Retail

How much added value can Openbravo Advanced Planning give me?

Recently, I had the pleasure to talk about the benefits of advanced planning to one of Openbravo’s long-term customers Halsteds, in Harare, Zimbabwe. The initial purpose was to introduce the Advanced Warehouse Management functionality and also touch upon the other components of the Openbravo Supply Chain Suite , one of which is the Advanced Planning functionality in Openbravo.

The specific case is a retailer and distributor of building and home supplies with approximately 16,000 SKUs in the DC and on average 10,000 SKUS in their seven outlets in the country. Consolidating this, the planner oversees approximately 90,000 SKUs and ensures the right stock on the right moment in the right quantity.

Clearly, the use of the word ‘ensures’ is wishful thinking as it is impossible to oversee 90,000 SKUs without computerized help. Not even 10% of that number can be overseen in a dynamic market like retail. Fast-changing assortments, seasonable demand with different seasons for different types of product, and omnichannel sales and returns create a level of complexity that is impossible to manage manually.

advanced planning1The Openbravo Advanced Planning functionality provides a solution. Where Openbravo transacts over an omnichannel retail environment with advanced front- and back-end functionalities, the Advanced Planning module calculates the following numbers for every single SKU/outlet:

  1. What is the expected demand given sales history patterns and ignoring outliers?
  2. What is the most optimum inventory level for this specific SKU/outlet?
  3. In case it needs replenishment, what is the optimum source, date and quantity? And what alternatives do I have in the case that the source does not have the capacity to fulfill my demand?

Once this calculation is finished, the results are presented in a traffic-light format that allows the planner to focus on those SKUs or pending orders that really need attention. This presentation stage is not trivial: it is the concluding step of a Manage-by-Exception philosophy that allows a single planner to ensure – yes, ensure! – the right quantity of the right product in the right outlet on the right time.

But  the calculated results cannot allways go directly into the Openbravo transactional system. What if Marketing decides to fade in or fade out product? Or if a campaign is planned for the south of the country for a specific product category? The reply is simple: even though the calculated output can be reviewed and adjusted per specific SKU/Outlet, it can also be reviewed and adjusted by complete dimensions like region, product category or sales/account managers, making it extremely agile to increase or decrease the expected demand and/or inventory levels.

So let’s try to answer the question posed in title of this blogpost ‘How much added value can Advanced Planning give me?’ Of course, the answer depends on several factors, with the most relevant being the current situation of your company in terms of planning, inventory management and warehousing.

But without doubt, the ROI obtainable from using Advanced Planning and/or Advanced Warehouse will easily convince the decision makers in your company. There are top-line benefits from the increased sales obtained by avoiding stock-outs or obsolete inventory. And that adds to the benefits when you can reduce your excess inventory and re-distribute it to outlets with insufficient stock.

But bear in mind that you need proper and accurate inventory data and pending orders. For that reason, the optimum sequence is to first ‘get the house under control’ with Openbravo’s Advanced Warehousing and then follow it with Advanced Planning. After all, unreliable data going in will only return alphabetically ordered unreliable data!

To learn more about Openbravo Advanced Planning and see a demonstration, watch our webinar Demo for Retailers: Demand Forecasting & Inventory Planning-Openbravo & frePPLe

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