Consumers are more empowered than ever to find exactly what they want, when they want it – all of which can wreak havoc on the bottom line if an organization isn’t prepared to make in-season planning adjustments.
Exception management, supported by a variety of business intelligence tools and reporting mechanisms, allows retailers to better navigate and react to variances in the plan. It is becoming highly sophisticated as businesses gain greater access to modern planning technologies and ever-more granular information about their customers’ lifestyles, buying behaviors and product preferences at the location level.
In a recent article, I discussed six strategies to help retailers better manage variances in their plan throughout a season and therefore avoid the costly pitfalls of having too much or too little stock on hand. Below is a summary of these six points:
- Holding inventory back. Retailers can circumvent variances in the plan by holding back a percentage of inventory in the DC from the start, while pushing the rest out to their stores and online channels.
- Prepacking. Store-level forecasts have an important role to play when optimizing prepack purchases. Of equal importance is determining the correct balance of prepacked and “loose” units in each planned receipt – the right combination offers greater flexibility when filling in missing sizes, colors, etc. as needed.
- Regular replenishment maintenance. Regular review of stock position for top-selling items throughout the season is crucial. In scenarios where stock outages are likely – or even unavoidable – retailers can strategically limit replenishment to protect stores with the greatest selling potential.
- Store-to-store transfers. Store-to-store transfers can be a very effective means of rebalancing inventory to meet shifting trends for items with sufficient profit margin. The key to this approach is weighing the proximity of stores with need against additional freight costs.
- Expanding product footprint. If slow-selling inventory, retailers may consider expanding the item’s footprint into locations that initially seemed to have less selling potential. Effectively doing so requires a thorough review of sales data, as well as customer insights, social media feeds and feedback from store managers to determine where inventory is most likely to drive up sales and profits.
- Vendor push/pull tactics. Businesses that realize a particular item is not selling fast enough and will result in markdowns at the end of the season may be able to partner with vendors to hold or even cancel subsequent deliveries at their facilities versus shipping as originally planned. Conversely, if demand for a particular item is higher than anticipated, retailers that identify this issue early on may want to consider changing the method of delivery or requesting an earlier ship date.
Technology is the underpinning to an advanced workflow that alerts retailers as soon as possible to exceptions in their merchandise plan. Read the full article here, and find out how JustEnough’s demand-driven suite of solutions offer the flexibility required to make in-season planning adjustments.