Normally these newsletters focus on wisdom we've gleaned with respect to supply chain planning, specifically as it relates to flowcasting. This month's is going to be a little different. It's time for a celebration and to recognize a first in retail!
We'd like to congratulate our client, Princess Auto Limited (PAL), on their successful rollout and implementation of the Flowcasting process and philosophy.
For those of you who don't know PAL, they are a growing Canadian hard goods retailer with stores from coast to coast, supported by a multi-tier distribution network that flows product from all over the world into their consumer's hands.
I remember getting a call from one of the Vice Presidents, Tammy and she said, “Hey I read the Flowcasting book you guys wrote and I really like the idea and concept”. So, I replied, “Great Tammy, I really like it too!”. And so it began.
Just recently they completed the initial implementation and are completely managing the flow of product using the Flowcasting approach and solution.
As originators of the concept, co-authors of the book and retail focused implementers, we could not be more proud of their efforts and achievements. Here's what they have accomplished:
They are managing the entire supply chain from a forecast of consumer demand, by item, by store (and web store). The forecasting process and solution is elegant, simple and intuitive and is not fraught with unnecessary complication.
The consumer demand forecast accounts for a number of different selling situations and demand patterns, including:
- Regular selling products that sell all year round
- Seasonal and highly seasonal products
- Products on promotions
- slow sellers and very slow sellers
- One time buy products that are purchased and sold during a very short time period or when the inventory is available
As an organization when it comes to demand planning they have shifted their thinking and everyone, including the Demand Planners and the Merchandisers, is speaking the same language – “what we think we will sell”.
They use the consumer demand forecast to calculate a series of integrated, time-phased plans (for a 52-week planning horizon) from the store to the supplier factory adhering, like heroes, to the mantra “never forecast what you can calculate”.
The projections of product purchases are shared with their merchandise vendors in the form of a supplier schedule so the vendors have visibility to see future requirements and plan accordingly. The vendors are beginning to use these projections to plan raw materials and production and are adhering to the concept of “silence is approval” – that is, if they see something in their schedule that looks odd, they contact their respective Analyst – otherwise, they are expected to supply.
Product transfers (from Stores to Distribution Centres) and purchase orders (from Vendors to Distribution Centres) are cut, automatically, at the agreed upon lead time between any two locations. Since all partners in the supply chain have visibility they are working to a single lead time between two nodes in the supply chain – even promotional requirements are automatically converted to an order at the same lead time as regular demand. In fact, their thinking has evolved to the point where they understand that, in retail, there really is no difference between a “regular” order and a “promotional order”.
The unit projections at all levels are automatically translated to different languages of the business:
- In dollars for finance to aid in budgeting and gaining control of the business
- In cube and weight for distribution, transportation and retail operations to provide volume projections and automatically convert the projections to capacity requirements
In terms of planning they are using the Flowcasting process and solution to greatly simplify and improve a number of common retail planning scenarios. These include:
- Product introductions
- Product discontinuations that phase out products, store by store, based on available inventory and the store specific consumer demand forecast
- New store openings to predict future dated sales and replenishment by product
- Promotions, including national and regional events
- Seasonal planning to ensure that residual seasonal carryover inventory is minimized
- Distribution Centre openings whereby future store requirements are mapped to the new DC in order to properly depict the ramp up demand on the new DC, while simultaneously showing the draw down demand on the older DC
They are managing their business to a single set of numbers and have created a dynamic model of the business – driven by the consumer!
I think you'd agree that's pretty impressive and, in my opinion, they deserve a round of applause and perhaps even a standing ovation for their accomplishments.
Folks, this is a first in retail supply chain planning and a first for Flowcasting. A retailer is managing their entire business using Flowcasting and is already beginning to see improvements in on-shelf availability, inventory performance and operational performance – not to mention starting to gain control of the business by connecting the business plan with the day-to-day operational plans.
To the folks at PAL and to the small, dedicated Flowcasting Team that we've worked with, I have only this to say….
Congratulations, and well done!!