Deciding on a Merchandise Planning System

DecisionSo you have read up on merchandise planning, and you know that you should be doing it. How do you go about selecting a system? Well, first of all ask yourself a few basic questions about your own company.

These should centre on how well you are prepared, and how good your planning culture really is:

  • Do you understand the planning process?
  • Do you have staff who understand planning?
  • Are your staff mature data users?
  • Will you need to provide training?
  • Do you have reliable source systems?

If the answer to any of these questions in “No” then you need to ask whether you are ready for the investment in time and money that is required for a planning implementation.

Have you really done your homework about what is out there and what it is that you are trying to achieve?

Do you know the sorts of systems that are available and the areas that they cover best?

How complex is your business?

If you have less than about 30 stores or a turnover of less than £100 million you may well survive using spreadsheets. There are obvious problems with consolidation and maintenance here, but the great benefit is low capital cost. More complex business almost certainly need a specialized planning tool, but that does not mean that you have to go for the “big bang” approach to planning. The most important advice that anyone will ever give you is ” keep it simple if possible”.

Are you looking for financial planning, merchandise planning, assortment planning, or graphical range /layout planning? The planning process is a continuum made up of many different processes. No single product covers all the bases.

Does your system have to be web-enabled? Most of the planning systems now offer a web front end, either through your browser or a proprietary interface. Do you need it and if so how will you use it?

Another very important question is how your vendor deals with the licencing implications of distributed web planning. Suppose that you wanted to allow 400 store managers to input sales forecasts. You would probably not want to find out that that meant buying an extra 400 full licences. Make sure that your supplier has an enlightened attitude here!

Have you considered the ASP route? ASPs or Application Service Providers host your planning application on the web. Effectively you rent processing time by paying an annual fee. There are many issues here, not least around the security aspects, but there are some serious potential benefits in the areas of cost of ownership.

If you already have a vendor in mind, do they specialise in your sector (food, non-food for example)? You may want to ensure that your vendor has a track record in your sector. If they haven’t then you may be able to cut a good deal to be their first customer in your sector.

If you can give coherent answers to these questions then you are ready to start evaluating the different solutions in the marketplace. In my next article I shall be looking at some of the issues surrounding vendor selection and implementation.