Collaborate with Assortment Planning Best Practices

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1 Collaborate with Assortment Planning Best Practices Bill Keith Vice President Merchandise Support

2 Agenda I. Introduction II. III. IV. Opportunities for Improvement in the Collaborative Planning Process Collaborative Assortment Planning Best Practices Critical Success Factors V. Q&A

3 Assortment Planning Business Process Flow Merchandise Performance Analysis Merchandise & Store Planning Assortment Planning Merchandise Ordering Merchandise Allocation

4 Business Process Improvement Opportunities Internal plans and processes must be aligned and optimized within the 4 walls in order to collaborate effectively with trading partners Limited internal collaboration: Assortment planning/buying process is disconnected from strategic objectives Plans developed in a silo environment, Excel driven Limited summarization & analysis capabilities Difficulty reconciling plans to corporate objectives and financial plans Stop and start process from financial planning through order placement Lack of effective communication venue for internal & external collaboration Manually planning & distributing inventory at store-level to exploit unique consumer patterns is not feasible Highly manual, error-prone and time consuming processes for assortment planning and collaboration

5 Belk Planning Vision Effective top-down planning, clustering, & SKU productivity optimization Streamlined internal collaboration and standardized processes Management visibility and validation of organization wide planning information, historical performance, forecasts Earlier and more productive discussion of validated plans between trading partners Focus during market is on product and opportunities

6 Assortment Planning Solution Web-based based assortment planning tool CAD sketches Integrated with line plan Summary reporting Account/Division/Season Door/cluster Classification Group Inventory Optimization SKU Productivity Production Sales Reconciliation Automated Order Creation (EDI)

7 Collaborative Planning Best Practices: Pre-Market Collaborative Process Buyer Creates Financial & Class/Unit Plans Vendor Creates Linesheets Buyer Uploads Financial & Unit Plans Vendor Creates Master Assortments Buyer & AE Collaborate on Financial & Unit Plans Vendor Process Retailer Process AE Creates Asst Plans on Based on Buyer s Unit Plans Buyer & AE Review Asst Plans, Run Summaries Management Reviews Asst Plans, Runs Summaries Buyer translates financial plans into optimized unit plans based on historical performance Buyer and AE share financial targets, clustering, & unit plans pre-market AE develops recommended assortment plans Style/Color/Size by door Vendor shares recommended assortment plans & product images via 7thOnline Buyer runs pre-market summaries and analysis (quantitative & visual) to understand parameters of suggested assortments, provides feedback

8 Worksheet Dillard s Inc.

9

10 Collaborative Process Vendor Process Retailer Process Collaborative Planning Best Practices: Market Buyer & AE Meet in Market Adjust The Buy Buyer and AE come to market on the same page View product, adjust plans on system as needed Buyer & AE Review Asst Plans, Run Summaries Management Reviews Asst Plans, Runs Summaries Vendor Compares Demand vs. Production Schedule Run summaries and analysis (visual and quantitative) to analyze assortments, location by location, to ensure that assortments are aligned with strategic and financial targets Management has visibility into plans during market from any location, making it possible to analyze and approve orders during market

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12 Collaborative Planning Best Practices: Post-Market Collaborative Process Vendor Process Retailer Process Finalize The Buy Orders sent via EDI to Retailer & Vendor Vendor Reviews Demand Data Against Supply Order are placed either in market or shortly after Can analyze plans both visually and quantitatively from any location via web browser Order flows seamlessly via EDI into order management system, no need for manual re-entry

13 Collaborative Planning Best Practices: Retailer Benefits Better internal collaboration and streamlined processes drive more accurate plans, increasing effectiveness of external collaboration on Cross organizational access and visibility, 365, 24/7 Corporate objectives immersed in collaborative process Actionable data for more effective decision making 1 version of the truth : All involved parties access real-time product information and plans Pre-market collaboration empowers buyers to focus on product during market Collaboration offers both visual and quantitative assortment planning Style/Color/Size by store Eliminates much of the clerical activity involved in ordering Improved planning, better product assortments on the selling floor, and ultimately higher sales

14 Collaborative Planning Best Practices: Vendor Benefits Earlier, better aggregation of and visibility into demand data Enables meaningful dialogue between merchants and vendor prior to market by providing clustering information, classification plans, units and dollars Higher out of the box shippable Production can be reconciled to demand 2-3 weeks earlier Additional revenue opportunities can be identified and acted upon Less excess inventory liquidation Improved customer service levels Single view of the truth: Real-time buying activity is visible to vendor and retailer management at various levels of detail Orders received 1 4 weeks earlier

15 Success Factors Business Discovery meeting is essential Develop a front end agreement Establish goals and objectives Involve responsible business functions: MIO, Merchant Executive, Sales Executive Define resource involvement and commitments, e.g. Senior IT executive sponsor Establish ground rules for resolution Share proposed timeline

16 Success Factors Industry standards minimize cost and complexity Executive Sponsor drives business results Mutually defined measurements are essential Frequent milestone meetings Engage both organizations at all levels Anticipate the bumps Don t underestimate change management

17 Questions

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