Cabela's Effectively Manages Multiple Channels

Headquartered in Sidney, Nebraska, Cabela's is the largest direct marketer in the United States and is a specialty retailer of hunting, fishing, camping and related outdoor merchandise. The retailer has more than doubled sales volume in the last five years, and in 2006, the company's sales broke the $2 billion ceiling.

The strength of Cabela's multi-channel approach has fueled this upward growth spiral. The company markets its merchandise through its catalog business, its successful Internet business, cabelas.com, and its retail division that includes 20 popular destination stores averaging 170,000 square feet. Cabela's also operates three distribution centers (DCs), which house 300,000 SKUs from more than 5,000 vendors.

When channel diversification meets tremendous growth, the result is one complex supply chain. With a long history in the direct sales channel, Cabela's systems and processes were based on this business model. Once the company opened its retail doors, operations and the associated infrastructure became much more complex. With a manually intensive operation and an increasing number of locations, Cabela's could no longer keep track of inventory or make accurate projections.

"Our retail stores had more inventory then needed, and the inventory was out of sync with sales," says James Landsman, manager, process improvement and quality, Cabela's. "Combined with an exponential rise in data volume, the company faced an urgent enterprise-wide need for an update to support its multi-channel business model. Cabela's decided to replace its high-maintenance custom applications with scalable solutions capable of handling even more expansion."

Inventory Control
Cabela's multi-channel strategy requires efficient and optimal utilization of people, systems and operating capital to meet the increasingly complex requirements of its diversified customer base - individuals whose preferences vary by geographic region, sporting season and skill level. Being able to accurately forecast, purchase and place inventory well in advance of demand is essential.

To support its multi-channel strategy, Cabela's selected the Manhattan Associate's Warehouse Management solution in 2000, Replenishment in 2006 and Assortment Planning in 2007. This combination of solutions enables the company to integrate business processes and supporting technologies, centralizing common functions while accommodating the unique attributes and demands of each individual sales channel. Centralizing common functions while honoring the diversity of its channels allows Cabela's to leverage its DCs strategically, while meeting customer expectations and achieving sustainable competitive advantage.

The Warehouse Management solution was implemented in Cabela's three DCs, two return centers and 20 stores. Warehouse Management tackles one of Cabela's key challenges: managing retail restock and directing fulfillment out of the same DC. Using this solution, the company can determine precisely the optimal balance between warehouse efficiency and service level management.

Replenishment's inventory optimization capabilities allow Cabela's to manage forecasting and replenishment across its multi-channel distribution network. The implementation of Replenishment was initially focused on the DC-to-store channel, but was then integrated into the company's catalog and Internet channels.

Assortment Planning enables Cabela's to build and maintain the right mix of products for its customers in every channel and category. The company operates across two to four major seasons per year, depending on the merchandise category. The operation also supports micro seasons for the various hunting and fishing seasons that vary by state. Because Cabela's stores span the country, assortment differences must be managed regionally. After all, Cabela's customers in Buda, Texas, don't ice fish very often!

Change Management
The biggest hurdle for Cabela's implementation was change management. "How do you take a group of people who have built a very successful process, and transition them to something totally new? You can imagine how panicked everyone got when we said we were taking away 30 percent of inventory," says Landsman. The project was treated as a business initiative and not as an IT initiative. Before making any changes, the company evaluated processes and closed organizational gaps.

"We used the best practices that were most applicable to our business when we launched our change management efforts," Landsman explains. "Objective partners were not wedded to past ways of working, and the team gained buy-in from company leadership to ensure the right investment priorities and an appropriate project sequence. When you put it all together, it is about driving improvement - both in customer satisfaction and the bottom line."

A Success Story
Cabela's implementation of Manhattan Associates' solutions spans three key functions: preseason planning and purchasing; in-season fulfillment and restocking; and postseason assessment and preparation for the next season. The integration of these solutions has allowed Cabela's to maintain high customer service standards and improve operational efficiency while meeting or exceeding the benefits projected for the integrated system.

"It is a monumental task to plan and forecast the inventory needed to keep our distribution centers and stores appropriately stocked. Optimizing our supply chain translates into greater savings and unparalleled service for our customers," says Angelo Sakis, vice president of inventory planning and purchasing for Cabela's.

The seamless operation of the  solutions in a high-volume environment will position Cabela's for continued growth across its multi-
channel strategy. Cabela's plans to implement Manhattan Associates' Slotting Optimization solution in 2008. It has been estimated that Cabela's will grow at least 50 percent and possibly as much 100 percent in the next five years.

Cabela's will continue to leverage Manhattan Associates' solutions to optimize inventory and service levels, improve efficiency of planning and replenishment processes, and support the growth of all of its business channels. With eight stores scheduled to open in 2007, Cabela's aggressive growth plans for its retail division will guarantee the company's continuing success in outfitting customers for the great outdoors.