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Tag Archives: Demand Planning

Why Some Demand Plans Burst into Wildfires in Your Location Channels

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?
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Critical Steps to Forecasting Replenishment for Demand PlanningForecasting replenishment correctly and following standardized inventory replenishment processes continues to deliver significant returns to retailers, wholesalers, and manufacturers. For the retailer/ wholesaler/ manufacturer ready to move away from legacy technologies, there are huge opportunities that cost 50-90% less than legacy systems. A forecast accuracy in the 90% range we know delivers a significant shareholder value increase of 15% or more.

Several documented events support these claims (click a link): a retailer achieved a 25% inventory reduction and a 3% same store sales increase in 90 days, the sales and inventory trend continued going forward (press release), Dr. Mentzer’s 3 page story concerning a collection of businesses that delivered an average 15% shareholder value increase via forecast accuracy improvements which directly impacted forecasting replenishment, and The Home Depot Chairman and CEO, Frank Blake, specifically stated in the 2011Q4 earnings briefing that supply chain investments continued to provide significant benefits including increased turns and same store sales.
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How To Get Rid of your Planners Once and for all

Demand-Driven Forecasting discussions seem to run into a debate on the differences between demand forecasting and planning. We know how new technologies have moved beyond many planner job descriptions, some still think a planner and inventory manager are the same. Unfortunately, many people don’t realize the value proposition that bottom up, demand-driven retail delivers; they continue to use the old planning models and rename their process as demand-driven. I sat in on a presentation for an international retailer a short time ago. They were a mid-tier retailer with sales in excess of $500M, a strong web presence, and stores found in shopping centers and malls. Their products are purchased by male and female shoppers resulting in strong return shopper experiences and new customers which deliver strong sales growth year after year.

Attendance for our meeting included the CIO, Chief Merchant, Director of Forecasting, planners, and inventory management people. They told us their goals were to reduce operating capitol but maintain service levels for the web and store customers. The company wanted to increase turns while re-purposing the capital from inventory into new stores and acquisitions. The irony of the meeting is that while they used words like Demand Driven retail and Demand Forecasting, they were really talking about planning and goal setting. They believed that allocations were great and had never even thought of discussing top down versus bottom up as two distinctly different methodologies that are used to achieve entirely different goals. Read More

As founder and CEO of Data Profits, welcome to the Data Profits Blog. Our goal is to provide you with meaningful insights into inventory management, helping you identify opportunities to improve your supply chain and increasing profits. Our solution, iKIS (“Internet’s Keeping Inventory Simple”) provides a SaaS-based solution that retailers trust with one of their largest investments — their inventory.

Data Profits’ BI tools deliver consumer insight and demand forecasting at new levels of detail and accuracy. Merging BI analytics, demand forecast and planning tools with vendor and buyer collaboration provides clear, accurate, and extensive knowledge of consumer buying habits allowing retailers to reduce inventories but stay in-stock with the right products at the right location, delivering increased sales for Data Profits’ customers.

 

One recent successful implementation with a top 100 retailer resulted in market leading outcomes:

  • 25 percent inventory reduction
  • More than 3 percent same store increase in sales and gross margin
  • More than 90 percent forecast accuracy

All in less than 90 days.
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