Fix Supply Chain Before Emerging from Chapter 11

Before a retail company deems itself ready to emerge from Chapter 11 bankruptcy protection, its management and consultants must ensure that supply chain and service issues alike have been thoroughly addressed. Otherwise, the potential for long-term survival is virtually non-existent, warned veteran retail executive and consultant Jim Welty, chairman of Clear Thinking Group.

According to its research, of 141 retailers with annual sales exceeding $100 million filing for Chapter 11 between 1990 and 2002, only 19 have successfully emerged without a change in control and with virtually the same store count and distribution network in place as when they entered the bankruptcy process. The vast majority of these retailers, 99, were eventually acquired by other companies or had significant assets liquidated.

Re-thinking the planning and management of inventory through merchandising, distribution and systems constitutes an essential step for companies striving to remain in business long after they have shed their Chapter 11 status. Management of inventory flow is a shared responsibility across the merchandising, operations, finance, systems, stores, and distribution functions.

From The Logistics & Supply Chain Forum 2003 weekly e-letter.

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