What opportunities and limitations does the transition from a traditional rigid planning system to a new flexible planning and fashion assortment management system conceal? In this article, Galina Kravchenko, a permanent expert on fashion trends and assortment management issues, talks about current assortment management technologies.
Director of the Assortment Department, Fashion Consulting Group, representative of the international online trend bureau FashionSnoops.com.
@ galina_kravchenko79, @fcgmedia
In the turbulent situation of the fashion market, the accuracy of sales forecasts is minimal and, as a result, problems arise with planning purchases. That is, already at the planning stage, the risks of excess balances are obvious if actual sales do not correspond to sales plans.
The hottest questions in procurement today are:
Both of these issues are resolved by the transition to a more flexible assortment planning and purchasing system by reducing the share of long-term order placement and increasing the share of operational assortment planning.
In buying practice, three assortment planning systems are used:
• Hard system - fixing plans and budgets for production / purchases for a full season (6 months) without the possibility of additional changes less than 5-6 months before the start of sales. That is, as planned, and should be purchased / produced;
• Flexible system - fractional order, in parts. Takes into account the possibility of making changes in the period less than 5 months before the start of sales in the assortment plan, production plans, purchase / production budget, etc. That is, they drew up a plan, but closer to the season they adjusted it and, with a positive dynamics of sales, made an additional purchase;
• System hybrid assortment planning implies the presence of a part of an order / assortment that is fixed for the season and a part of an order / assortment that changes less than 3-5 months before the start of sales.
In a situation of volatile demand, the risk of residuals can be reduced by combining the following methods:
In the realities of changing demand, a hybrid planning system is the safest, as it helps to optimize many performance indicators. Thus, the amount of investments and the period of freezing of working capital is reduced, and gross profit and balances are optimized. Buyers can make more accurate calculations of inventory purchases and model range selection.
Also, the hybrid scheduling system implies other possibilities for the retailer:
But not everything is as rosy as it might seem at first glance. This flexible assortment planning system has limitations:
How is it painless to switch to a hybrid scheduling system?
Solution for manufacturers and wholesalers:
Solution for retail buyers:
The transition to a hybrid, more flexible assortment planning and management system implies changes in business processes for both wholesale / manufacturing companies and retailers. First of all, this is a change in IT solutions (software, reports) for assortment management. It is important to quickly see statistics on the complete classifier of product characteristics in the context of all sales channels.
Further, assortment management techniques are also being improved, since hybrid planning implies an accurate identification of the reasons for the hit or failure of a certain article and understanding the risk criteria for a differentiated order for an article.
Manufacturers should be able to quickly replenish stocks of materials and accessories in accordance with new demanded models. And the most important is the focus on the competencies in the assortment for every proposal and every purchase. That is, understanding the most profitable categories and characteristics: types of assortment, model design features, heel height and format, materials, colors, price range.
Despite the need for a total restructuring of processes for managing not only the assortment, but also practically all company processes (presentations, sales, logistics, production cycle, etc.), the industry is unambiguously changing the benchmark in terms of the length of assortment planning from a rigid system of 1,5 years -1 year to more flexible - up to 6 months.
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