Fill Rate Improvement

Mining sales data to discover home run products you are missing:

Be a part of Assortment planning (strategic level & operational level)

Strategic level planning: amount of resources, including shelf space & purchase dollars to allocate to each category

At operational level you drill down to SKUs that you will carry in each category.(how much to localize your assortment)

Borders use Relative sales per title (RST)= sales in a category in a store over a specified period/ no. of titiles carried by that category in the same period.  Divide RST value into high medium low & take differential actions for each category SKU. In addition to above strategy we can look into marginal return on incremental resources ot average.

Can ask retailers to use loyality cards. So before deleting a SKU they can assess the average size of the basket of goods purchased by customers who bought those SKU. And then can take decision.

Define SKU as a collection of attributes. We then use prior sales to forecast market share in as store for each attribute and then use this information to forecast demand for any potential SKU. This approach lets u forecast the demand for SKU’s that you havenot sold before.

This approach can be applied at any level from chain to cluster to individual store.

Analytics

Strategy: Identify the region where fill rate is lowest like south…..fill rate can be low because of poor forecasting especially of newly introduced products…this can be improved by doing attribute based forecasting…..this will let u know the potential substitution percentage of products & right product assortment for a region..now the question is to do localization or no localization…which corresponds to one assortment for the chain & maximum localization, which corresponds to unique assortment for each store.But, unique assortment have high administrative costs….so we can cluster the stores based on store specific assortment until we have say 5 assortments & every store had been assigned to one of these assortments…

The process of assortment planning that we have presented comprises of three steps:Modelling estimation & optimization

Three types of attributes which we encounter in assortment planning are:

1. Functional attributes: how a given product satisfies customer needs ex: sizes….no substitution in this
2. Price & value:
3. Taste: includes like flavor, color & fabric type

Product life cycle planning:

The key lies in managing three ingredients that together enable product availability: an accurate FORECAST, a flexible supply chain & of course an appropriate supply of inventory.

Flexible supply chains

Flexibility cures a merchants two biggest headaches: having too little of the right products and too much of the wrong ones…