Behind the perfect website designs, the strategically picked real estate, and thoughtful store layouts, retail brands across the country are facing the same challenges. There are the obvious challenges, ones that are easy to see. Generating customers, launching sales, and upselling customers are common, almost daily tasks. But behind the storefront lies a truly difficult problem that almost every brand faces. Namely, a delicate balancing act of meeting customer demand at the perfect pace, having enough products on the shelves and being able to replenish from the warehouse exactly when needed, while still having enough inventory to fulfill e-commerce and wholesale demand.
In a perfect 21st century world, internal alignment between the marketers, product team, warehouse managers, and financial planners would be powered by a clairvoyance into the customer minds, seeing into their shopping demands on a daily, monthly, and seasonal basis. Black swan events, like the one we are currently experiencing, would be already modeled in, with inventory costs and warehouse space consolidated to free up cash for other purposes. The retail cycle would be profitable due to a synchronicity between departments and customer demand, letting the organization
Well, since we don’t live in that idyllic world, brands and vendors/manufacturers alike have had to invest significant time and energy into the field of merchandise planning. For smaller companies, this can be handled in-house and done with the very rudimentary toolset of a notepad and Excel, and for smaller companies, that’s sometimes all they need. But as these brands expand and add variety to their product offerings, their customer base and inventory count expands as well, creating a two headed problem: How do they meet the demands of the consumers without overextending their inventory needs?
Many times that means looking far into the future. Flexible tools are needed to handle a data set that will include new variables, like color variations or sizing, but also be able to generate forecasts that see months if not years into the future. Building proprietary solutions can be helpful as a short-term solution, allowing an organization to get a temporary head start on their next year of planning. But there are more problems that are created there, particularly when the company adds a new SKU, variation, or dimension, updating the proprietary software can be more than just a challenge; it can be outright impossible.
The combination of new dimensions, new SKUs, and customer data inevitably creates a difficult balancing act for most clients. Obviously, moving to a sophisticated solution as opposed to slower proprietary software is an important step in their merchandise planning evolution. While the accuracy of the data is a priority, writing and building the correct algorithms and scripts is just as essential to make sure every forecast, purchase, and allocation is as efficient as possible.
The team here at Promethean Analytics has always embraced a client first approach. Which is why we have harnessed the power of Oracle PBCS and its integration with Netsuite to create a merchandise planning solution. Teams already using PBCS and/or Netsuite can seamlessly integrate their data set into these cloud-native solutions with custom dashboards tailored to a customer’s specific requirements. And for customers who are looking to grow into or migrate to the PBCS or Netsuite platforms, we can build a custom solution from the ground up, ready to meet their specific needs. This allows customers to leverage the power of an intelligent, flexible data warehouse like Essbase, run the data through custom equations and algorithms in PBCS, and then pump out the results into Netsuite (or whatever EPS the customer prefers) for multiple teams to use. The data can be presented in a client friendly way and allow teams to do merchandise planning at a micro level with a degree of accuracy that ensures maximum profitability.
We focus on three primary areas:
Demand Forecast: Brands and manufacturers rely on projecting future demands in order to understand their inventory needs going forward. As such, creating an accurate Demand/Sales Forecast before a season or year begins to provide a guiding light and clear visibility into the future needs, preventing excess inventory roll outs, and keeping costs in check. Promethean specializes in multi-level merchandise and channel hierarchy forecasting with various degrees of granularity, ready to configure a solution that focuses on the right level of granularity, dependent on what the client needs.
Supply Plan: Figuring out demand is one thing. The next step, of purchasing, allocating, and replenishing inventory to meet this demand forecast, is just as crucial. Done correctly, this reduces stockouts and prevents excess inventory from accumulating, ensuring that budgetary expectations are met and can reduce financial pressures on the most fundamental levels. By leveraging the cloud powered potential of PBCS and its integration with NetSuite, purchase orders can be generated for raw materials or the products themselves to meet the customer demand, ensuring that the warehouse stays stocked for online and eventual storefront replenishment. Additionally, the whole team can have visibility into allocation and understand a customer’s buying patterns, with accurate predictions of when, where, and how much customers will purchase without doling out excess inventory to storefronts.
Events and Promotions: Not every sale is a big hit. But when it is, it can make a massive impact on in store and online inventory, creating the best type of problems: How can we capitalize on this momentum to sell more products? If we run the same sale again,will we achieve the same results? For merchandise planners, this means a new focus on both SKU and seasonality. Fortunately, Promethean offers a complete toolset that can add “what-if” functionalities, allowing clients to model out hypothetical situations based on previous performance, and from there, assess whether an event is worth the time and effort.
This is just a small bit of what we can do with merchandise planning. Feel free to reach out to the Promethean Analytics team if you want to learn more, and we’ll be happy to give you a demo. Talk to you soon!
Sr. Director, Promethean Analytics