RESHAPING MERCHANDISE

STRATEGY AND PLANNING

Eduardo Smaniotto

Senior Buying & Logistics Director

Company and Market Overview

The Importance of Planning in the Industry

Catalyst for Change

Technology as an Essential Component

The Implementation

Before and After

Warehouse Management System

Key Recommendations / Lessons Learned

Next Steps and Expectations

SUMMARY

MERCHANDISE STRATEGY & PLANNING IN FOOTWEAR RETAIL IN BRAZIL

MERCHANDISE STRATEGY & PLANNING IN FOOTWEAR RETAIL IN BRAZIL

MERCHANDISE STRATEGY & PLANNING IN FOOTWEAR RETAIL IN BRAZIL

MERCHANDISE STRATEGY & PLANNING IN FOOTWEAR RETAIL AS IT SHOULD BE

MERCHANDISE STRATEGY & PLANNING IN FOOTWEAR RETAIL AS IT SHOULD BE

MERCHANDISE STRATEGY & PLANNING IN FOOTWEAR RETAIL AS IT SHOULD BE

Sourcing Imported Domestic

Product Available Needs to develop

Volume Small orders possible Need big orders

Weeks Supply OH

18 wks average, targeting 13-15

12 wks average

THE IMPORTANCE OF PLANNING IN THE INDUSTRY

WHAT IS MERCHANDISE PLANNING?

Merchandise Planning is a systematic approach aimed at maximizing return on investment, through planning sales and inventory. It does this by maximizing sales potential and minimizing losses from markdowns and out of stocks.

Tech Trader Magazine, June, 2010

CATALYST FOR CHANGE

Structure to support growth - lack of visibility Need one number of the truth to drive the business Logistics, buying and financials- wasted time debating the number, miss efficiencies No standard on reporting People driven process – personified style Create stability in the business with planning

Information intensive industry

Low margins

Optimization of time, space and product

Release capital investment- holding more stock than you can

afford for fear of out of stock

Analytical approach to promotions to take the discount at the

right time to maximize the margins

TECHNOLOGY AS AN ESSENTIAL COMPONENT

Complexity:

4 different store brands

7 departments

52 categories

132 sub-categories

89,000 SKUs

Why Oracle?

TECHNOLOGY AS AN ESSENTIAL COMPONENT

WHY ORACLE?

Source: Gartner (August 2015)

THE IMPLEMENTATION

Top Executive Sponsor

IT Project Manager

Logic - Oracle Partner

HR

Business Project

Manager

Figure: Evolution Project Team Structure

DO NOT CUSTOMIZE!!

SHIPPING AS IS CANOAS

PROCESS MAPPING AS IS…

PROCESS MAPPING TO BE…

SHIPPING TO BE - ORWMS

BEFORE & AFTER MERCHANDISE FINANCIAL PLANNING (MFP)

BeforeNo ONE NUMBER

Individual Spreadsheets

Endless meetings

High Inventory levels - no future vision

No weekly control on purchases

Buyers holding merchandise power

AfterONE NUMBER

Standard on reporting and planning

Weekly meetings by departments

25% inventory reduction with weekly

projected inventory levels

Weekly OTB management

Planners on structure equivalent as

Warehouse Management System

• Replaced solution homemade

• Too much customization in existing tool

• Move toward integrated solutions for Warehouse

and Planning

• Project connects 2 warehouses in different

locations

• Stock levels in WH have not changed much

• Inventory accuracy achieved

• Reduced losses in warehouses by 1/3

• Last warehouse implementation done by Paqueta

• Now 100% “vanilla”

• Well trained team by the partner

KEY RECOMMENDATIONS

Process: map out the right processes completely before you start technology

implementation

Vanilla: do not customize, trust the best practices build into the solution

Mission: align all lines of business toward a common goal

Communication: involve your HR department to ensure consistent and constant

communication

Talent: hire a partner who will transfer information and set you up for future success,

align the right talent with help from HR

SO...

Merchandise Financial Planning fully implemented and integrated within the company process

Warehouse Management System implemented in two warehouses.

Assortment Planning and Clearance Optimization Engine just implemented and being adjusted

Looking into other modules (2-3 year horizon)

NEXT STEPS...

improve margin and sell through. No further reduction on inventory.

Sell thru:

2014 – 71%

2015 – 76%

2016 – 80%

2016 target