Basic Merchandise Planning

We don’t mean to upset anyone by calling their planning activities ‘basic’; at least you have a planning process.  It’s alarming how many retailers have no structured planning process in place at all.  Not even the back of a cigarette packet or napkin. Nothing.  Zip.  Nada.  Zilch.

So the presence of any planning process at all is a plus, lets be clear about that.

This is the most common scenario of planning that we come across:

• Planning is totally product focused (i.e. no store consideration beyond a high level comp assessment)
• Stops at class or sub-class, with maybe some key items being planned
• Normally at month level (although in Europe this is often at week level)
• A fairly basic set of KPI’s including; sales, inventory, markdowns, receipts, turns, GMROI (although the receipts are manually planned rather than optimized)
• Frequently contained in 1 monster spreadsheet, with hundreds of links to other spreadsheets that regularly break, and a format that can’t easily be changed or the world will fall apart
  • As an aside, we are keeping a list of the names of spreadsheets our customers used to use before we came on the scene.  These currently include; “The Beast”, “The Monster”, and “The Crazy Sheet”!  Please feel free to email your favorites into info@maplelake.com
• Reliant on 1 very clever person, who spends at least 50% of their time just keeping the spreadsheet alive, rather than analyzing business performance or planning.

Keeping this process alive is hard enough to do, so it’s no wonder that most companies struggle to go further.  In many cases, the main driver of this mode of planning is to provide and manage an overall open to buy figure for the buyers to work to.  Really, if we are being honest, it’s about controlling the core metrics of the business, and not about optimizing the opportunities.

But hey, that’s OK.  This is all that some companies want and need, and that’s fine by us.  Running a monthly open to buy to control receipts and keep the store inventories in check is pretty much a full time job in anyone’s book.

In a basic merchandise planning process, the main driver for a new system is really to rid themselves of the administrative nightmare that goes with keeping the spreadsheets alive.  However, by moving to a structured system there are often (it depends on which system you select) a number of advantages that you gain, even keeping the overall scope the same.

• Available Data
  • Instant availability of appropriate and valid history, actuals and on-order, automatically ready for use on a Monday morning
• Compare and Reconcile
  • It should be easy to get a snapshot of what each of the departments as planning vs an overall divisional target
• Valid Data
  • Most systems have global calculations that are set during implementations, so everyone knows that the GMROI calculation is the same everywhere and meets the company definition
• Slicing and Dicing
  • The ability to examine and plan information from different perspectives and often at different levels, relieving the PivotTable web of devastation

We could go on, but we’re sure you get the point.  If you are looking for ways to justify investing in a system like this, then head to our benefits page where we can help you build a cost/benefits case.