Nimble Supply Chains:Why Drop-Ship Changes Everything, and Nothing

SOG 1.0

1986 - 2009 2007 - 2011

2010 - Present 2009 - 2012

Who is SOG Today?

“We don't settle for ordinary. We never did, and we never will.” -- Spencer Frazer, Founder/Chief Designer

Roadmap to Success• Company Sold In 2009 to Private Capital Group• GOAL – DOUBLE SOG IN 2 YEARS!!!• Develop Growth Support Plan• Hire VP of Retail Sales• Hire eCommerce-focused Rep Agency

• Build Brand Recognition• Leverage Existing Relationships with Big Box Retailers• Build Drop Ship and eCommerce Channel

Dive Into E-Commerce

Are Drop Ship and eCommerce a Necessary Evil?

New SOG Emerges• Economic Impact Clear• 2 Consecutive Years of Huge Growth = 40% each• Knife Industry Annual Growth Average = 8%• Reactive Versus Proactive• E-Commerce proves SKU demand• SKU Placement At Retail Expands Rapidly

Dive into Drop Ship• Costco.com and Target.com • Drop Ship model only• No Inventory• Branded Consumer Experience• Order Processing Volume More Than Doubled• Hundred of Orders Received Each Weekend• Drop Shipping IS A Necessary Evil!!!

But …

Black Friday & Cyber Monday• Increased direct-to-consumer orders of 650%• Weekend Orders In The Hundreds• OOS On Top Selling Items• Low Fill Rate at 70%• Order Turnaround Was 5+ Days• DISAPPOINTED CUSTOMERS AND BUYERS• Best Holiday Season Ever

SOG 2.0• Overhaul To Supply Chain• Supplier Diversification• Lean Implementation• Improved Forecasting Efforts• Created Early-Stage SIOP Process• Key Account Analysis• Annual Purchase Order Volume = 30,000

SOG 3.0• Same Day Order Processing• Continued Process Improvement• Advanced Forecasting Methods• SIOP and SKU Rationalization • POS Analysis (TPI by SPS)• New Product Development Gate Stage Process• Annual Purchase Order Volume = 60,000

Overcoming Obstacles• Seasonality

• Q4 – Christmas

• Fall – Hunting

• Spring/Summer – Outdoors

• Winter – New Product Launch

• Chinese New Year

• Asian Supplier Holiday

• Nothing In or Out

• Efforts Spent On Improving Business Processes• IT Improvements• Staff Training Sessions• Marketing Efforts• New Product Development

Integration Story• BETA Participant with VSync (Accellos) and SPS• Began Testing In July • 14 Out Of 45 EDI Partners Already Integrated• Integrated Trading Documents Include:• Purchase Orders

• Functional Acknowledgements

• Advance Ship Notices

• UCC-128 Labels

• Custom Packing Slips

• Invoices

EDI Transactions

VSync and SPS• Previous Solution Took 6 to 12 Months • Currently Integrating 3 or 4 Partners Every 2 Weeks• 30,000 Touchpoints Eliminated Through Q4• Annual Savings = $50,000 (Estimated)• Eliminates 50 hrs/week Order Processing Time• Additional Benefits:• Increases Margins

• Increases Accuracy

• Decreases Order to Ship Time

• Decreases Customer Status Checks

• Reduced O/T Costs During Peak Times

Thank You.How To Reach Me…

Tanya Tremoulet

P. 425.361.4602C. 425.248.1893

E. tanyatremoulet@sogknives.com