Demand Planning Booklet - Enhanced Retail Solutions

Forecasting Tools
Tools to more
accurately project
future needs by
integrating wholesale
inventory with a retail
sales forecast
Table of Contents
Introduction .......................................................................... 1
Rolling Forecast..................................................................... 2
Item Planner.......................................................................... 6
Visualizing Forecast Data ...................................................... 8
Integration........................................................................... 10
How Our Clients Use Our Tools........................................... 11
About Enhanced Retail Solutins .......................................... 12
Introduction
Navigating your business at retail with
hindsight reporting is like driving a car
by watching the rear view mirror. You
know very well where you’ve been,
but the road ahead is still paved with
uncertainty.
Enhanced
Retail
Solutions’ forecasting tools provide
the analytic insight you need to
predict the road ahead and pick the
best path to reach your destination, in
spite
of
constantly changing
circumstances. It’s like havi ng an
onboard navigation system.
This interactive tool does more than just help determine sales potential and
inventory requirements. It helps you organize and rationalize your sku’s. It lets you
“teach” the system how to automatically adjust the forecast based on events that
may affect performance (changing sales trend, new store openings, stores that are
above or below minimum presentation standards, etc). The Business Rules panel
lets you set the logic for these events which you can adjust at any time. Business
Rules and other parameters can be assigned by SKU or at user-defined category
levels.
They system combines
all the data points then
applies the business
rules and parameters to
more
accurately
estimate sales. The user
can also manually
adjust any period.
1
Rolling Forecast
Because we forecast thousands of SKU’s each week for our customers, we
understand how hard it is to review so many different statistics at one time.
That’s why our user interfaces have been designed to reduce manual data entry
and filter data on virtually any attribute.
Typi ng keywords in any search box
i ns tantly filters results.
Our forecasting tools integrate wholesale inventory and production on order
with point of sales data from your retail accounts. Our automated web service
transfers data seamlessly from your ERP system to the application. The data
fields and parameters used in the forecast include:
PLM\Description
Item No (Unique ID)
Vendor ID
Item Description
Color Description
Size Description
Item Cost
Style Grade
SKU Grade
User Defined
ERP Fields
Lead Time
Available to Ship
Weeks of Supply
Production On Order Qty
Sales Curve %
Production Order ETA Date
Production Availability Ship Qty
Buy Assumption
Ship Qty Date
Comments
Min Presentation Qty
Max Presentation Qty
Valid Store Sales Qualifier
Valid Store On Hand Qualifier
POS Fields
Age
Store Count
YTD Sales
Last Week Sales
Last 4 Weeks Sales
Last 13 Weeks Sales
Store On Hand
Store On Order
Store In Transit
Store In Warehouse
Calculated Fields
Basis for Forecasted Sales
Sales by Week/Month
Sales Curve
Beg. Of Period On Hand Average Weekly Sales
End of Period On Hand
User Defined Time Range
Recommended Buy Qty
using Sales Curve
% Complete
User Defined Time Range
% Forward Coverage
flat sales
Average Weekly Sales
User Defined Average
# Weeks On Hand
Weekly Sales
Buy Cost Dollars
Retail Forecast Difference
2
Rolling Forecast (continued)
The system includes several methodology options that users can select as the
basis for creating a forecast including sales curve, average weekly sales, userdefined time frames and others.
Recommended buys are based on what level of inventory is required at the
beginning of each period (calculated on hand). It compares the ending on hand
for the current period (beginning inventory – forecasted sales + on order) with the
calculated on hand for the beginning of the next period. If the Ending on hand for
the current period is greater, no buy is required. If it is less, the recommended buy
is the difference between the two. The forecast assumes recommended buys will
be placed unless the “Producti on Availability” flag is set to “N”, indicating no
production capacity (or lead time) prohibits the buy from being made. Retailers
who support a collaborative forecasting program may provide you with their sales
forecast. This can be integrated into the forecast and variations between the
retailer’s forecast and the system calculated forecast are provid ed. The forecast
output (below) presents the user which a clear and concise schedule that
integrates retail POS, wholesale inventory and the retailer’s forecast. The yellow
highlighted cells are recommended wholesale buys.
Forecasts can also be generated that omit store inventory, and plot wholesale
inventory against forecasted sales only. This shows you what your projected
inventory level at the end of each period.
3
Rolling Forecast (continued)
While the Rolling Forecast provides very detailed information about each SKU, it
also includes exception reports that quickly summarize the current inventory
position for each SKU (both store inventory and wholesale inventory), the
percentage over or under plan, date of the next recommended buy and a brief
recap of sales for the next 3 and 6 months and total year.
The sales report provides a simple recap of sales by week or month for each SKU
which can be fed into ERP systems.
Whether you manufacture basic or highly seasonal products, sales curves pinpoint
the selling patterns (peaks and lulls based on seasonality or promotion al activity)
of each item. Curves can be built specifically for a product or at category level.
Rolling Forecast (continued)
4
Rolling Forecast (continued)
Additionally, curves can be created and managed visually by dragging points on
the interactive line chart to represent the desired peaks and lulls that the
category’s seasonality represents.
The forecast is generated and worked through interactive web pages which can be
exported as Microsoft Excel or PDF documents. Multiple versions of a forecast can
be saved, creating an electronic copy with comments of any changes made over
time. It includes a recap of the parameters and current sales and inventory position
(both store and wholesale), forecasts, exception reports a nd a recap of estimated
sales. Using a sales curve, the total potential sales are derived by taking past sales
and dividing it by the percentage of business they represented. Once the total
potential is calculated, any point along the curve (week or month) can be
calculated.
The user also has the ability to make “manual” adjustments to estimated sales for
any period by either typing directly into a cell in the forecast or pre-defining
adjustments through the parameters console.
Us er Overri des System
Sa l es Estimate
Sys tem Generated
Sa l es Estimate
5
Item Planner
This is the must-have tool for planners who need to consistently monitor sales,
inventory and profitability of their retail programs. Plans are based on sales and
inventory history, seasonality, the promotional cadence and profitability
requirements Build a plan from scratch or use last year information as the basis
for a new plan. Then, track business week by week- watching for trends that
effect profitability and taking action to optimize performance. Any factor can be
changed- making it the perfect tool to review multiple “what-if” scenarios. Plans
can be set up at any level - SKU, style or category, then “rolled-up” to provide
summary information. It also helps determine the most efficient receipt flow.
Don’t rely on luck- Item Planner can help you assess risk on margin guarantees.
Using the tool you have a basis to see what the chances are of meeting the
guarantee without impacting your finances.
Item Planner uses history and forward looking parameters like the sales curve and
promotional activity to constantly update item potential.
6
Item Planner (continued)
The system shows what the net effect of profit will be based on seasonality, the
retailer’s promotional calendar and any additional “loads” (shrinkage, freight
charges, chargebacks, etc). Based on these factors, the user can see if the cost
structure will support the margin guarantee. The system will also calculate the
optimum cost- the cost at which the margin guarantee is met.
Most Buyers are required to submit an item plan to their management showing
what sales and profit will be generated from an item they buy. Not only can you
now assist in building that plan, but you can see before the first unit ships what
the full expectations are. This puts both parties on a more even playing field in
the management of the item. Item Planner provides several reports (in
Microsoft Excel) to help manage and track merchandise programs including:
This Year Plan vs. Last Year, Weekly and Cumulative Sell Through, This Year
Actual vs. This Year Plan and Last Year, and Receipt Planning.
7
Visualizing Forecast Data
Accurate forecasting requires great discipline and when working with hundreds
or thousands of SKU’s it can become a daunting task. That’s why we’ve set up a
system that significantly reduces the amount of time it takes for a planner to
catch trends and find the opportunities and liabilities that are buried deep inside
the data. Forecasts can be scheduled to automatically run in the background on
a weekly basis. Once run, the key values (sales estimates, recommended buys,
inventory position, etc.) can be integrated into ERS’ Retail Synthesis Business
Intelligence module. This enables the user to get customized interactive views
of their forecast using grids, pivot tables, comparison deltas, graphs, Google
Visualizations and dashboards. Using the filtering capability, exception reports
can be created and automatically emailed to users. This means users can spend
less time deriving and pouring over the forecast and more time focusing on
what action to take on the styles & SKU’s that need the most attention.
Integrate up to 9 different charts, grids, pivots, visualizations into a dashboard
than can be viewed online or automatically emailed as a PDF to a user group.
This provides an excellent place to start uncovering the state of your inventory
position and where opportunities and liabilities may exist.
8
Visualizing Forecast Data (continued)
Build exception reports to show just the SKU’s that need attention. This example
only shows items where the recommended buy is >0. Reports can look at
weekly, monthly, quarterly or annual periods. These reports can be scheduled
to run at specific intervals and automatically emailed to a user defined email
list.
Using the pivot option the user can track how forecasts changed over time. It
shows saved versions of a forecast side by side- an enormous aid in determining
forecasting accuracy.
9
Integration
One of the biggest challenges any company faces is integrating data from
different sources onto one platform from which business decisions can be
made. There is also complexity in that every retailer provides data in a different
manner. From our POS translation services to simple Microsoft Excel mappings,
getting data into our system is flexible and easy. For any r equired parameters,
templates are provided so the user can upload great masses of infor mation
quickly. Based on your IT infrastructure and organizational set up, we offer
different levels and methods of integration from manual to completely
automated to meet your specific needs.
Using our vast data processing experience from the last 10 years we have
recently re-innovated our state of the art translation and integration tools for
the web.
The diagram below visualizes the most commonly used model of our client basewhere POS EDI 852, wholesale inventory and PLM data all come together. ERS
picks up your POS 852 data from a designated mailbox provided by your EDI
VAN, FTP or AS2. Style level data (cross reference information) is transmitted
via FTP, AS2 or email. Wholesale Inventory data (a daily text file is generated
based on a schema we provide) is transmitted via FTP or AS2. Using this model
the process can be automated saving time and providing great accu racy. This
model can be applied over the web or deployed in-house.
10
How Our Clients Use Our Tools

A highly recognized hosiery brand uses our interactive forecast to manage
their inventory at SKU level to reduce the amount of significantly over or
under planned items. An exception report highlights those aberrations to
prioritize SKU’s that need immedia te action. They can also see the
changes in future needs based on whether production is available at any
given point in time.

A Cleaning Supply company uses our software to more accurately plan
wholesale inventory. Prior to our reporting their wholesale inventory
levels were higher than needed because the retailer’s reorder system was
not consistent and sell through data was not readily available.

Top Home Textiles Suppliers manage just in time inventory on both direct
import and indirect programs using our forecast software.

A major hosiery supplier uses our Projected In Stock application to
integrate retail POS data with their wholesale inventory to calculate
future inventory needs on replenishment programs. On a weekly basis it
compares the buyer’s original forecast against a revised estimate based
on actual trends. The software includes logic to understand timing of
future orders based on shipment options (sea, air, etc.). This has
significantly improved their inventory position and in stock % at retail,
which the buyer has rewarded with additional programs.

A top Women’s Sleepwear and Innerwear manufacturer uses our
software to better predict inventory needs, improve sell through’s and
decrease markdown payments on major national and private brand
programs. They constantly review ratios between sizes and colors to
optimize inventory.

A top Home Décor company uses our software to increase business at
mass, mid tier and specialty retailers. They have better predicted retail
needs than the retailers have and have become category manager at
many retailers because they manage the business so well.

A major Licensed Apparel manufacturer uses Item Planner for ladder
planning, tracking actual sales vs. forecast and last year to reduce
markdown payment exposure and validate the buyer’s plan.
11
About Enhanced Retail Solutions
Enhanced Retail Solutions provides Revolutionary Tools for retail business
analysis. Our software reads, and interprets, the data from Key Retailers. It arms
the user with information to make the confident inventory and merchandising
decisions which lead to improved sales, profit and efficiency.
ERS knows that in today’s market, Retailers demand more from Suppliers than
ever before. This includes significant participation in the analysis and
management of key programs. Smart suppliers know that more business comes
their way when they help the Buyer do their job. That’s what ERS is about.
ERS was founded by James Lewis, a former Buyer at one of the Nation’s largest
retail chains- JC Penney. His main experience lies in Home Furnishings, Men’s and
Children’s Apparel and Accessories. Ready to merge his Retail know-how with
advanced analytics, he formed the Company in 2002. Jim has been featured in
several articles in Playthings Magazine, Apparel Magazine and LDB Interior
Textiles Magazine and has been quoted as an expert in many general interest
publications such as The Washington Times.
Key customers include iRobot, Global Brand Group, JCPenney, Delta Galil,
Public Clothing, Evriholder, Britannica Home Fashions, Great China,
RadioShack, Mundi Westport Group, Itochu, Duraflame, Masterpieces Puzzle
Company, Topsvile, Paris Accessories, Duraflame, Hollander Home Fashions,
USAopoly, Richloom Home Fashions and Unger Global just to name a few.
ENHANCED RETAIL SOLUTIONS LLC
214 W. 39th Street
New York, NY 10018
TEL: 212.938.1991
e-ma il: [email protected]
twi tter: @enhancedretail
www.enhancedretailsollutions.com
Al l text, i ma ges a nd l ogos copyri ght 2016
Enha nced Reta i l Sol uti ons LLC