Top Five Winning Habits for Retail Planning and Allocation
On May 30, 2014 we announced MID Retail, a provider of retail allocation and merchandise planning solutions, is now a part of the Logility family
Last week I sat down with MID Retail co-founders Mike Ruhana and Chuck Miller to discuss the qualities that lead to retail supply chain success. Drawing on their experience with more than 100 leading retailers, they have identified five habits for retail planning and allocation success that are, in their words, “true difference makers.”
1) Top Down, Bottom Up, Upside Down
The merchandise plan needs to meet the demands of two distinct entities — financial plans (top-down), and customers (bottom-up). Getting it right requires simultaneously keeping an eye on the big picture and the details, all while performing complex re-iterative calculations. Far too often retailers approach this task using manual, disconnected spreadsheets and a lot of “shimmying, re-jiggering, and re-figuring.” This approach results in inconsistent and rigid plans leaving the organization upside down, unable to balance cost and service.
The amount of data, the sheer volume of SKUs, calculations and adjustments is far beyond the capabilities of spreadsheets. As Chuck stated to me, “to stay right side up, leave the spreadsheet behind.” Good advice.
2) The Future is Subject to Change
According to Mike Ruhana, “Every plan is perfect until it meets the real world.” He is absolutely right. The world does not stand still long enough for plans to work out the way we want. As seasons progress, consumer preferences change, competitors alter course, etc. flexibility becomes your best friend. Rigid plans cannot be revised easily in-season and will leave you with margin-eroding markdowns and lost sales.
Unless you have a crystal ball you will need a technology platform that lets you update the forecast periodically (to account for changes) and integrate planning with allocation (to ensure the optimal plans can be easily executed in the real world).
3) Automation Leads to Strategic Thinking
Planning and allocation teams can make a major impact on sales, profit and customer satisfactionif they are enabled to. According to Chuck, “far too often we find these teams stuck in the weeds, sifting through rows and rows of data trying to hold the merchandising process together.”
Best-in-class retailers have freed their planning and allocation teams from this process by turning to automation to handle frequent and repetitive merchandising calculations. By taking the repetitive processes off their plate, these teams are able to focus on strategic initiatives, tackle the projects that drive bottom line results and move the needle on sales and customer satisfaction.
4) Embrace Merchandising Innovation and Nimbleness
Retail merchandising practices have been around for a while. The best practices of 5 or 10 years ago have evolved to meet the changing needs of retail driven by new channels, new forms of risk, nimble and low cost competition, expanding markets, the list goes on. The challenge for today’s retailers is to get ahead of these challenges and turn them into a competitive advantage.
To be successful you must be open to new ideas, new processes and new technology. It’s not always easy to become an agent of change, but it is always a good idea to identify the best-in-class organizations in your space, foster a healthy awareness of best practices within your executive team, and, well, emulate the leaders. I guarantee that’s what others are doing.
5) Customer (in store), Customer (online), Customer (mobile)
Every customer is an individual with specific wants and needs. Every customer expects you to have the exact product they want for the right price. The customer wants it now, and wants access options to choose from: the Omni-Channel experience is what matters.
Retailers must be able to plan, allocate and reforecast at the finest level of detail quickly across channels to meet customer demand, no matter where that demand comes from.
These are just five of the many insights Mike and Chuck shared with me. In the coming weeks and months we will expand on each of these areas. Feel free to let me know which you would like us to discuss first or if you have a best practice you would like to share.
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