase productivity in their distribution centers with the goals of driving down costs and improving order accuracy. "We will be able to better manage our direct labor and apply more standards in the warehouse," said Karayusuf. "We will also be able to increase usage of incentive pay beyond the single area where it is offered today. This will increase efficiency and throughput."

The implementation plan calls for RedPrairie's warehouse management, productivity management, transportation management and quality assurance applications to go live at GNC's Pittsburgh facility in September 2003. The same systems will go live at the retailer's Phoenix and Andersen, S.C., distribution centers at the end of 2003. RedPrairie's visibility and event management system will go live at all facilities by the end of 2003 as well.

John Jazwiec, RedPrairie company results leader, pointed out that GNC is approaching its logistics challenges at the supply chain level. "Too often we find companies looking for point solutions in organizational silos, thus missing the synergies that an integrated supply chain execution suite can provide," Jazwiec said. "GNC's rollout of our DigitaLogistix suite will create competitive advantages in customer service, product availability and distribution efficiency that are key to success in the retail industry."