assortment planning strategies

challenge of buyers understanding customers

failure to use the data they have

incentives that inhibit profitability

lead time differences example

product assortment deliberations (see product launch decisions) reliance on trust with suppliers

empowering a champion

empowering the shop floor

inventory issues at distribution centers

new focus on inventory accuracy metrics

senior management’s example setting

assortment allocation examples (see snack cake assortment planning; tire assortment planning)

complexities of SKU choices

conjoint analysis

data needed to forecast sales

estimation steps

forecasting assumptions

forecasting based on attributes

levels of

localizing assortments

logic behind carrying slow-moving SKUs

marginal return on incremental resources

modeling steps

operational level of planning

optimization steps

stockouts and

strategic level of planning

value in using a complex model

analysts’ focus on sales

assortment planning

causes of stockouts

inventory turns

partnering with suppliers

staffing levels setting practices

switch to sales-capture rate

assortment planning

late-adoption repercussions

localizing of assortments

metrics used to evaluate store performance

phantom products and stockouts problems

approaches used

assumptions

balancing forecasts, flexibility, and inventory

based on attributes

CPFR process

data needed

improving accuracy of (see launch forecast accuracy)

for a new product (see product launch decisions)

profits reclaimed by more accurate forecasts and better inventory

retailers’ unwillingness to invest in accurate forecasting

top-down versus bottom-up forecasting

at World

assortment planning

availability of data

buyers’ inability to be correct

CPFR process

labor expenses versus cost minimizers

logic behind carrying slow-moving SKUs

RFID applications

challenge of skepticism about promised improvements

cultural changes example (see Arrow Electronics)

failure to focus on changing people’s behavior when implementing new systems

failure to hire for analytical skill

failure to leverage the available information

getting over the tedium of analytics

hesitancy to use cross-functional collaboration

limits of tactical changes

possibility that broad organizational changes may be required

principles for tactical implementation (see tactical implementation of retail strategies)

structural changes that may be needed

top-down versus bottom-up forecasting

acknowledging existence of misaligned incentives

bad incentives’ impact on sales and profits

consequences of failure to recognize the value of reputation

contract-based solutions to incentive problems

distribution and supply chain incentives that inhibit profitability

hidden incentives in cost-plus contracts

identifying the root of a misalignment

information-based solutions to incentive problems

metrics use to reward desired behavior

misaligned incentives hurting business example

misalignment from unforeseen consequences of actions

overcoming goal incongruence

principal-agent theory (see principal-agent theory)

principles of

profit loss due to differing incentives

trust- or reputation-based solutions to incentive problems

information used to predict stock price

levels affect on retail valuation

relationship to a firm’s valuation

stock valuations based on inventory management

turns (see inventory turns)

understating of the relationship between inventory and sales

analyst’s focus on

data analysis

defined

metrics for

pooled model results

time trends and benchmarks

problems from clustering based on attributes

problems with using “average” stores as a predictor

referencing products from prior seasons

test sales data use

updating forecasts based on early sales

in calculation of cost of forecast errors

and consolidation used to clear out inventory

in determination of optimal buy quantity

inventory levels and

optimization

optimization using price testing

order point determination and

position in product lifecycle planning

rise in quantity of

taking into account to reduce forecast error

accommodation of variation in demand

cost of customization

customization process

decouple point

lead time components

mass production supply chain

offering of product versions

process for setting the custom lead time

reductions in lead times

sales losses due to inventory management

small quantity production efficiencies

enforceability as a contractible element

observability as a contractible element

principle that incentive design requires an understanding of operations

principle that incentives exist to influence behavior

principle that there are underlying causes for incentive misalignment

uncontractible defined

verifiability as a contractible element

actual versus forecast demand calculations

cost of forecast errors

cutting the cost of errors

determining an initial buy amount

early sales used to improve accuracy

financial evaluation of different strategies

finding an optimal hedge

forecast deliberations

gamma distribution used to find optimal buy quantities

marginal profitability analysis to find optimal buy quantities

order lead time considerations

replenishment decisions (see stockouts)

revising data based on reduced lead time

summary

updated forecasts used for a second buy decision

categories of

forecasting sales

launch forecast accuracy improvement (see launch forecast accuracy)

life stages of a product

markdown optimization

markdown optimization using price testing

markdowns and consolidation used to clear out inventory

new product launch decisions (see product launch decisions)

summary

adopting an investor’s perspective (see retail valuation)

aggregate demand uncertainty versus mix uncertainty

assessing inventory levels (see inventory turns)

buyers’ inability to be correct

complexities of buying decisions

current state of the sector

discrepancy between what retailers stock and what customers want

excess inventory problem for retailers

fixed costs issues

lifecycle of

operational execution improvement focus

predictions for in light of current economic crisis

product availability attention importance

profits reclaimed by more accurate forecasts and better inventory

strategies implementation (see implementing retail strategies)

technological risk in (see technology and retailing)

inventory information used to predict stock price

inventory levels affect on

inventory levels’ relationship to a firm’s valuation

inventory turns (see inventory turns)

steps for managers to take

stock valuations based on inventory management

understating of the relationship between inventory and sales

applications inside retailing

applications outside retailing

cost and frequency availability issues

current limits to compelling financial returns

indications of a decrease in stockouts with use

passive versus active tags

pilot studies in retailing

recommendations for

serial numbers and

viewed as an investment or as a call option

benefits of localization

computing estimates of demand

estimating demand for flavors not offered

estimating likelihood of substitution

finding an optimal assortment

sales data

achieving balance between overand under-investment

cheapest ways to increase quantity of store labor

considerations for setting staffing levels

diminishing returns from increased staffing

example process at Best Buy

identifying metrics for

evaluating store performance

labor expenses versus cost minimizers

link between revenue results and staff quantity and quality

payroll and

providing training to improve the customers’ experience

sales increases per dollar of payroll

applying Toyota Production System to a retail store (see Toyota Production System)

assortment planning and

best practices for inventory control

causes of at Best Buy

causes of inventory discrepancies

challenge of accurately tracking inventory

customers’ response to

determining an optimal order point

finding the trade-off between carrying costs and lost sales

phantom products and

reducing with the right assortment (see assortment planning)

stocking related to sales

system application results example

tracking with RFID

applying Toyota Production System to a retail store (see Toyota Production System)

associates’ knowledge related to customer satisfaction

best practices for inventory control

causes of inventory discrepancies

challenge of accurately tracking inventory

managerial metrics’ impact on sales

staffing levels and (see staffing levels impact on sales)

stocking’s relation to sales

survey questions asked of customers

contractible elements of the relationship

goal alignment through incentives (see incentives for goal alignment)

partnering with for better inventory control

reliance on trust with

balancing forecasts, flexibility, and inventory

company examples (see World; Zara)

cost of flexibility

CPFR

decouple point used to enable

Destination Maternity’s process

inflexible chain example (see National Bicycle)

lead time differences example

lead-time mapping

need for trust in the chain

partnering with suppliers

push and pull boundary

tendency to accept savings over flexibility

unwillingness to invest in accurate forecasting

achieve buy-in from users at all levels

aim for quick wins

quantify the benefits

start with a mundane task

factoring costs and benefits of implementation

importance of integrating technology with operations

late-adopter risks

optimization complications

recommendations

reliance on for inventory management

requirement to understand key details

retailers’ failure to use the data they have

RFID (see RFID)

stages of technology integration

treating adoption as an investment or as a call option

benefits of localization

brand-warranty combinations

estimating substitution frequency

finding the optimal assortment

resulting revenue increase

engagement of people in problem solving

managing inventory to reduce “phantom products,”

statistical process control charts used to track inventory

customer service and

focus on inventory turns

pilot study of RFID technology use

company background

empowerment through design teams

forecasting and inventory planning

integration of design, merchandising, and production

lead times

production steps allowing flexibility

program of having suppliers hold fabric

sales and nonsales data collection

success from flexibility

company background

customer engagement practices

empowerment through design teams

integration of design, merchandising, and production

lead times

production steps allowing flexibility

response to market signals

sales and nonsales data collection

success from flexibility