Saks turns jeans collaboration into higher inventory turns

Inventory turns on Polo jeans increased by 13% at Saks Inc. stores as the result of a CPFR pilot that Saks and Polo ran earlier this year, Rick Shaller, senior vice president of e-business development at Saks told the Retail Systems 2002 conference in Chicago Wednesday.

Saks undertook the pilot with Polo to test how well a Collaborative Planning, Forecasting and Replenishment system would work and what it would take to implement one. A key finding from the test is that a retailer and a manufacturer have to be willing to share information, Shaller said. Saks and Polo share replenishment expectations and results to determine how accurate the forecasts were. To do so, they have a formal meeting every month but also meet on an ad hoc basis to deal with exceptions. Shaller said agreements that the two sides worked out before the pilot began contain guidelines for how to deal with instances when two forecasts reach different conclusions and the two sides can’t reach common ground. “This was our first endeavor to share forecasts,” Shaller said.

Saks also found it was not including enough people in its initial CPFR efforts, Shaller said. At first, the collaboration was the responsibility of the replenishment group. But the company soon learned it needed merchants in the meetings as well.

Other benefits that the partners realized from the test were a better understanding of each other’s operations--“That was key. Now we know who to call, who to see, who to follow up with if there’s a problem,” Shaller said--and fewer stock outs.

The results of the CPFR pilot occurred in the spring quarter this year, Shaller said. He expects the real benefits to become apparent in the fall. “The next step is to enable the process with technology,” Shaller said. “We can’t do this in a manual process with other manufacturers who have a lot of stock.”