Lack of collaboration between functions such as buying, merchandising, supply chain, logistics and stores has always caused inefficiencies. With the advent of multichannel retailing and economic uncertainty, the problem has become more acute. Integrated Planning & Execution (IP&E) joins up the silos for effective stock management.
Benefits of Integrated Planning & ExecutionIntegrated Planning & Execution (IP&E) is to join the functions from end to end, so it becomes possible to plan the business, including the movement of stocks, strategically.
Everyone in the business can now see, and act on, the same stock information at the same time. This enables optimal availability with the lowest possible inventory level, plus tight control of working capital and the supply chain. Retailers can increase inventory turns dramatically by adopting this approach.
Sales increase by as much as 15%, because customers find their preferred products prominently displayed and in adequate quantities. Transport costs decrease through better capacity management and consolidation of requirements. Consistent KPIs can monitor activity across all categories and channels because sales, margin and inventory targets are standardised.
IP&E also makes the supply chain greener, because it eliminates unnecessary stock holdings and unnecessary movement of goods.
The principle of IP&E is to link overall strategy to physical stock movements, joining up three elements: retail planning, inventory management and physical distribution (i.e. executiont).
This is a complex task, partly because of the different measurements used by different functions. Financial and range plans tend to be done in terms of currency, whereas inventory and merchandise planning is done in terms of volumes and units. Using averages to convert from currency to units means that when the product range changes significantly, the conversion no longer gives realistic projections.
Capgemini knows how to structure data to allow the output of one plan to be used meaningfully as input to the next. We start by building a business case for change, assessing everything from space allocation to promotions and demand forecasting.The solution we recommend depends on retailers’ individual needs and starting point. It often involves point investments in technology, people and/or processes to create the necessary connections. Sometimes, the better option is replacement of ERP systems. Our emphasis is always on joining up processes without necessarily reorganising the company.
The outcome is an inventory management approach that copes with both "push" (from new season’s products) and "pull" (from customers’ demands for continuity of supply). You'll deploy a single inventory pool efficiently across your different channels and locations, resolivng capacity issues in the supply base so that stock moves smoothly to where it needs to be.
Our global team of retail specialists understand these processes from end to end, and we have further specialists in the key areas of range and space, demand forecasting and physical distribution (warehousing and transport). Where the analytical challenges are significant, Capgemini's Operational Research consultants can find innovative answers.