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Mitigating Risks

BY CSA STAFF

“The one thing that always gets you is the one thing you never planned for.” Sound wisdom from New York City-based Marsh Risk Consulting, offered during a Supply Chain Summit session dedicated to “Building a Resilient Retail Supply Chain.”

Stuart Winn, senior VP, Southeast practice leader for Marsh, led the presentation to help retailers understand risk mitigation and how to create viable business-continuity plans.

“Most companies underestimate risks and the impacts of a disruption in their supply chain,” he cautioned. “There are risks that are insurable—such as catastrophic disasters, property damages or loss, product liability and business interruptions. Then there are those uninsurable risks—demand volatility, supplier non-performance, work stoppages and emerging threats such as the potential of a pandemic.”

Top 10 Questions to Answer Before Disruption Occurs

What are the most critical aspects to protect in your supply chain?

What would be the impact of a disruption in your supply chain?

Are you insured for this type of risk?

How would you respond?

How long would it take you to respond?

How would your customers respond?

What are the repercussions of your customers’ responses?

How do you respond to temporary shifts in demand?

How would your competitors respond?

Could your brand and your company survive?

Either way, the impact on a retailer’s operations can be devastatingly disruptive. In addition to lost sales, shareholder value may plummet and the brand’s reputation could be severely, if not permanently, tarnished.

As retailers become increasingly reliant on global trading partners, risk mitigation and business-continuity plans must look beyond the retail enterprise to assess interdependencies between people, technologies, processes and physical dynamics across the supply chain.

“Retailers have to map resources to the critical processes and skills required to maintain operations,” advised Winn. “It is also important to match the level of an incident or crisis to the appropriate level of executive management.”

As a general starting point, retailers should address a number of questions including defining the most critical areas to protect, understanding the impacts of disruptions and predicting responses throughout the internal and external enterprises. Most importantly, the risk assessment must answer: “What does it take for the retail brand and company to survive?”

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Sears Holdings ceo unhappy with 2Q

BY CSA STAFF

HOFFMAN ESTATES, Ill. Sears Holdings today reported net income of $176 million, or $1.17 per diluted share, for the second quarter ended Aug. 4, compared with net income of $294 million, or $1.88 per diluted share, for the second quarter ended July 29, 2006. The company attributed the decline in its second quarter results from the same quarter last year to lower operating results at both Sears Domestic and Kmart, which were partially offset by improved operating results at Sears Canada.

“We are disappointed with our second quarter results. Our gross margins came under pressure from sales declines and increased promotional activity, and as a result, our net income was significantly below last year and our expectations,” said Aylwin Lewis, Sears Holdings’ ceo and president.

Sears Domestic’s comparable-store sales declined 4.3% for the quarter, while Kmart’s comparable-store sales declined 3.8%. Total domestic comparable-store sales declined 4.1%. The company reported lower sales across most merchandise categories at both Kmart and Sears Domestic, partially offset by increased sales of women’s apparel at both Kmart and Sears Domestic, as well as within consumer electronics and footwear at Sears Domestic. For the quarter, total revenues declined $0.6 billion to $12.2 billion in fiscal 2007, as compared to $12.8 billion for the second quarter of fiscal 2006.

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Lane Bryant pres. joins Christopher & Banks

BY CSA STAFF

MINNEAPOLIS Former Lane Bryant president Lorna Nagler will join Christopher & Banks as president and ceo effective Aug. 31. She will replace Matthew Dillon, who resigned from his position as president and ceo and as a member of the board of directors today. Nagler has also been elected as a member of Christopher & Banks’ board of directors effective Aug. 31.

Nagler most recently served as president of Lane Bryant, a division of Charming Shoppes. Before joining Charming Shoppes in April, 2002, Nagler served as a senior vp and general merchandising manager for apparel and jewelry at Kmart Corp.

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