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 having 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. PLM\Description User Defined ERP Fields Item No (Unique ID) Lead Time Available to Ship Vendor ID Weeks of Supply Production On Order Qty Item Description Sales Curve % Production Order ETA Date Color Description Production Availability Ship Qty Size Description Buy Assumption Ship Qty Date Item Cost Comments Style Grade SKU Grade 2 Typing keywords in any search box instantly 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: Min Presentation Qty Max Presentation Qty Valid Store Sales Qualifier Valid Store On Hand Qualifier POS Fields Calculated Fields Basis for Forecasted Sales Age Sales by Week/Month Sales Curve Store Count Beg. Of Period On Hand Average Weekly Sales YTD Sales End of Period On Hand User Defined Time Range Last Week Sales Recommended Buy Qty using Sales Curve Last 4 Weeks Sales % Complete User Defined Time Range Last 13 Weeks Sales % Forward Coverage flat sales Store On Hand Average Weekly Sales User Defined Average Store On Order # Weeks On Hand Weekly Sales Store In Transit Buy Cost Dollars Store In Warehouse Retail Forecast Difference
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 provided. 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. User Overrides System Sales Estimate System Generated Sales 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 required 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 accuracy. 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 immediate 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. 39 th Street New York, NY 10018 TEL: 212.938.1991 e-mail: info@ers-c.com twitter: @enhancedretail www.enhancedretailsollutions.com All text, images and logos copyright 2016 Enhanced Retail Solutions LLC