operational excellence through integration

“product design to delivery”

retail & sales planning
methodology overview

V.2.2
200809
team composition
a team of industry professional with relevant
hands-on experiences on the market

markets
Made in Italy Luxury Goods Automotive
Customer eXperience Mgmt
lines

Supply Chain Mgmt

Business Intelligence
Retail Management
our mission

increase our client’s performances

implementing

tools, methodologies,
services, and expertise
to increase customer loyalty and

to streamline sales & logistic activities.

what we do
ncrease efficiency and streamline activities of
“design to deliver”

supply
product retail business
chain CRM
design operation intelligence
mgmt

business process reegineering

leverage on the expertise already present in the company

sustain change management

design and implement business intelligence applications

project management during software implementation, web-based sw development

increase usage of existing sw application through user training and support

our methodology
Discover
• process owners & key players interview
• process & IT applications assessment
• gather business needs

Diagnose
• identify critical success factors
• organization
• operation
• finance

Design
• to be plan
• “gap” analysys
• implementation plan
• change management plan

Deliver
• implement plans
• project management
• time
• cost
 objectives
setting

lines of action

negative
signnals

actions

new products
launch

POS
segmentation

forecasting
supply chain management

replenishment

key perform.
indicators

key learning
points
 business objectives
service / volume
• increase POS sales forecasting
demand and a better execution of
assortment/castegory
management
• increase new products sales during
launch and post-launch period
• increase sales orders fill-rate and
respect of promised delivery date
• make a more reliable forecast of
demand through the usage of
advanced BI toolsi
organizaton / operations
• increase flexibility and readiness of entire
design to delivery process
• roles and responsiblities re-alignement
• re-fucus each resource on its core
competences
inventory / financials
• reduce new products stock-out
during early months of sales
• increase stock turnover controlling
and optimize inventory over the
entire supply chain
• sustain company growth with no or
minimum increase of inventory
• obsolete management

maximise
shopping
eXperience
lines of action
organization
realignment

streamline
POS segmentation
operations

As Is

budgeting & product

forecasting assortment
 negative signals
product sales &
purchasing production
assortment marketing

weak control of purchase orders driven sales forecast by

assortment sales forecast by sku business unit
by personal taste / gutt
• brand, feeling • no unfullfilled demand • country / sales channell
• area / country, analysis at POS • breakdown by product
• little or no usage of BI info, • unsctrucured awereness of
• shop / pos category using past sales
• stock turnover objectives new opening plans and data only
set at category level seasonality at POS

no product stock-out inventory level forecast

analysis stock turnover set by • by product category only
new products
financial objectives not • underestimate seasonality
by customer experience • little or no alignment with and new products launch
loosely defined sales & mktg
expectations
processes & procedures • understimation of product
needs to sustain
• no periodic assessment of distribuition network new products sales
assortment, growth forecast
low POs’ fill-rate and
• new shops opening, • production capacity limits
respect of delivery dates • underestimate
• new products launch sales forecast cannibalization
 indicated actions
sales & sales &
production marketing marketing logistics
(corp.) (local)
procurement plan segmentation & sales data quality
safety level definitions
• strategic raw materials assortment • correctdness
• central warehouse
• components and WIP • products • timeliness
• area warehouse
management • pos • shop warehouse
project management
engineering of new
• promotion
products new products global and local
• new shop / pos opening
• increase reusability of distribution plan
• creative briefing
existing components • launch strategies
• distribution strategies on
different sales channels demand forecast
actual production BI competence center
• capture unfilfilled demand
• keep promised quantities & at shop / pos
delivery dates • BI tools
• increase flexibility sales forecast • sales forecast at macro sustain and champion
• postponement consolidation level change
• control product quality
 segment product assortment
define key dimensions
• identify and agree on key dimensions of each business line and / or
product line
• assign and maintain key dimensions to each sku

definition of assortment cell

• all sku’s that have same values of their key dimensions

assortment cell is the basic tool to:

• be perceived as “different” (assortmentwise) by the final customer
• control and measure stock-outs
• forecast sales
• define product obsolescenze and manage “long tail”
 product assortment grid
Bracelets / Retail price: 1,000 – 5,000€
Steel Steel-Gold Gold-Steel Gold
Plain Sku1 Sku2 Sku3 Sku4
Sku5 Sku7 Sku8 Sku10
Sku6 Sku9
Semiprecious Sku11 Sku12 Sku14 Sku17
Sku13 Sku15 Sku18
Semiprec.-Prec. Sku20 Sku22 Sku24
Sku23 Sku25
Sku26
Precious Sku27 Sku30
Sku28 Sku31
Sku29 Sku32
Diamonds Sku33 Sku34 Sku35 Sku36
Sku37
Sku38
Rubies Sku39
Sku40
Emeralds Sku41
Zaffires Sku42
 new products launch process
As Is To Be
stand-alone shared

unstructured structured

reactive / late proactive / planned

1. product brief 4. sales meetings and sell-in orders

– agreed with sales / mktg / production – first update to purchasing and
– expected retail price band replenishment plan

2. collaborative forecasting 5. merchandise delivery to shops

– consensus based
• corporate and POS
• areas / sales channels managers
• marketing corporate & local
• production
6. early sales analisys
• logistics
– impact on existing products 7. second update to purchasing and
3. distribution plan replenishment plan
– expected service levels  safety stocks levels
– purchasing and replenishment plans
 shop and POS segmentation
shop segmentation
 strategic & brand image building  location
̶ flagship ̶ on street
̶ level 1 ̶ shop in shop
̶ level 2 ̶ shopping mall
̶ level 3 ̶ travel retail outlet

BU # 1 on street shop in shop shopping mall airport

flagship
BU # 2 fullstreet
on shop in shop shopping mall airport

marketing
level 1
flagship full full high1
BU # 3 on street shop in shop shopping mall airport
level 2
level 1 full full high2
high1 high2
flagship full
level 3 2
level high1 high2 high2
high2 full
level 1 high1 high2
level 3 2
level high2 low1 high2
low2 high1

level 3 low3 low3

forecasting cycle (top down approach)
sales forecast
by quarter by product category

sales forecast by sku responsible

monthly forecast by shop / sales channel by sku

sales /
agreement on sales forecast mktg
updates/changes at assortment cell level

definition of inventory levels CEO

safety stock levels by area / shop by month by sku

sales forecast approval

group-wide sales forecast logistics

acquisti
purchase plan by month by sku

distribution plan
delivery plan by warehouse by sku by month
 anticipate customer demand
safety stock levels defined taking into consideration product
typology and its seasonality
• Core (fast movers): no stock-outs expected
• Select (slow movers): no stock-outs expected on assortment cell

flexible purchase plan

• moving purchase plan
• scope of purchase plan equal to product lead-time
• flexibility bands vary according to production processes

flexibility 0% 20% 50% trend

band
month 1 month2 month 3 month 4 month 5 month 6 month 7 month 8 month 9 month 10 month 11 month 12

delivery plan
 replenishment – owned shops
each shops makes available daily sales and stock levels data

logistics calculates inventory gaps by shop by sku

logistics calculates the optimal distribution plan to:

• replenish shop filling the inventory gaps, and replenish the entire
supply chain if needed
• anticipate shop and product seasonality

replenishment frequency: based on sales forecast and distribution network

safety stock changes to
sales purchasing product on inventory
delivery plan levels sale delivery
forecast plan shelves gaps
definition plan
 key performance indicators
sales forecast variances vs. actual sales
expected vs. actual operation activities and costs

re-orders re-routing delays obsolete

 budget central warehouse  production  outlet

 forecast update   central warehouse  auctions
sales area warehouse  area warehouse  e-commerce
Production  new product  reverse logistic
 inventory levels launches intraarea
area warehouse
central interarea
area 
shop / POS shop
key learning points
“soft”
 get quick wins asap,
 top management sponsorship,
 increase and reward operations flexibity,
 align customer experience objectives with corporate and personal objectives,
 change management,
 right mix of data analysis and gutt feelings.

“hard”
 standardize, streamline and accelerate information flows,
 standardize, streamline and accelerate business processes,
 don’t stop to communicate and align:
 shops,
 key players,
 what’s going wrong and the relevant countermeasures,
 product shortages and action plan to minimize bad effect on customer experience.
thank you

Ing. Fabio O. Bernardini

Managing Partner
mobile +39 338 3497750
office +39 06 83398345
email: fabio.bernardini@e-xperience.it

founder of “Made in Italy & Luxury Goods” social network