For more than a century, Neiman Marcus has been synonymous with luxury retailing, with a strong brand for distinctive merchandise and unique marketing to upscale shoppers. Since its founding in 1907, Neiman Marcus has remained current with consumer trends as well as their buying habits, expanding its brick-and-mortar locations with online shopping destinations.
Today, the Neiman Marcus Group operates 41 Neiman Marcus stores throughout the country, two Bergdorf Goodman stores in Manhattan, as well as 39 Last Call clearance centers and studios, totaling nearly seven million square feet of retail space. NMG also has its Neiman Marcus, Bergdorf and Last Call direct-to-consumer web sites as well as those for the Horchow Collection, CUSP and mytheresa brands.
That all adds up to many silos of inventory, and the Neiman Marcus Group (NMG) needed much better visibility. To do this, it required more than 2,700 of its vendors—both large suppliers and small artisan companies—to use GS1 standards and EDI technologies. Partnering with DiCentral, GS1 US and InterTrade Systems, NMG educated and supported its vendors in executing the company’s supplier enablement solution.
About 95 percent of NMG’s targeted vendors are now using GS1 Standards and EDI-enabled transactions. Further, 93 percent of all shipments use advance ship notices (ASNs), more than 90 percent of purchase orders are now transmitted via EDI, and fulfillment problem rates have decreased in excess of 10 points, resulting in increased fulfillment accuracy and significant supply chain efficiency for NMG and its vendors. NMG’s customers now have access to all products across all divisions for a truly NMG-branded shopping experience, says Jill Barron, vice president of supply chain for NMG.
Unifying Silos of Inventory
NMG maintains three independent buying groups for its five divisions—a strategy that has served the specialty retailer well over the years since the needs and preferences of customers may be different for each division. To preserve its image for singular merchandise, each buying group deals with scores of specialty vendors—artisans that create unique limited-run products—in addition to hundreds of larger suppliers. In all, NMG buys from more than 2,700 vendors.
“We found our customers were shopping across our divisions and channels—in store and online, at Neiman Marcus and Bergdorf—using multiple devices and channels to research and buy our products,” says Barron. “We wanted to offer them a seamless shopping experience, giving them easy access to all of our products in all of our divisions. To do this, we needed visibility across our silos of inventory.”
Neiman Marcus knew it was missing opportunities to reach more customers with a wider selection of products. Yet, the company was challenged with three separate inventory systems that lacked a standardized way of identifying products. Because each system used different product naming conventions, there was no way of knowing the cashmere cardigan bought for Bergdorf Goodman was the same one stocked by the buyer for Neiman Marcus.
“A customer who found a sweater in one of our stores, but wanted it in another size, for instance, would be disappointed and we would lose a sale simply because it wasn’t identified in the identical way in the other division’s system,” says Barron. “With a unified inventory system, we could not only improve our customer service and increase sales, we knew it would make a significant impact on the efficiency of our fulfillment process. We decided to dive in.”
Identical Products, One GTIN
Barron and the NMG team started by brainstorming about how to combine, yet retain, their silo-based inventory model. The team quickly concluded that each product should be assigned by its respective vendor a GS1 Global Trade Item Number (GTIN)—encoded in a GS1 Universal Product Code barcode.
“The GTIN uniquely identifies each product in our inventory, regardless of the buying group that purchased it. The sweater in our Neiman Marcus store that is identical to the sweater carried by Bergdorf online is now identified by one GTIN,” says Barron. “We needed vendors to start using GS1 Standards—to register with GS1 US for a GS1 US Company Prefix, which is part of the GTIN, and start assigning GTINs to their merchandise. We reached out to GS1 US, the GS1 Member Organization here in the U.S., to support us in this effort.”
Another significant element of the NMG strategy was the use of EDI-based transactions by its vendors, including the artisan community. Approximately 35 percent of NMG vendors were already using EDI, and ASNs accompanied about 65 percent of all vendor shipments to the company’s distribution centers.
“We understood the upside impact that the use of EDI by all vendors would have on managing inventory in our fulfillment centers,” says Barron. “With approval from our executive team, we decided to require that all of our vendors—large and small—use EDI and GS1 standards.”
To support the implementation, Barron called on two GS1 US Solution Partners—InterTrade Systems, a longtime provider of NMG’s electronic product catalogue, and DiCentral—for testing all EDI transactions with vendors who were new to EDI.
“We set an aggressive goal to ‘activate’ about 900 vendors in just 12 months,” explains Barron. “We called it our supplier enablement solution. ”
An innovative internal marketing effort was launched to explain the need for the solution to NMG’s buying groups. “We wanted to ensure that we were internally aligned and behind the new initiative,” Barron says.
Webinars, public web portals and other communication channels were enlisted in the educational campaign aimed at “newbies,” particularly artisan vendors that had no exposure to EDI.
CEO Karen Katz even recorded a video discussing the initiative, demonstrating NMG’s commitment to its new supplier enablement solution. Part of the educational thrust was demonstrating the benefits of using GS1 standards and EDI for even the smallest suppliers.
All three partners helped to educate and onboard the NMG vendors. “On one of our webinars, more than 100 vendors attended,” Barron says. “GS1 US, InterTrade Systems and DiCentral all explained, step-by-step, their respective areas of the onboarding process. It was truly a team effort.”
Vendors first chose an EDI service provider. Secondly, they registered with GS1 US to start assigning UPC barcodes on their products. Next, the vendors registered with the Neiman Marcus electronic catalogue, provided by InterTrade Systems and the repository for product information, where they would then upload and exchange their GTINs. Finally, they registered with DiCentral to begin testing and validating their EDI transactions.
Once vendors had completed all steps, they were given notice of their successful completion and the green light to begin trading with NMG.
“As their longtime provider of network and data synchronization solutions, we continue to work closely with Neiman-Marcus to support programs that benefit all sides of the supply chain. For this enablement project, vendors were given options that addressed their specific business size and integration capabilities,” says Anthony D’Angelo, vice president of Sales, InterTrade Systems Systems. “We were happy to be part of this initiative and are very pleased with the positive impact for all NMG groups and their suppliers.”
Today, all vendors identify their products with GS1 GTINs, and about 95 percent of the company’s targeted vendors are utilizing EDI-enabled transactions.
Where once a customer may have gotten an “out-of-stock” message when trying to purchase a pair of designer shoes from Bergdorf.com, the product’s GTIN now enables a behind-the-scenes search, revealing an identical pair in a Dallas Neiman Marcus that is then shipped to the customer—seamlessly and transparently.
“It’s amazing the total number of vendors that are now using EDI—about 2,600 in all with 1,800 of them added in two years,” says Barron.
Samantha Hawke, logistics manager with Smythe Jackets, one of NMG’s artisan vendors, sums up her experience. “When EDI integration first surfaced, I felt a bit anxious about how it would all work. When I logged into and navigated my way around the NMG website, I quickly learned how easy it was to collect the information I needed. Plus, with the excellent support from the NMG EDI department, I knew I was in good hands. NMG explained all the details, making the EDI process very easy to follow. After becoming EDI compliant with NMG, it made working with other retailers a breeze. I believe NMG has the best vendor portal for all vendors and is an excellent source of industry information.
Benefits for the NMG supply chain have also resulted. ASNs accompany 93 percent of all shipments, and a little more than 90 percent of vendor purchase orders are transmitted via EDI.
“This transition to EDI has been huge for us for many reasons, “ says Barron. “We have gained some tremendous efficiencies in our supply chain with higher throughput and more accurate order fulfillment in our distribution centers. Our problem rate has dropped by over 10 points.”
Barron attributes these positive results to the automated nature of EDI transactions coupled with scanning UPC barcodes on products. “Those who once relied on faxes, phone calls and emails to communicate with us were more likely to suffer from errors and inaccuracies during the fulfillment process, which might slow delivery or even prevent goods from reaching store shelves.”
Many vendors who took advantage of the Neiman Marcus Group’s private EDI portal saw a lift in sales,” said Peter Edlund, senior vice president of global product marketing for DiCentral. “In addition, those vendors who required EDI integration with their ERP systems achieved additional value and reduced costs by further streamlining their order management fulfillment processes by leveraging DiCentral’s Managed Services offering.”
Today, when a customer needs a different size sweater, Neiman Marcus can easily identify the location of the inventory across the various NMG divisions because of the UPC commonality.
As consumers are shopping using their various smart devices—their phones, their tablets, and sometimes both at the same time—NMG’s multiple inventories, linked by GS1 GTINs, can be instantly accessed to serve them with related product information. “And our store sales associates now have iPads that can access shared items, offering customers that shop in our stores something that once was only available online,” adds Barron.
“I think one of the reasons we were so successful is we involved all stakeholders and called on experts to support our plan. InterTrade Systems and DiCentral are not only EDI experts, they are also qualified in the implementation and use of GS1 standards,” Barron says. “I think that was one of the things we did right—bringing together InterTrade Systems, DiCentral and GS1 US.”
Neiman Marcus provides an excellent example of how all sizes and types of vendors can be nimble and efficient when using GS1 standards and EDI technologies. NMG’s ability to introduce a compliance program that bridged the gap—from the largest to the smallest supplier—was educational for all involved.
“In our business, it isn’t the size of the vendor that matters; it is the distinctive products the vendor creates and offers to our discerning customers,” says Barron. “Together, we are now offering a distinctive shopping experience that our customers expect and deserve.”