Inventory Management Innovation: IT Improvements For Promotions Planning & Strategy
By Aptaris / July 2016Insights, Research
In North America, the loss from overstocks costs retailers $123.4 billion annually and out-of-stocks $129.5 billion, according to a recent study* by IHL Group.
Aptaris supported a national discount retailer with optimizing its marketing, merchandising and promotions processes. The retailer’s IT Department further enhanced its inventory management and merchandise planning systems by adding on to the Aptaris software. Here’s how they did it.
Marketing & Promotions Management
The retailer chose the Aptaris enterprise marketing and promotions management software for the ability to customize dashboards to access financial reports and historical information. The software connected merchandising, marketing and other departments, eliminating redundancy and manual labor, improving planning for thousands of promotional programs. In addition, the improved data integrity results in greater accountability and better cost management.
However, the national retailer recognized they needed additional support with merchandise planning and inventory management because there were gaps in the ability to forecast product orders and SKU quantities for key promotions.
To support annual promotional programs and campaigns, the amount of data and assets required for advertising inserts, in-store circulars, promotional signage, end-caps, and gondolas for weekly, seasonal and holiday sales is enormous.
Some of the challenges included:
- Data Integrity
Information was being extracted and merged using various spreadsheets and reports from different departments and outside resources.
- Decentralized Workflow
The teams relied on manual, error-prone processes that resulted in duplicate efforts and postponed the most current information.
- Delayed Decisions
Inability to accurately forecast merchandise planning and delayed buying decisions
The Director of Inventory Management said, “We were working with a primarily manual process, sharing Excel spreadsheets through email. This created lags in getting the most up-to-date reports and slowed decisions.”
To support the retailer’s promotional events with more accurate inventory, the IT Department enhanced the Aptaris software by adding historical sales and offer history functionality.
The IT Project Manager initiated the project by getting input from the Inventory Management and Merchandise Planning Teams first. He said, “It was important to get their wish list of functionalities to ensure the tool was adopted quickly and improved the process. That’s the reason we added features such as date stamping when changes are made, database access for daily feeds, and easy email notifications.”
The upgraded database allows the merchandise planning team to be included in the workflow. When an offer is being created or changes are being made to specific promotions, a new functionality notifies team members when they need to take action.
The advanced solution supports Inventory Management downstream in the workflow with maintenance of suppliers’ service level agreements and category management. The inventory team is alerted of changes or if promotional items are added or removed.
The software enhancement also facilitates Merchandise Planning upstream in the workflow with a new finance tab that can quickly roll up current stats and past events. This advanced feature provides a historical perspective and allows different forecast scenarios on the fly to support strategic planning and speed buying decisions.
With upgraded promotions software, the discount retailer’s teams have heightened responsive to customers’ shopping habits and seasonal spending. The teams can look at the database to review the sale items that resulted in the greatest lifts in past promotions and make decisions. They have more time and data at their fingertips to further refine their competitive advantage.
Significantly Improved Accuracy
What took several days, phone calls, and emails to confirm merchandise planning now takes only one business day. The Inventory Management Team estimates as much as 9-18 hours of reduced manual labor weekly due to improvements.
Using the Aptaris system as the centralized source for promotional data means accuracy for merchandise forecasting is now in the 90% range. After the first year with the new software enhancement, the retailer experienced a 24 basis points improvement for in-stock percentage during promotional events and an 8% reduction in store-level out of stocks.
“We have less do overs,” said the Director of Merchandise Planning. “This new tool lets the planning team focus on strategy, building annual plans, category management and forecasting throughout the year.”
The new inventory management solution:
- Centralizes promotions data
- Increases accuracy of inventory levels
- Lowers out of stocks
- Drives additional sales
Now, planning and executing promotions for the discount retailer is easier, more efficient and effective. The retailer is seeing results with greater productivity, bottom line savings and business growth.
* “Retailers suffer the high cost of overstocks and out-of-stocks” by Tom Ryan, RetailerWire, May 15, 2015