October 30, 2009, 12:00 AM

A Small World

(Page 2 of 2)

“We were doing sales forecasts on spreadsheets that were not immediately available to our inventory control people, so there was a lag in processing orders,” Burke says. “Now, as soon our buyers enter a merchandise plan into our Direct Tech merchandise planning system, our inventory control people see it. So if we put something into our system today and need it ordered today, it can get processed and ordered the same day.”

That’s made it possible for Improvements to maintain lean inventory stocks of the right merchandise, while also improving its ability to fulfill orders. “Our inventory levels now are well within budget every month, and we’re maintaining a high fill rate,” Burke says.

Having access to more comprehensive and accurate data to match sales forecasts with inventory records, Improvements can plan its promotions and merchandise buys further ahead. The longer lead time also allows it to source from more foreign suppliers for a wider choice of products and prices.

“Now our buyers can plan so far in advance that in October they were working on merchandise for next June and July,” Burke says. “And because we can plan so far ahead, we can maximize use of overseas buys to get better prices and profit margins because we have more time to source from overseas suppliers instead of just domestically.”

Business intelligence

At Orvis, merchandise managers plan pre-season product purchasing through a mostly manual process of reviewing prior-season sales records and making judgment calls based on their knowledge of current market demand, the economy and planned promotions.

As a season gets underway, the merchandise buyers and inventory control managers rely more on a mixture of in-house business intelligence software, which Orvis has been upgrading to better analyze sales trends, and the retailer’s Manhattan Associates warehouse management system for coordinated updates on inventory stocks. Together, these systems produce demand forecasts that suggest what Orvis can expect to continue selling, such as fishing gear and related apparel, and at what prices and margins, throughout the remainder of the spring-to-fall fishing season.

Once it has submitted orders to suppliers, Orvis relies on its VendorNet-enabled web portal to communicate with suppliers to ensure orders are being processed as expected.

Orvis sources its products primarily from about 100 top vendors, and before using VendorNet its merchandise buyers used to communicate with most suppliers through a combination of fax, phone calls and written notes. That system resulted in relatively slow delivery of purchase orders to vendors, and an ineffective way of receiving and processing order confirmations from them, Salamone says.

That has all changed now that Orvis exchanges electronic purchase orders and order confirmations through the VendorNet-enabled portal, Salamone explains. Instead of often taking a week for a vendor to receive a purchase order, vendors can now download them from the portal the same day Orvis enters them. Order confirmations are also sent expeditiously through the portal, with alerts extending if necessary to a merchandise or inventory manager’s e-mail system.

Audit trail

If an order is delivered with the wrong products or too late, the communications in the VendorNet portal provide an electronic audit trail. It’s now easier to prove, for example, that a vendor misread a purchase order and is responsible to expedite shipment of replacement merchandise, Salamone says.

The portal’s communications records serve as an effective way to monitor the performance of suppliers as well as of the retailer’s own merchandise buyers and inventory managers. Indeed, managing an effective flow of merchandise requires an overall system that combines the best of human input and technology, Salamone says.

“Without good people and processes,” he says, “the best tools in the world won’t help you.”

paul@verticalwebmedia.com

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