Optimizing Retail Performance

Retailers find that business performance management gets the right goods to the right place at the right time

Retailers find that business performance management gets the right goods to the right place at the right time

Sunnyvale, CA — July 8, 2004 — Most of us take for granted that we can walk into a store and find just about whatever we want on the shelves. However, making tens of thousands of items — in their varied sizes, colors and flavors — consistently available is a complicated process, involving not just the retailer but the entire supply chain. Optimizing the "what, when and how much" of the supply chain adds another layer of complexity.

For example Belk Inc., based in Charlotte, N.C., is the largest privately owned department store company in the United States. Belk uses application from business performance management provider Hyperion to analyze sales trends, inventory levels, margins and markdowns across 225 fashion department stores in 14 Southeastern states. Belk shares the information with its merchants so they can work together to respond quickly to inventory shortages or oversupply.

"We help our merchants understand where their risks and opportunities are," said David Palmer, vice president of financial services for Belk. "Working together, we are making better decisions to get the right inventory to the right store."

The North Face produces the performance apparel, equipment and footwear of choice for the world's most accomplished climbers, mountaineers, extreme skiers, snowboarders and explorers. The approximately 12,000 stock-keeping units (SKUs) offered by The North Face are produced by a global network of manufacturing partners and sold through thousands of outdoor resellers and in the company's own retail and outlet stores.

The North Face said it uses Hyperion to orchestrate its supply chain, achieving an on-time delivery rate of 98 percent to its reseller customers, up from below 50 percent in 2000. In such a seasonal business, sales delayed by late shipments are sales likely lost for good, not only to The North Face but to its customers as well, making timely delivery a mission-critical requirement. In addition, the company reduced excess inventory by 65 percent and closed most of its outlet stores, which has helped increase margins and strengthen its brand.

The North Face said it automatically generates 50 standard supply chain reports that are made available via e-mail and online. Before implementing Hyperion solutions, these reports took days and weeks to generate. Now, they take hours. Time previously spent manually compiling data is now spent analyzing it and improving operations.

"Our product managers rely on product profitability reports generated by the Hyperion system to see which styles, colors and sizes are best sellers and which warrant discontinuation," said Richard Hays, vice president of information systems and chief information officer for parent company VF Corp.'s outdoor product lines. "Hyperion helps us see, for example, that small sizes are becoming less popular and large sizes are selling more, and we can adjust our forecasts accordingly."