Stuffed with success: How Build-A-Bear reimagined retail operations with Dynamics 365

Build-A-Bear Workshop, Inc. (NYSE: BBW) is a multigenerational, multidimensional brand focused on adding a little more heart to children’s lives around the world. A pioneer in “experiential retail,” Build-A-Bear Workshop has been engaging customers since the first store opened in St. Louis, Missouri, in 1997. Now, Build-A-Bear is a global phenomenon with more than 500 locations worldwide, an innovative online experience, and even its own Build-A-Bear Radio and Entertainment division. Its mission hasn’t changed, however, and there’s no limit to who can experience the joy of Build-A-Bear.

Once upon a time: Building a better model in the cloud

Build-A-Bear has been a family mainstay since opening its workshop doors in 1997. Since 2013, Build-A-Bear President and CEO Sharon Price John has led the company with a long-term view of success, expanding and repositioning the beloved brand and launching a systematic digital transformation designed to drive profitable growth.

But disparate warehousing and financial systems and restricted visibility of inventory data stifled growth. Effective inventory management is crucial to any retailer, especially to a brand that touches millions of hearts with customized treasures that guests of all ages cherish for years.

Build-A-Bear’s Retail Inventory Project was designed to implement a holistic way to manage planning, inventory, and sales orders in a unified system with end-to-end flow. After two years of using Microsoft Dynamics 365 Finance, the company added Dynamics 365 Supply Chain Management in early 2020 to bridge the gap between finance and warehousing. The rollout continued through 2023, giving stores a throughline of inventory visibility and traceability that allowed the company to continue to delight guests with simpler and faster fulfillment for their furry friends.

Putting eyes on inventory

Before Dynamics 365, Build-A-Bear’s legacy Manhattan warehouse management system operated in isolation, with functionalities limited to the warehouse. Stores receiving an inventory shipment manually counted and entered product data in the system. Faced with cumbersome manual steps, store associates who were also managing store traffic and activity often confirmed inventory receipts without inspecting the shipment to validate the order. In other words, a full view of inventory ended the moment shipments left the warehouse. Accurately accounting for inventory was difficult. The finance team grew frustrated with the discrepancies and complexities that stemmed from the disparate supply chain and finance systems.

Now, receiving is far more efficient and accurate. Store teams simply scan each box with a Zebra TC21 mobile device equipped with the Dynamics 365 warehouse management app, and Dynamics 365 cross-checks and validates the merchandise sent and received. Build-A-Bear store teams have unprecedented inventory visibility, which allows the company the ability to ensure workshops are well stocked with the right product levels to meet the needs of guests with more options to choose from when personalizing their perfect furry friend.

As any retailer knows, inventory is money, and the financial impact of the new system cannot be overstated. Warehousing data connected with Dynamics 365 Finance links inventory and financials in the back office for complete traceability of Build-A-Bear’s precious cargo. With greater visibility and easily accessible data, gaps along the supply chain are quickly identified for remediation. Unlike with the old system, now Build-A-Bear's Inventory Control team can confirm that shipments are complete without having to search through the myriad ways merchandise can get lost to identify and correct an issue. Less time spent tracking down lost inventory leaves more time for fulfilling orders.

For Joel Berger, Build-A-Bear's Director of Accounting, External Reporting, and Compliance, working in one system has made a world of difference. Managing inventory in Dynamics 365 has “created efficiencies in our reconciliation process,” he explains. “It has simplified a lot of what we’ve had to do. We used to export data, collate it in Excel, and then create journal entries to reflect that data in our general ledger. Now it happens daily and come month-end, the inventory is set.” Before Dynamics 365, Berger’s team had to run several reports that didn’t always reconcile. The ensuing investigation could delay Build-A-Bear's closing process by up to a week. “Dynamics 365 has greatly accelerated what we can do, and it has made us better,” adds Berger.

Dynamics 365 optimizes the control of inventory by enabling the company to maintain the right level of on-hand quantities through an efficient cycle count process that doesn’t disrupt warehouse operations. Warehouse efficiencies like cluster picking and put-to-wall functionality save time and money by maximizing the effectiveness of the company’s once-a-week shipping schedule to stores. Because Dynamics 365 is flexible, the company can take advantage of custom fulfillment strategies. In the legacy system, store-bound merchandise had to make it all the way down the sorter on the day of shipment or wait for the next scheduled shipment, which could be more than a week later. Now, an easy-to-configure customization in Dynamics 365 implements a validation process that doesn’t allow a pallet to leave the warehouse until it has all the boxes that were picked for that order, making sure that inventory reaches its destination in time for each guest’s special Build-A-Bear experience.

E-commerce bursting at the seams

One of the most special parts of the Build-A-Bear experience is the joy of creating a highly personalized furry friend. Guests of all ages get to personalize plush keepsakes with clothing, accessories, and even sounds and scents of their choice, in store or online. Online orders take extra time to fulfill at the warehouse. A Bear Builder personally customizes each furry friend to order, either stuffed and dressed ready to play or undressed, allowing the Guest to dress when their new furry friend arrives.

During the COVID-19 pandemic, Build-A-Bear's online orders increased exponentially, as did most online retailers’, stressing resources not only during peak holiday shopping times but for an extended period. But Build-A-Bear is unique in its high rate of customization and high demand beyond traditional retail peaks.

Dynamics 365 warehouse management enables Build-A-Bear to optimize production and delivery times by using stores as mini-warehouses. In fact, Gerry Tagliaferro, Senior Vice President, Logistics, Design, and Construction, says that Dynamics 365 made Build-A-Bear's e-commerce business much more efficient. With the easy integration of the company’s MuleSoft middleware and other platforms like Salesforce for e-commerce orders processing, and Deck Commerce for order management, orders flow seamlessly into Dynamics 365 for processing and fulfillment.

Dynamics 365 ensures the right items are in stock to assemble customized furry friends for Buy Online and Pickup in Store (BOPIS) and Buy Online Ship from Store (BOSFS) orders. The extra shipping capacity reduces the number of rerouted orders and unlocks revenue opportunities by allowing the company to extend holiday order cutoff windows. Guests have more time to shop before the holidays and still feel assured their gifts will arrive on time.

Says Tagliaferro, “Dynamics 365 allows us to really focus on shipping cut-offs and how much volume we can get out the door. We've established some really good tools within Dynamics 365 to help us manage through that volume and deliver the Build-A-Bear experience that defines our relationship to our guests.”

With more than 350 Workshops serving as mini-warehouses, if each location assembles just five orders a day, the primary fulfillment center is relieved of nearly 2,000 orders every day, significantly increasing warehouse productivity. And, “the ability to set wave parameters enables the team to group orders enabling us to reduce processing days by 28%. We did not have any aging orders last year, even with our doubled holiday demand,” says Tagliaferro. “It was very important that we got our customers their products on time.” With Dynamics 365, all resources are used efficiently, customers are happier, and Build-A-Bear has more top-line revenue.

Furry friends go further with wholesale

Wholesale is an exciting—and expanding—new channel for Build-A-Bear. With a Build-A-Bear Workshop on most Carnival Cruise ships and at many Great Wolf Lodge locations, customers have even more opportunities to engage with the brand.

Before Dynamics 365, Build-A-Bear couldn’t enter customer information in the legacy system. Sales were bogged down. Finance teams couldn’t easily track fulfilled orders to partners and had to manually enter invoices. Now, sales teams place wholesale orders directly into Dynamics 365. An automated process pushes them to the warehouse for picking and shipping, making it easy for the company to expand its wholesale footprint.

For Build-A-Bear and Dynamics 365, expanding business doesn’t have to mean complicating it. To the contrary, Dynamics 365 helped the company think through warehouse optimizations for its wholesale channel that would benefit warehouse productivity for each of its channels. Dara Meath, Chief Technology Officer for Build-A-Bear, was instrumental in reimagining warehouse functionality through the implementation of Dynamics 365. “When it was first structured, there was a warehouse set for each channel. But Dynamics 365 enables us to put [wholesale] inventory anywhere. That inventory is now marked for that wholesale partner regardless of where it sits, eliminating the need to do internal recounts and replenishments.”

Flexibility drives comfort

You might not know it from the vast number of furry friends on display in Workshops, on cruise ships, and online, but Build-A-Bear operates as a small and lean company, which means that flexibility to adjust and adapt is imperative. The hallmark of Dynamics 365 is flexibility, enabling agility and supporting strategic shifts rather than restricting them. “In our legacy system, we were bound to processes that met the capabilities of the system,” says Elizabeth Gray, Lead Technical Analyst for Build-A-Bear. “With Dynamics 365, we maintain flexibility by allowing the system to adapt to our business processes. This means we shape our operations to fit our needs, rather than having to adjust to the system.”

Build-A-Bear is a unique retailer. It needed an end-to-end platform to support not only its business model, but also the innovation that makes it so beloved. Dynamics 365 delivered. From easy integrations to the user-friendly interface that gives a clear picture of inventory throughout its life cycle, Dynamics 365 positions Build-A-Bear to focus on what it does best—innovating ways to create special experiences and lasting memories for its customers.

Building an exceptional customer experience every time

Customer experience is the driving force behind Build-A-Bear's digital transformation. Everyone at the company, from the leadership, logistics, finance, warehouse, and store teams, are committed to delighting guests and bringing “The Stuff You Love” to life. Inventory accuracy is crucial. Approximately 80% of Build-A-Bear guests plan their visit to a Workshop by previewing options on Buildabear.com. Thanks to Dynamics 365, Build-A-Bear customers can be confident that the fuzzy friend they fall in love with on the website is the one they can take home from the Workshop.

What's next for Build-A-Bear? As it looks to the future, the answer is clear. Microsoft Copilot is changing the way businesses work, and early adoption of these emerging technologies can be a game-changer for Build-A-Bear. "Dynamics 365, as our comprehensive platform, provides a strategic advantage by streamlining complexities and paving the way for future innovations with the integration of Copilot. We are highly enthusiastic about Microsoft's advancements in AI across its entire ecosystem, particularly within Dynamics,” says Meath. With Microsoft's help, the team is building their Copilot roadmap so they can enhance employee and customer experiences, increase operational efficiency, and grow its business for the future.