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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 Africas 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 1,450m
2
)
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
Woolworths, South Africa
Relationship with i2
Merchandising History
The Next Wave
Questions


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

Allocation and Replenishment Management
Purchase Order
Planning
Pre-pack Buying Pre-pack Allocation EOL Allocation
Buying and Assortment Management
Line Build
Assortment
Optimization
Sales Inventory Receipts Events Markdowns
Merchandise Financial Planning
Strategic Plan Product Plan Location Plan Cross Plan
In Season
Reconciliation
Event
Management
Store
Grading
Sales
Forecasting
Seasonal
Profiling
Parameter
Maintenance
Data
Services
Shared Process
Options Plan
Inventory Levels
Management
Disaggregatio
n
i2 Retail Reference Process
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Master / Meta Data

ETL


MP RP
RABPP Server

BAM SGM
Transaction Data
Data

Agenda
Woolworths, South Africa
Relationship with i2
Merchandising History
The Next Wave
Questions


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
forecast
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
Woolworths, South Africa
Relationship with i2
Merchandising History
The Next Wave
Questions


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 SLIM
Maintain
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 Footprint
System Product Used for
Store Group
Management (SGM)
All Grouping stores based on turnover, space and
customer profile
Profiler All Seasonal Profiling used in generating forecasts
Size 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 current
System Used for
Merchandise
Planner (MP)
Upgrade to Oracle
Simplified Merchandise Planning
Options 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
Woolworths, South Africa
Relationship with i2
Merchandising History
The Next Wave
Questions