Tag: #analyticsdrivesbusiness

Order of operations

4+3×4=16. If you think it equals 28, please stop reading now and review order of operations in about 8th grade math. (if you think it equals 11, see an optometrist)

This week we continued our review of new planning systems, and internally had a conversation about what order of operations should look like in planning. 

If you change the forward forecast of sales what should be impacted? If sales go up,  inventory should follow inversely.  OR… Inventory should be stagnant,  and receipts increase equally to offset. 
What about MD?  Md% move,  or does % lock and md$ plan move?  And.. If MD $ changes than OH forward has to move.  
Endless loop?  How should this be done? 

The answer is yes to all.. Or no.   Depends on the item,  the goals,  the seasonality (in or pre-)
I want the system to match whats in my head. 

In Gen Merch (what we call our food,  bev,  HBA,  etc) the receipts have to move lockstep with sales. Todays receipts =tomorrow’s sales,  +/- fixture fill and safety stock/lead times. If sales jump 10% receipts must jump as well.

In Fast Fashion?  Cant  buy it back normally,  so I want to decrement the inventory to show future impact.  Ultimately the receipts have to compensate,  but there is more timing /availability to factor.
Jewelry,  high end,  watches?
Some of both. 

And in Branded goods?  Well,  hopefully replenishment already caught it,  bought it,  and trended orders as needed. (see Replenishment 101)

Just need to software companies to match whats in my head and we’ll get along just fine.

-That Planning Guy

Vacation, and the the Demi-God Maui

Back from vacation. It’s always hard to come back and get into the swing of things, but alas, what makes a vacation special is the time in between them I guess.

Taking a divergence from my usual Greek God commentary to add in a few Legends of Polynesia…

The legend of Maui is one of my favorites: Maui climbed Haleakala and lassoed the sun to make it move  slower and make the Hawaiian day last longer.  As one who enjoys spending a lot of time under the Hawaiian sun, the length of the day is delightful. Sunrise, sunset, and everything in between.
(Maui did several other things, such as creating the islands by hooking the ocean floor and he and his brothers pulling up the islands…)

Sometimes when we think there is not enough time in the day to accomplish all our tasks, we could use a Demi God like Maui to lasso the time clock and slow it down to give us more analytics time in the day. Perhaps we need a god/goddess of Big Data?  ‘Datalist’ should be the God of Big Data and Analysis? Open to other suggestions~~~
In the meantime, tomorrow is Monday morning, the birth of new data to review, and Datalist will be busy.

With much Aloha,
-That Planning Guy

Planners are your Radar Detectors

I drive a fast car.  No, this is not a Tracy Chapman discussion.  Don’t delete just yet! But seriously, Wilma is very fast.  I don’t mean like Mustang GT fast, I mean VERY fast.  Some have called her a “pretty blue convertible” and you know who you are… but at the heart, she’s a beast with wheels.

Sometimes I tap the gas and find myself a few MPH over the speed limit.  It just happens.  So, I had a radar detector installed and hard wired on.  It is always on and protecting me. It is one of the highest rated, and was NOT a cheap one, one of the higher priced. Buy I researched and selected what I thought to be the best.

Last week, as luck would have it, a small Scion was next to me at a light, and we both kind of stepped on the gas a little bit more aggressively than we probably should have. My radar chirped before we crested a small hill, and I backed off quickly.  Just over the hill, the Metro PD motorcycle policeman with the radar gun pinged him, not me, and stopped him and wrote what I can only imagine was a $6-800 ticket.  Whew.  Nice save.

Companies invest millions in their systems.  They buy top of line Planning, BI, optimization tools, and replenishment systems, and invest millions if not tens of millions of dollars in these.  Shouldn’t the talent level also be ‘best in breed’ to match? The disparity astounds me.  A company will drop $3M on a piece of software, but will not invest nearly enough in the ‘drivers’ of these. 

The P&A team are the radar detectors.  We warn you of problems you can’t yet see— we can see over the hills and predict you’re about to get hammered by (choose 1 or more options below)

1-    Too much inventory: MD’s are coming if we don’t react soon
2-    Too little inventory: Chasing sales, or even walking them
3-    Too little receipts on order: Will miss future projections
4-    Too much receipts coming: Need to re-merch floor, move through old, cancel orders even.
5-    The trend has changed: We must as well. Change strategy in mid-stream? Ha, that’s Retail 101! You bet!
6-    The trend has accelerated: DRIVE the receipts
7-    Pricing… oh pricing, so near to my heart. Pricing is wrong, here’s how to fix it.

Is your radar detector the best in the industry?? Mine cost several hundred dollars >>> but the ticket would have been twice that.  The difference between the discount radar detector and the ‘best’ is less than 1 ticket costs.  What the difference between a best in breed Planning team and a ‘decent one’? Far less than the cost of not having one. If you are blindsided by any 1 or more of the above, you should have invested in your P&A team.

I once commented that Planning does not have a crystal ball, but predictive analytics (and Prescriptive even above that) can make it all look magic. In Winter of 2008, was YOUR inventory ready for what came next? 

You got a fast car
I want a ticket to anywhere
Maybe we make a deal
Maybe together we can get somewhere- Tracy Chapman

Aloha,

-That Planning Guy

(PS- I didn’t forget, I plan to re-read Sun Tzu on vacation and sure I will have some fun commentary next week… from The Beach)

Pricing analytics, revisited

I commented this week that if an item sells really well,  it is probably priced too low.   The reverse is also true.  There are no bad products,  only products priced wrong!
Is this really true? 

Part 1: if an item sells better than expected,  the perceived value is bigger than expected,  which should show in the pricing analytics.  Demand > expected demand is a pricing signal… Giving away profit. (assuming of course elasticity supports this,  and new retail X lower units is better than old lower retail X original units.) If not true, then the signal is wrong.
What about the reverse,  the part 2? If an item sells worse than expected,  can’t we just lower the price until demand is where it should be? Hmmm.   Unless it is not profitable,  in which case it was a bad product,  bad timing,  bad presentation even- and pricing is not the (only) issue. 
When you run out of pretty,  ugly sells?
But, how do you know what the right price is  to start?  What if your comparison items are wrong too? Comparing to competitors?  We KNOW we are smarter than those guys!

Perception.   Where is day 1,  and where will day 2 end? The route to success can not be short-cut.

Note: Athena was the Greek Goddess of wisdom,  justice, math… and war.   Is the connection that direct between wisdom and war? Perhaps the natural order, linear context,  direct path … Next,  let’s look at some SunTzu – Art of War. Always some fun things to discuss.
-That Planning Guy

15 minutes

I increased my workout time by 15 min a few weeks ago.   I accomplished this by waking up 15 minutes earlier.   No real magic there. Now I do a solid hour on the elliptical machine.  
I have noticed some interesting things that have happened,  and a trend.  The first 10-15 min I am just getting going.   Minor effort,  heart rate not yet really in the Zone.  (big fan of HR based training,  all about the data!)
The next 30 minutes are kind of a grind.  Heart rate better,  just flowing along.  HR good effective,  efficient workout.  
It’s the last 15 min that bring me to here. This is when I am fully warmed up,  all aches and pains better,  and I am in  ‘countdown to be done’ mode.   Can step on the gas.   These minutes are greater exertion,  and obviously greater effect. 
OK,  where you going with this  one,  Planning Guy?
Analytics follows the same pattern.   (you knew that was coming by now!)
First block of time is gathering data.   Pulling sources,  building queries,  filling tables.   Necessary,  but not anywhere near the end game. 
Stage 2: assembly.  What goes with what.   Where is this pointing?  What joins the data points?  How do we present to make sense? 
Final group : Insight.  When we reap the fruit of the labor.   We bring home the answer.   And we are JACKED about what we now know. 
So,  how do we get more time in phase 3 and less in phase 1? I can wake up earlier.  So how do we WAKE UP  earlier in this world of analytics?

-That Planning Guy

Next speaking engagement

Looking to meet me or see me live? Well then,   buckle up and catch this great event:
Marketing Analytics Innovation Summit.  Should be a great event.

https://theinnovationenterprise.com/summits/marketing-analytics-innovation-chicago-2016?utm_content=buffer4e17d&utm_medium=social&utm_source=linkedin.com&utm_campaign=buffer

What do you do?

Recently I was asked to explain what I do to our new ‘HR Partner’ who was meeting everyone in the division to gain an understanding.  Seems easy.

I have written many job descriptions, including my own, and re-written many times, as have we all. But what we submit for HR, for job openings, for Monster or LinkedIn postings, is that what we DO?

Planning is the forward-looking financial arm of Buying.  We look at historical info, re-seasonalize, smooth out anomalies, and project (and re-project) We work in season, pre- season, and post season, all at the same time. We determine the best course of action to flow inventory- when (timing), how much, method (DSD, Whse, drop ship)
Planning uses analytics, planning sometimes creates the analytics.
Planning interfaces with DC, Stores, managment, buying, leadership, and each other.
We determine markdown plans, exit strategy, replenishment and allocation algorithms.
And now we drive pricing decisions using elasticity and demand signals.

But what do we do? A course I once took said you should be able to boil your job description down to a few words, fewer the better:

Planning: We give data-driven advice.

-That Planning Guy

Put the needle on the record

Records became cassettes,  cassettes became CDs,  CDs became mp3…. Evolution.

What has changed in retail?  We can talk e-commerce,  omni-channel,  endless aisle,  b-b,  b-c all day,  and believe me we have.   But over 90% of transactions are still in a physical store. 
The Greeks had Agora marketplaces dating back over 500 BC,  2500 years ago.  Merchants sold their wares.  People came and congregated.   Food was eaten.
Isn’t that a open air mall?  The Grove in LA,  Horton Plaza San Diego? 
So what has really changed and evolved that much in retail?  SPEED. 
Today’s shoppers want it now,  better, faster,  cheaper,  but NOW.   The merchants also have to be faster.   The quick or the Dead is really a fair assessment of today’s retail landscape.  
We in analytics need to provide amazing details,  Great info,  great insights,  but we need to provide it NOW.  Yesterday would have been even better.  We need goods in the stores now.   Vendors need to ship now.  Now.  So how do we keep up?
We need faster systems, more powerful engines,  stronger algorithms,  and  a leaner supply chain.  But we have all that now.  What’s the next progression?  What comes after the Mp3? (or any digital format,  semantics)

What will the future mall look like? The Millennials  of are course accustomed to buying online,  ship to store,  or next day shipping.   What will the next group expect? And how do we not only get ahead of that, but actually LEAD the charge?
He who answers this question wins retail in the 2020’s

-That Planning Guy
(yes,  was listening to MARRS,  Pump up the Volume, at the gym.   I had the album,  the tape,  the cd,  and now on Google play. )

Sir Isaac

For every action, there is an equal and opposite reaction.
Feeling Newtonian this morning.
(third law of motion,  for you physics nerds.)

If you want to change the outcome,  change the inputs. 
If you change the inventory levels  sales will change.  Be sure the outcome is what you want.   If it isn’t,  there are other inputs you may not be factoring.  Traffic,  price,  selling,  conversion rates,  friendliness of staff?  All variables.
 
If you add time to your workout,  your results will change.  Phase 3, added in   another 15 min a day.  Wearing me out.. But results better be better.

-That Planning Guy

What’s YOUR Excuse???

This morning at the gym, while I was doing elliptical as I often do, there was a lady on the rowing machine.  She had a prosthetic leg, so she was rowing with 1 leg in the strap/slide thing, and the other on the floor.   I would guess she was 30-ish, though my women-age-guessing is truly awful, so likely between 25 and 45.  She was very fit, workout gear, looked pretty hardcore.  But what stuck me is that she likely could not do other machines, running, elliptical, stair master, etc as they are so leg-centric.  So she was rowing.
Now, I didn’t talk to her, don’t know anything about her, don’t know her story or even her name.  Just seeing her on a workout machine for about 40 minutes put the thought in my head about what excuses we all use every day for whatever we can not do, achieve, accomplish.
(If you are reading this expecting inspiring things, please don’t confuse me for Ghandi- I am taller. You should go read Nelson Mandela, MLK, The Dali Lama, not That Planning Guy. I am just a guy with an opinion)
The Merch Planning system we use does not suit what we need.  Yeah, I said it.  We stopped using it, and have gone offline into Excel sheets of varying difficulty and complexity.  Some are simple 5-line OTB (BOP-Sales-MD+Rec=EOP) Some are incredibly complex using formulas that combine a ISERROR() with IF()  with GetPIvot”” – and external references, and of course build in a forward-forecast engine that re-projects and re-trends.
I would rather we had a system that did this for us, and all levels & sheets rolled up, allocate down,  forward forecast, re-project, auto calc, and we could plan at Div/Dept/Class/Vendor/Location/Region interchangeably and all at once.  But we don’t have it, so should we do a bad job of giving the actionable data to the users? (in this case, Buyers/DMM)
Not having a tool is not a reason to not do a job.  The 19th century Pioneers built houses from trees without a Makita cordless drill/driver, or without a Sawzall. Not even a Poulan chainsaw!   Couldn’t even swing by the Home Depot for a box of nails. (you can do it! We can help! Not so much in 1850) Was it hard? I would assume so. But option 2 of living outdoors was pretty bad as well. Rain, cold, and a chance of being eaten by bears would make me build fast.

We (my company) are actively seeking out and doing due diligence for several planning systems.  JustEnough, ANT, TXT, Logility-we will research and review them, and one will be implemented this year (I hope)
Can we make excuses why we cant do? Sure.  And no one would really question it much.  We could say “We’ll do after we get tools” and that would likely fly.
I bet the lady at the gym could not work out and no one would lose respect- After all, it has to be difficult to do.  Wouldn’t blame someone for not working out at 6:30 AM, least of all a lady with a prosthetic leg.

“I never saw a wild thing sorry for itself. A small bird will drop frozen dead from a bough without ever having felt sorry for itself.”  -D.H.Lawrence

So whats your excuse why you cant get something done? Too busy?  Too Tired? Too short of a deadline? Not enough tools?  Sorry, I am throwing the BS flag on that one.

Not sure which quote to end with- Nike Just DO IT? I prefer Larry the Cable Guy- GET ER DONE.

After you achieve what cant be done, then you can go back and complain about it.

-THAT Planning Guy

PS- The pioneers probably didn’t whine about stress or workloads either.  Can you imagine? Sitting around with the other Pioneer guys, all in flannel, cold, windy, eating jerked meat. “Oh I am so stressed about the harvest, I just don’t know how I will ever harvest all the crops in order to feed my family.  Its just too much work” Huh?