Best Buy Change to Succeed

“Making Technology Work for You”

We offer a “Unique Customer Promise” •  The latest devices and services •  Impartial & knowledge advice •  Competitive prices •  The ability to shop when and

where you want •  Support for the life of your

products

Best Buy has a Promising Multi-Channel Platform

•  U.S. Digital Channel in FY12 •  Traffic:1 Billion

•  U.S. Physical Stores in FY12 •  Traffic: 600 Million

70%

40%

15%

of customers do research on bestbuy.com before buying in our stores

of bestbuy.com orders are picked up in stores

of pick-up orders result in additional purchase

Need for Change

•  Multi channel design •  Stores are getting older, need for updates in various

markets •  Concentrating on highest selling SKUs •  Evaluating space utilization

Current System

•  Ship direct to store via TL, LTL, and airfreight •  Able to do some TL consolidation •  Contact with fixture vendors to discuss packaging and

expected quantities •  If we have the opportunity, our team works with fixture

design team on how items will be packaged.

Prior Experience

•  Had some prior experience with various warehouses and models

•  Franklin, IN warehouse •  Various Warehouse Management Systems •  Customer Centricity Project in California •  Smaller special projects

“The Why”

•  Four large Markets were in the scope •  Rolling start date for stores within a Market •  Stores not able to handle 15 plus truckloads of fixtures •  Containers, cumbersome to utilize in project •  Multiple week implementations per store, anywhere from

6 to 10 weeks

“The Challenge”

•  BBY Properties challenged the Transportation team with coming up with a solution.

•  Their parameters: •  All fixtures in market •  Flexibility •  Quick turn-around •  Ease the strain on the stores being remodeled •  Reduce number of damages to fixtures

How We Started

•  A great deal of analytics •  Three initial scenarios presented to Properties team •  Recommended a fourth, a Hybrid model, combination of

the three proposed ideas •  Motivators

•  Cost •  Capabilities •  Timeframe

What we needed-Putting it all together

•  RFP for carriers •  Warehousing capabilities •  Simple method for tracking •  Visibility for all cross functional partners

- Field - Corporate - Carrier partners

•  Flexibility

Putting the Pieces Together

•  Selection of carrier(s) •  Warehouse locations in market areas •  Determine quantity from each Vendor by store and

market •  Define reports we needed •  Putting the rules together for use of warehouse

WarehousesVendorsStores

Building the Team •  BBY Transportation •  BBY Properties •  BBY GBS •  BBY Design •  Carriers, Koch Logistics, AGS, Logistics International •  Vendors, Fixtures and Graphics

Internal Processes and Systems

•  Develop spreadsheet for Field and Corporate to use to track where shipments are in relation to their store •  No cross functional system available for use by all •  No funds to develop a system •  No time to develop a more complex solution

•  Vendor coordination •  Order system flow

Challenges •  Multi-channel challenges •  Date changes at the stores, late notification •  Construction delays •  Permitting issues •  Inability to change the delivery date on orders

Systemically •  Too many people trying to be in the warehouse

Challenges (continued) •  Communication

•  Across multiple business channels •  Field to Corporate to third party warehouse •  Corporate to vendor

•  Inventory, coming from CA for stores in TX that were running behind

•  Fixture Vendor managed freight

What We Learned

•  What we set out to do versus what actually happened •  Need for a Dedicated Field Deployment Manager

coordinating with the warehouse facility •  Flexibility •  Need to put more controls on airfreight spend, both

service level and quantity •  Need line of sight to vendor-provided items

Richfield, MN

Benefits (Hard and Soft)

•  Truckload quantity shipping into warehouse •  Financial savings

•  Overall freight cost reductions and better trailer utilization.

•  Fewer damages of fixtures, if damaged identified earlier

Benefits, hard and soft cont. •  Quick view of inventory in warehouses

•  Field Deployment Managers monitor inventory as projects were being implemented

•  Allowed for Flexibility •  Field teams able to pull fixtures and parts as they

were needed •  Changing time frames in implementation schedule

•  Allowed for cleaner stores, no extra fixtures, no crowding, no moving items multiple times.

Benefits, hard and soft cont. •  Safety stock, bringing in extra parts for the most

commonly used items •  Overrun parts

•  Being sent to next market at the end of the project •  Eliminate waste and additional reorders and

transportation costs. •  Some fixtures saved in market for additional projects. •  Reduces overall mileage, disposal of extra parts

which helps BBY meet its sustainability initiatives.

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