the evolution of merchandising

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


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

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ata

Lega

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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


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


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


the evolution of merchandising

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