There’s a lot of buzz surrounding the Internet of Things (IoT). With Nest Labs’ line of household connected devices and Amazon’s new Dash Button for reordering groceries, customers are getting used to more and more connectedness in their day-to-day lives. Retailers too are trying out ways to be not only more connected to customers but also to connect disparate parts of their business operations by adding connectivity to everyday things. RFID chips in packaging can track inventory from source to customer and provide all kinds of valuable data, as well as lower shrinkage. Digital signage and shelf tags saves labor and reduces pricing errors. With all the new and exciting things that the Internet of Things can bring to retail, it’s shocking how behind the times most inventory planning and replenishment software is.
Sometimes in retail, we feel like all we are doing is putting out fires. Little things pop up every day that are urgent but maybe not all that important. This store is out of that, this vendor short shipped something else, and your boss’s boss wants to know why sales were down in this class. We get bogged down in this week’s problems so much so that we forget to prevent next month’s or next season’s fires. Your time should be spent on seasonal planning, demand forecasting, vendor collaboration, and other proactive activities. When do you take off your fireman’s hat and let the small fire burn for the greater good?
Put Down the Sales Reports
Mondays are generally known in retail as “report day.” Sales and in-stock reports aplenty, sorted and summed by every conceivable angle land on every desk from the CEO on down. The point of all these reports is to find exceptions and actionable items. But sometimes it’s like looking for a needle in a haystack. You don’t need a bigger haystack; you need a magnet!
Earlier this year we decided to revamp our company blog. We’ve been working hard to deliver fresh content and fresh perspectives every week. You may have also seen our new Slide Share presentations on lead time and seasonality and our new whiteboard animation on Lead Time Forecasting. (If you haven’t seen them, click the links and take a look.) We are really excited about all this new content and it turns out, so is everyone else! In case you missed them, take a look at our most read, most shared, and most talked about blogs from 2015. We’ve covered everything from lead time forecasting and lost sales to omni-channel retailing. In 2016 you can expect to see even more new and insightful demand forecasting, supply chain, and retail content from us, including a few surprises I can’t talk about yet. Stay tuned!
I grew up writing letters to Santa at Christmas time, asking for all a child’s heart desires. Bicycles, ponies, footballs, puppies, and more. I know a lot of you did the same. But do you ever take the time to write out your wish list for your business? If you were to sit down and write out a inventory management list, what would be on it? From talking to our customers, we’ve found a few running themes both on the retail and manufacturing sides. Here’s our typical new customer’s wish list:
Collaborating with vendors is something every retailer does every day.You set up promotional plans, create POP materials, make co-op marketing agreements, devise better training programs and a thousand other things that set both vendor and retailer up for success. Cultivating relationships are key to making things go more smoothly. But most retailers have difficulty supplying vendors with one piece of communication, and it can become a big pain point.
December is a time when many retailers are trying to manage orders to meet end of year inventory goals. How do you decide which items to buy and which items to cut? If you are trying to maintain the same instock level on every item, you are going to end up buying too much of some items and reducing orders on best sellers in order to pay for it. You can avoid this pitfall by managing service levels rather than focusing on instocks.
We all know snow shovels aren’t going to sell in the summer and beach towels will flop in December. Most of us can identify general seasonality and spot a really bad seasonal index by applying simple common sense. But do you frontload your key seasons or reduce orders because your Replenishment System doesn’t quite get the job done? You might be running into these common seasonality issues that cause retailers big headaches. The irony of seasonal index errors is they are one of the few things where an Excel file can actually solve the problem; yes shocking, we all thought Excel was a report tool.
The key point to remember – a seasonal index is just a multiplier to run against the base forecast. Some software solutions will lose you with a discussion using words like multiplicative and additive. While the discussion has merit, these terms only describe seasonality math, not how it needs to be applied in replenishment or even what numbers are needed in the seasonal index math. A seasonal index is multiplicative and a market force is additive against the base forecast…but then I have gotten ahead of myself.
Thanksgiving should be a holiday for all of us to take a much needed breather and spend some quality time with our friends and family. But if you work in retail, what should be a holiday usually turns into early mornings, late nights, or no vacation at all. In order for customers to shop on Black Friday, it takes others to leave their holiday early to stock shelves, man registers, or be on call for those on the front lines. Even the corporate office doesn’t get a break; if one store is open, there is someone back at the office too. With more stores open on Thanksgiving Day, more and more of us have to cut our holiday short.
Chinese New Year: Its Coming, Is Your Supply Chain Ready?
Chinese New Year starts on February 8, 2016. Most retailers are familiar with Chinese New Year because every year their Chinese suppliers and factories shut down for a few weeks. Chinese New Year is a huge celebration for China and many surrounding countries. Workers head home for a much deserved vacation that can last 4 weeks or more, leaving quiet offices and empty factories. That means nothing is shipping and that can result in empty shelves or managing the cost of overstocks- if your Inventory Replenishment software bought the right products.