20080816 Design To Delivery V2.2 En

operational excellence through integration

“product design to delivery” retail & sales planning methodology overview V.2.2 200809

team composition a team of industry professional with relevant hands-on experiences on the market

markets Made in Italy Luxury Goods

lines

Customer eXperience Mgmt Supply Chain Mgmt Business Intelligence Retail Management

Automotive

our mission increase our client’s performances implementing

tools, methodologies, services, and expertise to increase customer loyalty and to streamline sales & logistic activities.

what we do ncrease efficiency and streamline activities of

“design to deliver”

product design

supply chain mgmt

retail operation

CRM

business intelligence

business process reegineering leverage on the expertise already present in the company sustain change management design and implement business intelligence applications project management during software implementation, web-based sw development increase usage of existing sw application through user training and support

our methodology Discover • process owners & key players interview • process & IT applications assessment • gather business needs

Diagnose • identify critical success factors • organization • operation • finance

Design • to be plan • “gap” analysys • implementation plan • change management plan

Deliver • implement plans • project management • time • cost

key learning points

key perform. indicators

replenishment

forecasting

POS segmentation

new products launch

actions

negative signnals

lines of action

objectives setting

supply chain management

business objectives organizaton / operations service / volume • increase POS sales forecasting demand and a better execution of assortment/castegory management • increase new products sales during launch and post-launch period • increase sales orders fill-rate and respect of promised delivery date • make a more reliable forecast of demand through the usage of advanced BI toolsi

• increase flexibility and readiness of entire design to delivery process • roles and responsiblities re-alignement • re-fucus each resource on its core competences

maximise shopping eXperience

inventory / financials • reduce new products stock-out during early months of sales • increase stock turnover controlling and optimize inventory over the entire supply chain • sustain company growth with no or minimum increase of inventory • obsolete management

lines of action organization realignment

streamline operations

POS segmentation

As Is

budgeting & forecasting

product assortment

negative signals product assortment weak control of assortment • brand, • area / country, • shop / pos

no product stock-out analysis loosely defined processes & procedures • no periodic assessment of assortment, • new shops opening, • new products launch

purchasing purchase orders driven by personal taste / gutt feeling • little or no usage of BI info, • stock turnover objectives set at category level

production

sales & marketing

sales forecast by sku

sales forecast by business unit

• no unfullfilled demand analysis at POS • unsctrucured awereness of new opening plans and seasonality at POS

• country / sales channell • breakdown by product category using past sales data only

inventory level forecast stock turnover set by financial objectives not by customer experience expectations

low POs’ fill-rate and respect of delivery dates

new products • little or no alignment with sales & mktg • understimation of product needs to sustain distribuition network growth • production capacity limits sales forecast

• by product category only • underestimate seasonality and new products launch

new products sales forecast • underestimate cannibalization

indicated actions production procurement plan • strategic raw materials • components and WIP management

engineering of new products • increase reusability of existing components

actual production • keep promised quantities & delivery dates • increase flexibility • postponement • control product quality

sales & marketing (corp.)

sales & marketing (local)

segmentation & assortment

sales data quality

• products • pos

• correctdness • timeliness

logistics safety level definitions • central warehouse • area warehouse • shop warehouse

project management new products • creative briefing • launch strategies • distribution strategies on different sales channels

sales forecast consolidation

• promotion • new shop / pos opening

demand forecast • capture unfilfilled demand at shop / pos • BI tools • sales forecast at macro level

global and local distribution plan

BI competence center

sustain and champion change

segment product assortment define key dimensions • identify and agree on key dimensions of each business line and / or product line • assign and maintain key dimensions to each sku

definition of assortment cell • all sku’s that have same values of their key dimensions

assortment cell is the basic tool to: • • • •

be perceived as “different” (assortmentwise) by the final customer control and measure stock-outs forecast sales define product obsolescenze and manage “long tail”

product assortment grid Bracelets / Retail price: 1,000 – 5,000€ Steel Plain Sku1 Sku5 Sku6 Semiprecious Sku11 Semiprec.-Prec.

Steel-Gold Sku2 Sku7 Sku12 Sku13 Sku20

Precious

Diamonds

Rubies Emeralds Zaffires

Sku33

Sku34

Gold-Steel Sku3 Sku8 Sku9 Sku14 Sku15 Sku22 Sku23 Sku27 Sku28 Sku29 Sku35

Gold Sku4 Sku10 Sku17 Sku18 Sku24 Sku25 Sku26 Sku30 Sku31 Sku32 Sku36 Sku37 Sku38 Sku39 Sku40 Sku41 Sku42

new products launch process As Is

To Be

stand-alone

shared

unstructured

structured

reactive / late

proactive / planned

1. product brief – agreed with sales / mktg / production – expected retail price band

2. collaborative forecasting – consensus based • • • • •

corporate areas / sales channels managers marketing corporate & local production logistics

– impact on existing products

3. distribution plan – expected service levels  safety stocks levels – purchasing and replenishment plans

4. sales meetings and sell-in orders – first update to purchasing and replenishment plan

5. merchandise delivery to shops and POS 6. early sales analisys 7. second update to purchasing and replenishment plan

shop and POS segmentation shop segmentation  strategic & brand image building ̶ flagship ̶ level 1 ̶ level 2 ̶ level 3 BU # 1

on street

level 3

shopping mall

fullstreet on shop in shop full full high1 on street shop in shop full full high2 high1 full high1 high1

high2 high2

high2

low1

airport

shopping mall

airport

shopping mall high2 high2 high2 high2 low2 low3

airport full high1 low3

marketing

flagship BU # 2 level 1 flagship BU # 3 level 2 level 1 flagship level 3 2 level level 1 level 3 2 level

shop in shop

 location ̶ on street ̶ shop in shop ̶ shopping mall ̶ travel retail outlet

forecasting cycle (top down approach) sales forecast by quarter by product category

sales forecast by sku

responsible

monthly forecast by shop / sales channel by sku

agreement on sales forecast updates/changes at assortment cell level

definition of inventory levels safety stock levels by area / shop by month by sku

sales forecast approval group-wide sales forecast

acquisti purchase plan by month by sku

distribution plan delivery plan by warehouse by sku by month

sales / mktg

CEO logistics

anticipate customer demand safety stock levels defined taking into consideration product typology and its seasonality • Core (fast movers): no stock-outs expected • Select (slow movers): no stock-outs expected on assortment cell

flexible purchase plan • moving purchase plan • scope of purchase plan equal to product lead-time • flexibility bands vary according to production processes

0%

flexibility band month 1

month2

delivery plan

20% month 3

month 4

month 5

trend

50% month 6

month 7

month 8

month 9

month 10 month 11 month 12

replenishment – owned shops each shops makes available daily sales and stock levels data

logistics calculates inventory gaps by shop by sku logistics calculates the optimal distribution plan to: • replenish shop filling the inventory gaps, and replenish the entire supply chain if needed • anticipate shop and product seasonality

replenishment frequency: based on sales forecast and distribution network delivery plan

sales forecast

safety stock levels definition

purchasing plan

product on shelves

sale

inventory gaps

changes to delivery plan

key performance indicators sales forecast variances vs. actual sales

expected vs. actual operation activities and costs

re-orders  budget  forecast update sales Production  inventory levels central area shop / POS

re-routing central warehouse

 area warehouse

area warehouse

 shop

delays

obsolete

 production  central warehouse  area warehouse  new product

 outlet  auctions  e-commerce  reverse logistic intraarea interarea

launches

key learning points “soft”      

get quick wins asap, top management sponsorship, increase and reward operations flexibity, align customer experience objectives with corporate and personal objectives, change management, right mix of data analysis and gutt feelings.

“hard”  standardize, streamline and accelerate information flows,  standardize, streamline and accelerate business processes,  don’t stop to communicate and align:    

shops, key players, what’s going wrong and the relevant countermeasures, product shortages and action plan to minimize bad effect on customer experience.

thank you Ing. Fabio O. Bernardini Managing Partner mobile +39 338 3497750 office +39 06 83398345 email: [email protected] founder of “Made in Italy & Luxury Goods” social network