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The Evolution of the Merchandising Processes at
Woolworths, SA
Noelene De Villiers
Agenda
• Woolworths, South Africa• Relationship with i2• Merchandising History• The Next Wave• Questions
Woolworths, SA• South Africa’s leading retail brand • Wide range of products including food, clothing, beauty,
homeware and more • Excellent quality and outstanding value • Own brand name• Revenue 2006/7 R18.6 billion, operating profit R1.8 billion• 349 Stores (average footage per store – 1,450m2)
– 200 corporate– 149 franchise (SA, Africa & Middle East)
Woolworths, SA• Majority of product (90%) is private label i.e. Woolies brand• 2 Business units where merchandising process is applicable
(i.e. i2 product suite used)– Clothing– General Merchandise (Home, Beauty & Digital)
• Fast/Fashion product (50% of turnover) vs Replenishment (RPL) product (50% of turnover)– Organisation structure split across these product types– Planning processes split across these product types– OTB management focused on Fast product only
Woolworths, SA• Corporate vs Franchise Stores
– Centrally plan for and allocate to corporate stores– Franchise stores select and purchase fast product
• Currently 2 Tier Supply Chain with primarily Cross Dock Model
Agenda
• Woolworths, South Africa• Relationship with i2• Merchandising History• The Next Wave• Questions
Relationship with i2• Started when i2 bought Merchandise Planner (MP) in
2000 (initially built in-house in 1992 & bought by IBM in 1996)
• Key i2 user group members• In 2003, software selection process for forecasting and
replenishment solution – i2 selected (i.e. Demand Planner & Replenishment Planner)
• In 2004/2005 co-developed a master data management solution to maintain product parameters for replenishment
Relationship with i2• Recently investigated a Assortment Planning solution –
again i2 was selected• Longstanding relationship underpinned by trust, regular
contact and mutual benefit
Event Management
StoreGrading
SalesForecasting
SeasonalProfiling
ParameterMaintenance
DataServices
Shared Process
Options Plan
Inventory Levels Management
Disaggregation
i2 Retail Reference Process
Rul
esD
ata
Lega
cySe
rvic
esU
IR
etai
l Dat
a M
odel
Enterprise Message Bus / ETL / JMS
Inpu
t Sta
ging
Out
put S
tagi
ngErro
rN
et C
hang
e Master / Meta Data
… ……
ETL
…
…
MP RP
RABPP Server
…
BAMSGM
Transaction Data
Data …
Agenda
• Woolworths, South Africa• Relationship with i2• Merchandising History• The Next Wave• Questions
1990 2000 2007
Merchandise Planning (MP)
Store Sales Planning (MP)
Makoro Allocations (MA)
Attempted Range Planning (MP)
Model Stock Planning (MP)
Merchandise Plans revised Fast/RPL
Replenishment (DP, MDM, RP, MP)
Options Planning (MP)
Store Parallel Planning (MP)
Product Planning (MP)
RMS
Merchandising History
Replenishment Solution
Demand Planner (DP)- 4 month style/colour/store-12 month style/colour/national
Replenishment Planner (RP) -Two level supply chain (i.e. supplier to store)-Nightly 2 week run-Weekly 9 week run
Master Data Manager (MDM)
Merchandise Planner (MP)- 5 RPL specific plans
forecast
forecastIn
vent
ory p
lan
parameters
Lessons Learnt• Too much focus on RPL/Fast split in the product
planning process• Stores add value to the planning process• Stores need to be grouped on factors other than turnover• Space must be taken into account when planning ranges
and volumes sent to stores• Need to have an Assortment Plan that is integrated with
planning and order execution• Replenishment works
– Use Replenishment process for products for which its intended• Need to have people structures that support the process• Need to simplify!
Agenda
• Woolworths, South Africa• Relationship with i2• Merchandising History• The Next Wave• Questions
Integrated Planning and Execution
– Overhaul planning in its entirety– Main focus on an integrated, systemised assortment
planning solution• i.e. to integrate strategy with execution
– Enable replenishment (pull) or allocation (push) for all product types interchangeably
– Enable all supply chain models
Integrated Planning and Execution
– Address some of the other known shortcomings of our existing solution e.g.
• size profile quality, • demand curve quality (to remove the need for Historical
Substitution)• store grading with the incorporation of space and customer
profiles • take store space into account in planning• enable allocation in case/ratio packs
End in Mind Process
Set Design Direction
Financial Plans set by
Business
Group/Dept Strategies
Create Store Forecasts
i2 DP
Create Seasonal Profiles
i2 Profiler
Create Product Plans
i2 MP
Create Store Plans
i2 MP
Create Merchandise
Plans
i2 MP
Group Stores (Turnover, Space &
Customer)i2 SGM
Manage Store Space
TBC
Create Product
Forecasts
i2 DP
Manage Store Level Inventory
i2 SLIMMaintain Planning
Master Data
i2 MDM
Allocate / Replenish Product
i2 ARM
Reconcile Product &
Store Plans
i2 MP
Create Size Profiles
i2 Profiler
Create Options Plan
i2 MP
Create Assortment
Plans
i2 BAM
TBC
Product Development
QUEST
Maintain Master
Data/PO Creation
RMS
Procure Product (incl case packs)
i2 Size Buy
New i2 FootprintSystem Product Used for
Store Group Management (SGM)
All Grouping stores based on turnover, space and customer profile
Profiler All Seasonal Profiling used in generating forecastsSize Profiling (for buying and allocating/replenishing)
Buying & Assortment Management (BAM)
All Building the range, assorting to relevant locations and doing sales & receipt planning
Store Level Inventory Management (SLIM)
All Managing store model stocks (for the purpose of allocations)
Case Pack Optimisation & Size Buy
All Configuring case packs, calculating selling and stocking size curves and driving the buy quantity in case packs
Allocation and Replenishment Management (ARM)
All Interactive as well as batch calculation of store need i.e. allocating or replenishing to stores
Changes to currentSystem Used for
Merchandise Planner (MP)
Upgrade to OracleSimplified Merchandise PlanningOptions planning for all products
Demand Planner (DP)
Simplified and optimised forecasting using profiles and Variable Response Smoothing (VRS)Generating a store sub class forecast for Store Sales Planning
Replenishment Planner (RP)
Configuring to better use Supply Chain parameters and model a 3 level supply chain
Master Data Manager (MDM)*
Manage parameters for Fast as well as RPL product
Agenda
• Woolworths, South Africa• Relationship with i2• Merchandising History• The Next Wave• Questions