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“Forecasting” What it’s really all about… By Laurie Lofgren Vice President Planning & Forecasting Warnaco Intimate Apparel Warnaco – Strong Brands Intimate Apparel Sportswear Swimwear Warnaco – Diverse Customers Department Stores Specialty Retailers Chain Stores Mass Merchants Membership Clubs International Europe R Canada Mexico Asia Main Focus Tools Process & Disciplines S&OP Collaboration Continuous Improvement Tools Build the foundation System is the enabler Information = Visibility Core Systems S&OP Inventory Planning Demand Planning Retail Planning Point of Sale Analysis System “POS Analysis” Why Invest? Increase Visibility Increase Sales Increase ROI Maximize Productivity Implement VMI Optimize Assortments Reduce Markdowns POS Analysis #1 Key Independent Store Account Inventory Analysis by Door Rank Product Lifecycle Replenishment Replenishment Total Newness Newness Total Runnout Runnout Total Dropped Dropped Total Grand Total Account Rank A B C D E F LV A B C D E F LV A B C D E F LV A B C D E F LV TY Sales 6,825 12,600 20,775 25,088 15,938 6,900 3,863 91,913 3,038 5,325 8,550 9,750 5,738 2,438 1,275 36,113 38 150 300 525 375 225 113 1,763 38 113 338 675 713 638 450 3,000 142,313 Curr Proj Fall OH TY Sls 17,738 34,088 38,213 62,963 77,363 103,875 125,438 120,375 79,613 100,388 61,838 34,425 36,450 19,313 459,638 452,325 7,388 15,188 17,738 26,625 35,025 42,825 50,363 48,713 37,875 28,688 22,013 12,188 13,200 6,300 180,525 183,600 150 263 375 750 750 1,463 1,125 2,700 1,275 1,838 863 1,200 525 638 5,025 8,813 225 225 413 525 863 1,763 1,200 3,450 1,275 3,600 1,238 3,150 563 2,175 5,775 14,925 711,638 732,450 Maximize Productivity Need vs. Target Target % Target Inv $ Inv. Variance Inv. $595,200 4,988 22% 22,725 $1,273,388 10,238 21% 48,413 $2,281,013 9,188 11% 86,550 $3,148,388 -938 -1% 119,438 $2,342,850 -11,925 -13% 88,425 $1,304,363 -12,675 -26% 49,163 $1,025,288 2,175 6% 38,625 1,050 $11,970,488 0% 453,375 $274,988 2,738 27% 10,125 $555,413 2,738 13% 20,475 $970,688 675 2% 35,700 $1,267,875 -3,975 -9% 46,388 $876,188 -6,038 -19% 31,875 $479,738 -4,613 -27% 17,400 $347,025 -563 -5% 12,600 $4,771,838 -9,038 -5% 174,600 $900 -113 -75% 38 $2,325 -263 -80% 75 $4,650 -563 -75% 188 $6,938 -825 -77% 263 $7,875 -938 -76% 300 $5,325 -638 -74% 225 $3,338 -413 -71% 150 $31,350 -3,750 -75% 1,238 $1,425 -150 -83% 38 $2,700 -300 -73% 113 $5,738 -638 -74% 225 $7,913 -900 -75% 300 $8,475 -938 -76% 300 $8,363 -938 -76% 300 $3,750 -413 -73% 150 $38,400 -4,350 -75% 1,463 -54,000 $18,229,613 -8% 678,450 POS Analysis #2 Optimize Assortments Key Department Store Retailer #1 vs. Retailer #2 Sales & Inventory Comparison Account TY STD LY STD % Sls Rank Sales Sales TY vs LY A ++ 18,263 18,525 -1% A+ 6,113 6,975 -12% A 21,113 21,263 -1% B 18,563 18,413 1% C 9,488 9,188 3% D 2,663 1,763 50% Comp Total 76,163 76,163 0% New Doors A+ 2,738 1,425 91% A 938 750 26% B 788 338 142% C 4,125 1,988 107% D 375 225 59% Walk Over Total 9,000 4,763 89% Retailer #1 Total 85,163 80,888 5% Retailer #2 Account #1 A+ 1,275 863 49% A 6,150 3,938 56% B 5,250 3,338 57% C 3,638 2,100 72% D 450 263 79% Account #1 Total 16,725 10,500 59% Account #2 A+ 2,438 1,425 71% A 4,425 2,963 50% B 3,638 2,138 69% C 3,713 2,363 57% D 1,050 413 154% Account #2 Total 15,263 9,300 64% Retailer #2 Total 32,888 19,800 66% Grand Total 118,050 100,688 17% May-Fed Retailer #1 Door Type Legacy Doors Avg Avg Wkly Wkly % OH OH TY OH LY TY vs LY 49,200 41,738 18% 12,788 11,025 16% 62,325 53,700 16% 64,125 49,725 29% 35,813 29,213 23% 10,388 6,225 67% 234,675 191,588 22% 7,913 5,625 40% 2,813 2,250 24% 2,250 1,050 112% 17,025 6,900 146% 1,650 1,088 50% 31,650 16,950 86% 266,288 208,538 28% 3,263 1,688 95% 25,200 12,375 104% 23,438 10,725 118% 18,750 8,438 122% 2,775 1,463 87% 73,425 34,688 112% 4,088 2,813 47% 11,438 8,325 37% 10,013 6,600 52% 12,788 8,888 44% 3,300 2,475 34% 41,625 29,100 43% 117,638 63,750 84% 383,925 272,325 41% Turn TY 1.9 2.4 1.7 1.4 1.3 1.3 1.6 1.7 1.7 1.8 1.2 1.2 1.4 1.6 1.9 1.2 1.1 1.0 0.8 1.1 3.0 1.9 1.8 1.5 1.6 1.8 1.4 1.5 Turn LY 2.2 3.2 2.0 1.9 1.6 1.4 2.0 1.3 1.7 1.6 1.4 1.1 1.4 1.9 2.5 1.6 1.6 1.2 0.9 1.5 2.5 1.8 1.6 1.3 0.8 1.6 1.6 1.8 POS Analysis #3 Reduce Markdowns Key Collection Style # 1000 - Fashion Color Sell-thru 9/25/05 thru 11/25/05 Deliveries, First 17 weeks of selling from Intro Date Geo Region Northeast Corp Rank A+++ Account DEPT STORE 110 110 100% 215 215 110 110 100% 1,385 1,185 33 40 86% 1,385 1,185 33 40 86% CHAIN STORE 1,485 965 19 30 65% DEPT STORE 1,600 1,170 15 20 73% 3,090 2,140 17 25 69% 2,515 1,590 12 20 63% 60 45 11 15 73% DEPT STORE A+ Total A CHAIN STORE DEPT STORE A Total B 2,575 1,635 12 20 63% CHAIN STORE 670 385 7 10 58% DEPT STORE 240 160 8 10 67% 910 550 7 10 60% CHAIN STORE 340 180 5 10 53% DEPT STORE 25 10 5 10 38% 365 190 5 10 52% 270 115 5 10 42% 270 8,815 115 6,025 5 14 10 20 42% 68% B Total C C Total D D Total Northeast Total Inv. Per Door % Sold 215 A++ Total A+ Sales 215 A+++ Total A++ Shipped Sales per Door CHAIN STORE System “Demand Planning” Why invest? Reduce Inventory Improve Service Increase Collaboration DS FM Statistical Forecast based on Best Fit Pyramid based on Consumer Spending Collect “ALL” Relevant Information Provides Flexibility Easy To Use DSFM View #1 Historical Bookings Seasonality Curve Retail Inventory Account Collaboration System & Adjusted Forecast Account Forecast DSFM View #2 POS History Statistical Based Forecast POS Based System Forecast DSFM View #3 MTD Shipments & Orders Collect all relevant information Current Open Bulk Orders Historical Cancellations Historical Shipments Historical Door Distribution DSFM View #4 Historical Forecast Forecast Accuracy Utilize Forecast Accuracy DSFM View #5 Customer Forecast – Unit Receipt Plan ? Account Collaboration ? ? System “Inventory Planning” Why invest? Reduce Inventory Improve Service Collaboration (Capacity Planning) DS RP “Dynamic” Inventory Planning Daily Forecast Updates Automatic PO Generation Exception Reporting Reporting Systems Provide Visibility Emphasize Reporting A successful implementation…. Clear Business Plan Detailed Project Plan DSFM DSRP Allocate the Resources Prioritize & Execute Training & Training Continuous Refinement DS Stores Sales Planning S&OP Process & Disciplines Achieve results S&OP a must S&OP What does it mean at Warnaco? Formalized & Structured Process Occurs on a Monthly basis Synchronize “all” Plans Cross functional ownership 2006 OCTOBER Monday Tuesday Wednesday 2 3 2006 Thursday 4 Friday 5 6 Month End Roll Demand Planning Process 9 10 Demand Planning Process 11 12 13 Demand Meeting Supply Planning Process 16 Supply Planning 17 Supply Meeting 23 Run S&OP Plans 18 Demand & Supply Reconciliation Meeting 24 S&OP Meeting 19 25 26 20 Run S&OP Plans 27 S&OP Process Demand Planning Must Do’s “Utilize” Forecast Accuracy Collaboration with key accounts Reconcile demand & production Synchronize “all” plans Monthly Demand Meetings S&OP Process Collaboration & Communication Synchronize & Reconcile Replenishment OTB Production Capacity Demand Plan Inventory Financial Joint Ownership & Smart Decision Making General Mgmt Sales Involvement at all levels Marketing Operations S&OP Disciplines Warnaco USIA Standard Operating procedures Cut to Order - New & Fashion Opp’s Confirm – New Doors & Model Builds Critical Principles One Number Forecast All Demand is Forecasted Supply = Demand S&OP Why is Warnaco doing this? Ensure Ongoing Improvements Establish “Best Practices” Informed Decision Making Increase teamwork Success Stories for Warnaco USIA in 2006! Improved Service Increased Inventory Turn Reduced SLOB’s Increased Sales What’s Next for Demand Planning at Warnaco? System Roll Out Europe Expand Account Collaboration Advanced utilization POS Roll out Best Practices Evolve S&OP Main Focus Tools Process & Disciplines Collaboration Continuous Improvement Q&A