Merchandise Financial Planning is Critical to your Bottom Line

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In retail, it all starts with the plan. Senior management sets strategic merchandise and financial objectives—as Buying and Planning teams aim to meet them head-on. In today’s retail environment, these goals are increasingly complex as you consider multiple channels, macroeconomic and social influences.

Whether you are a traditional retailer or a digital native, merchandise financial planning is the strategic roadmap to which all other merchandising initiatives must align. Merchandise planning provides a systematic way of planning sales and inventory to maximize profitability. Today’s planning tools must support the omni-channel retail. Unfortunately, many merchandise planning solutions on the market today are quite mature and lack the functionality needed for today’s omni-channel retailer.

Current Planning Challenges

The current planning process at most retailers is overwhelming for several reasons:

  • Antiquated planning systems are often too complex and inflexible to be easily adapted for omnichannel, by product categories.
  • Most systems cannot scale to process large amounts of data, at all levels, quickly and efficiently.
  • Many legacy systems simply cannot integrate effectively with one another, making it difficult to access accurate data in a timely manner.
  • Many systems limit retailers to pre-season planning and do not afford the opportunity to adjust their plans in-season
  • What if and approval process are simply too rigid and manual for the dynamic planning process needed today

These are just a few reasons why legacy planning tools are inadequate for the job. As a result, planners end up exporting all of the information to Excel spreadsheets to do true planning work and reupload those plans back into the organization’s centralized planning tool. Sounds like a roundabout way of getting things done?

Benefit of an Enterprise Planning Solution

Instead, look for an enterprise merchandise planning tool that’s built for planning, not simply a destination data entry tool after the planning is done elsewhere. It should support collaborative planning and seamless information sharing with your planning and buying team. As planners work collaboratively with buyers, they can mix the art of the buy with the science of the plan.

Key Elements you Need

  1. Preseason planning capabilities that can help you set your strategic merchandise targets for sales, inventory and profit margin goals by product category by customer profile
  2. Ability to preserve multiple versions of your plans and collaborate top down and bottom up to plan and construct what-if scenarios to achieve your revenue goals
  3. Ensure plan integrity with approval process for reviewing and locking in committed plan versions
  4. Automatic and seamlessly integrated actual sales, forecasting, and inventory information to facilitate in-season analysis and planning
  5. Robust in-season Open to Buy planning and real time visibility into your buy plans to meet the changing needs of the business

Final thoughts: Leverage Your Data, Automatically

The world seems abundant in data, that’s a fact. But as a merchandise financial planner, numbers are your best friends. Without the proper numbers, you aren’t able to provide your buyers with the right budgets and forecasts to work with when selecting off-the-runaway products that they think will be a huge hit at your New York, Singapore, or Berlin stores.

Every retail channel will yield a return. Planning with the right data at hand will help you forecast your e-commerce, physical and wholesale channels, giving you the edge on making an impact with ‘blended retail’ strategies.

Using a variety of traditional planning tools in order to attempt the reconciliation of plans created by various departments is a process that could take months. Precious time you can’t afford.

Leverage technology to reduce lead time, plan with agility, and increase profits so you can optimize for future goals and grow holistically.

William Booth
William BoothContributor, Business Solution Architect at daVinci
Bill has over 30 years of experience in Merchandise and Assortment Planning, Allocation, Supply Chain and system implementation experience in retail. Prior to joining daVinci, Bill served in various senior executive roles at retailers including Gloria Jeans and Northern Group. His extensive buying and planning experience extends to Kinney Shoes, Walmart, and Footlocker.
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2020-09-29T09:34:42-04:00Categories: Blog|Tags: |
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