How New Balance Keeps Stores and Factories Stocked

Fifty years ago, New Balance was a scrappy startup, consisting of six employees manufacturing and delivering running shoes to enthusiasts in and around Boston via mail order. Today, it is a $4 billion dollar company, producing over 16 million shoes a year, including more than 4 million in the United States, from factories in Massachusetts and Maine. Throughout, it has retained an ethos of self-reliant problem solving combined with a beneficial sense of thrift.

Not surprisingly, this extends to how its employees approach purchasing.

“It’s amazing. The employees are so conscious of what they’re spending,” says Don Cloonan, global manager of sourcing at New Balance. “There’s definitely a culture of trust, and knowing that people are looking out for New Balance and not just frivolously spending.”

Still, purchasing at the company was decentralized and often inefficient. To address those issues, New Balance turned to Amazon Business to help the company gain greater visibility into its spending and add organization and efficiency to empower employees to make better, faster purchasing decisions.

By integrating Amazon Business into its existing procurement architecture, based on SAP^® Ariba^® solutions, New Balance has been able to provide a responsive system familiar to its employees, who know SAP Ariba and intuitively understand the Amazon Business user experience thanks to the use of Amazon in their personal lives. The result is a frictionless purchasing experience where spend data is centralized in one place. Employees still have the freedom to order what they need, but now New Balance can increase its visibility into how money is spent.

Purchasing improves the process

Among the most critical beneficiaries, Cloonan says, has been New Balance’s U.S. retail operation, consisting of around 100 company-owned stores. Employees can quickly, efficiently and predictably obtain any supplies needed to ensure smooth operations, keeping their focus on shoppers. “In hindsight, we never realized how beneficial it is for the stores to get their shipments the next day,” he notes. “It eliminated the need for the store manager to run to the hardware store during business hours to replace a light bulb. Now they can get it tomorrow from Amazon Business.” This keeps more people on the floor, helping assist customers and driving a better experience for anyone entering the store.

But it’s not simply a matter of refining how purchasing is done on the retail end. Cloonan says New Balance has seen benefits stretching well beyond the typical suite of supplies required to keep a corporate office or retail store running smoothly. “The number of areas within New Balance that have been able to utilize Amazon Business for their needs is greater than we thought,” he says. “Some of the products that we’re finding to support manufacturing have been surprising.” A gantry crane, for example, was purchased for the company’s manufacturing operations through Amazon Business. “Twelve feet high, 20 feet apart between the legs, and you’ve got a chain hoist that you pull that does all the lifting for you,” Cloonan says. “It’s a big piece of equipment. I saw that and thought, ‘Wow, we can order a lot of things there.’”

The ability to secure this type of heavy equipment from Amazon Business brings major benefits, Cloonan says, by simplifying a potentially time-consuming process. “You don’t need to set up an additional supplier and get extra approvals, handling their W-9s and contract information,” Cloonan notes. “We would have to run a credit check, or they would have to run a credit check on us, during which we might even have to send them over our credit references. That whole process is inefficient.”

Now employees can do due diligence on the legitimacy of a supplier and then purchase through Amazon Business, saving themselves a tremendous amount of time so they can focus their efforts on higher value activities.

Scaling for growth

The value New Balance has experienced since adopting Amazon Business three years ago, Cloonan says, encouraged the company to scale Amazon Business into other geographies. Currently, the company is expanding the program to Europe, with a focus on supplying retail stores there, and will soon bring Canada on board, as well. Cloonan believes they’re just scratching the surface with Amazon Business. For one, it addresses a pressing need for agility as New Balance pushes to innovate. “New Balance is growing, and our needs are changing rapidly, whether in manufacturing or technology—or what we’re using to make our athletic apparel and shoes,” he says. “We’re constantly looking for suppliers that offer technology and can also support the technology we’re using.”

Keeping the ethos of trust and responsibility endemic to New Balance’s culture is critical, as a better procurement process benefits everyone from end to end.

“We’re at the beginning of learning what we can do to both control and leverage our spend. We have the ability to have certain policies and approvals built in, if we want,” Cloonan says. “The savings we’re gathering can be documented, and we can learn how to work toward even greater savings.”