NASSTRAC Shipper of the Year: Best Buy meets the multi-channel challenge

As logistics professionals know, there’s more to the supply chain than simply moving product. An innovative supply chain not only connects retailers to manufacturers and customers, but it can offer ancillary benefits including improved inventory control, lower costs, and even cleaner stores.

A leading example of that is Best Buy, the Richfield, Minn.-based “big box” retailer of electronic goods. Faced with rising transportation costs two years ago, Best Buy set out to change its logistics strategy while remodeling some of its 1,059 U.S. retail locations to offer smaller, more intimate shopping environments with a “cleaner” look.

Two years later, Best Buy has reduced transportation expenses by 30 percent per shipment in the stores that were remodeled. Its new transportation network also provided logistics flexibility and created a template that can be plugged in as more of its locations are converted to the new, multi-channel format.

“By reducing transportation expense and providing flexibility, we’re able to remodel Best Buy stores to our new format more efficiently and effectively,” says Peter Zedler, Best Buy’s senior manager for transportation planning and support. “Over the long term, this will enable Best Buy to remodel more stores to a format we feel better services the customer.”

For this innovative thinking, Zedler and Best Buy have been named NASSTRAC’s 2012 Shipper of the Year—the second time the company has received the award in the past eight years. According to NASSTRAC Executive Director Brian Everett, this is the first time that a company has received the coveted award multiple times. “They truly do some innovative things,” says Everett. “Best Buy’s program demonstrates that a retailer, or any shipper for that matter, now has to think about more than just product movement throughout the supply chain.”

Everett calls Best Buy’s innovation “a classic model of inventory postponement,” leveraged in a unique way. “It’s a great supply chain story,” he says. “By having the fixtures and supplies for the upgrade projects closer to the end user or installer, the last-minute changes done during the store remodeling process are more easily accommodated.”

Zedler and Best Buy’s logistics team has also realized huge savings in expedited shipping costs by deploying retail items to the local warehouse in advance of sale date. “By having goods a few miles away from its stores, versus hundreds of miles in the past, changes are handled nimbly and at a far less cost,” Everett says.

Best Buy’s customers are also winners in this. “Our new store format is really about finding a solution for the customer and not shoving as much product in their face as possible,” says Zedler.