However, we have observed that many retailers commit common supply chain mistakes, including failing to align supply chain strategy with overall business strategy, losing focus on the few key drivers of supply chain performance, and assuming that IT solutions have to be comprehensive. We help retailers overcome these pitfalls by developing and piloting an end-to-end blueprint of their supply chain solution, leading to simultaneous improvements in cost, service levels, and lead times. This approach has helped our clients achieve a 20-40 percent reduction in supply chain costs and top-line revenue increases of 5-7 percent.

Vendor performance improvement (VPI)
McKinsey's Retail Practice has created VPI, a powerful approach for deepening our clients' knowledge of their category economics. VPI embraces vendors as partners in a systematic assessment of the vendors' existing and potential capabilities in order to help retailers identify opportunities to improve their category management, buying, and logistics.

VPI requires that merchants rethink traditional attitudes to managing vendors, build analytic skills, and take a cross-functional view of margin opportunities. It is a powerful tool: in addition to providing better strategic control of the business, VPI can generate 5 percent or more in net margin improvements.

Purchasing management
We help clients take a strategic approach to the sourcing of materials and services and better manage operational transitions. We help them make key decisions related to total cost of ownership, selection and development of suppliers, make vs. buy decisions, organization design, and change management. Our strategy-driven approach and experience across a broad range of industries enable us to help our clients navigate the complexities of purchasing today and achieve both near-term and long-term benefits.