www.tocpractice.

com

27th InternationalConferenceofthe
TOCPractitionersAlliance TOCPA
www.tocpractice.com

August1618,2016Johannesburg,SouthAfrica

ApplicationofTOC
BeckonsinRetail
Dawid B Janse van Rensburg, CargoSolutions, South Africa
17th 18th August, 2016

27th InternationalConferenceoftheTOCPractitionersAlliance TOCPA

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Dawid B Janse van Rensburg

MD of CargoSolutions, a supply chain optimization business unit of the
Cargo Carriers Group.
Focus on TOC supply chain solution implementations, and is an
Implementation Partner for Inherent Simplicitys Symphony software in
SA.
Completed TOC implementations in many industries in SA, including
FMCG, building supplies, extrusion, footwear, clothing and printing,
distribution, etc.
TOCICO certified in Supply Chain and Logistics.

Contact info:
dawid@cargosolutions.co.za
011 485 8700
083 3034183
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ApplicationofTOCBeckons
inRetail
TOCidentifiedretailastargetindustry easygains
S&T&salesefforts limitedpenetration
Riachelo,Sportswear,pharmaceutical(Baltic),TitanWatch,etc

WhyisRetailsoattractive?
Bastionofforecasting!
GoodTleverage

SimulationsinSA
Enablingsystemsmaturing
FootwearProjectsUpdate
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RetailisNothingNew.

27th InternationalConferenceoftheTOCPractitionersAlliance TOCPA

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ManyChallengesinRetail
SKUProliferationandtheimplications Finished
Goodsrangesexpandedby67%inlast3years.
Customertolerancetimesreducing instant
gratification
ProductLifeCyclesaccelerating
Customersplacingmorefrequent,smallerorders

Complexityincreasing!
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ForecastErrorbyIndustry

www.DemandPlanning.Net;MarkChockalingam Blog.ForecastErrorBenchmarking
acrossvariousindustries surveyresultsAverageofforecasterror

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ForecastErrorbyIndustry

27th InternationalConferenceoftheTOCPractitionersAlliance TOCPA

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CommonUndesiredEffectsof
Forecasting

Toomuchinventoryofslowmovers
Toolittleinventoryoffastmovers
Poorcustomerservice
Toomuch/littlecapacity

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SKUsvsSales

www.cohnreznick.com

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TheDevil.

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PerishablesSupplyChain

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PerishableItem AsIs

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PerishableItem Simulated

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ColourStatsReportfor30SKUs
AsIsvsSimulated

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GeneralRetail(NonFoods)

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ConsumerGoodsItem AsIs

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ConsumerGoodsItem Simulated

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AllSKUs AllStores
CompositeGraph AllSKUs AllStockLocations
2500000

2000000

1500000
GreenBuffer
Red
Yellow

1000000

CurrentSOH
SimulatedSOH
Consumption

500000

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BuildingSupplies LongLeadTimes

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LongLeadTimeItems

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RetailLeverage
%
%
Change Change
inQty
inPrice

Now
ZAR

%ofSales

Sales
CostofSales
GP
OE
NP

100
70
30
20
10

Inv
ROI

20
50%

5%
70%
30%
20%
10%

68%

3.5

50%

235%

Future

ZAR
%ofSales
5% 110.25
73.5
67%
36.75
33%
20
18%
16.75
15%
10
168%

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EnablingSystems TheEcoSystem
DC&Purchasing

Store/DG/AG/Family/SKU
DGMax(maxbudget)
X
L

X
LL

DGStock
Control

M
S
L
M
L
M
S
L
M
S

L
M
S
L
M
L
M
S
L
M
S

AGVarietyMax
X
LL

M
S
L
M
L
M
S
L
M
S

AGVarietyTarget

X
LL

M
S
L
M
L
M
S
L
M
S

XL

SKUFamily1

DGMin(Units)

MTA
Buffers

Sales

M
S

SKUFamily2
M

Allocator

AGVarietyMin

AGVariety
Control

Liquidate

SKUFamily3
M
S

SKU
Depth
Control

LiquidationControl:

Space/
Refreshment

SKUFamily4
M
S

AGX
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SKUDepth
SKUDepth NumberofunitsfromsameSKUtobekeptinthe
storeinordertoimproveavailability/inventoryturn
Example
SKU:TG XL

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ManagetheDepthoftheSKU
KeepanMTAbufferforeachSKU(differentbufferfordifferent
sizes)
DBMalgorithmwillmanagethebuffersizedynamically
Minimumbuffersize,safetystockanddisplaystockcanbe
defined

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SKUFamily
SKUFamily SKUswhichpartofthesameproductadaptedfor
differentclients(forexample,size)
OrangeRLXL
OrangeRL
OrangeRLL

OrangeRLM
OrangeRLS
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ValidSKUFamily
ValidSKUFamily theamountofinventoryofSKUsfromthe
samefamilyisenoughtoconsiderthisSKUfamilyasvalid(not
broken)
Example:
ValidSKUfamilywillbeifyouhaveatleast2unitsofLarge.1unit
ofmediumand1unitofsmall

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ProductVariety
ProductVariety(width) manage(increase/decrease)the
offeringtothecustomersinordertoimprovesalesforeach
categoryineachstore

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AssortmentGroup
AssortmentGroup(AG) groupsoffamilySKUswhichhave
commoncharacteristics
EachAGwillhavevarietytargetfordifferentvalidSKUfamilies
Managethetarget(similarformanagingDBMbuffers)
betweenMinandMax
Example:VarietyTarget=4
Depth
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ManageAssortmentGroupVariety
Target

DynamicallyseteachAGvarietytarget(=numberofunique
SKUFamilies)
Basedonconsumption/turnsofthatAG(comparetootherAGsin
DG)
AGtargetsizecanbeincreasetodecrease

WillbelimitedbyminandmaxvalueoftheAG/DG
Canbechangedthroughseasonalityevent

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DisplayGroup
DisplayGroup(DG) severalAGwhicharepartofthesame
themeofthedisplay
DisplayGrouprange managetheoverallstockfortheDGin
ordertomakesurethedisplaycapacityissatisfying
Min ByUnitsMax ByMoneyValue

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ManageSKUEndofLife
MonitoreachSKUconsumptionfrequency
TheusercandefinedEndofLife(EOL)policyforeachSKU
OncesystemrecognizethatthisSKUreachItsEOL,alertsthe
userandstopreplenishmentforthisSKU

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StockAllocator
Allocatorgeneraterefreshment/replenishment
recommendations:
RecommendationswillbebasedonAvailablestockintheorigin
warehouse
Recommendationprioritywillbebasedonbuffer/varietypenetration
Recommendationsalsoconsidertailrotation
Refreshmentconsiderbestseller

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ManageNewProductIntroduction Pull
SystemtomonitorthesalesforalltheSKUsintheSystem
Oncerecognizedthatarefreshmentisneededforaspecific
store(i.e.varietytargetisnotreached)itwillmakeitsselection
basedonactualconsumptionindifferentstores(bestseller)

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ManageSeasonalityEvents
Seasonalityeventvandefinedindifferentaspects:
IncreasebuffersforSKUs
increasevarietytargetforassortmentgroup
IncreaseMin/Maxrangefordisplaygroup

Seasonalityeventcantriggerreplenishmentand/or
refreshmenttostore

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ManagementDashboards
TheDashboardwillbeadaptedtoeachmanagementlevel
(wholechain/region/store)
Reportswillhavetheabilitytodrilldowntolowerhierarchyin
ordertofocusourefforts

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ManagementDashboards
Availabilitystatus(depth)ofbestsellersin
store/warehouse/transit
BestSellers Store'sAvailability
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
5/7/12

5/14/12 5/21/12 5/28/12

6/4/12

6/11/12 6/18/12 6/25/12

7/2/12

7/9/12

7/16/12 7/23/12 7/30/12

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ManagementDashboards
Assortmentgroupstatus(betweenmin/max)
AGs/Stores
80%
70%
60%

70%
60%

60%

60%

70%

75%

70%

60%

50%

TooMuch

40%

Good

30%
20%

30%
20%

20%

10%

20%
10%

0%
Week1

30%

Week2

Week3

10%

10%

120%
Week4 Week5

25%

25%

5%

5%

Week6

Week7

20%

TooLittle

5%
Week8

100%
25%

25%

Cyan

5%
20%

5%
20%

Green

20%

20%

Red

25%

30%

30%

Black

Week3

Week4

Week5

80%

40%

40%

40%

60%

5%
20%

5%
20%

5%
20%

10%

10%

10%

25%

25%

Week1

Week2

40%
20%

Yellow

0%

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ManagementDashboards
Displaygroupinventorystatus(betweenmin/max)

DGs/Stores
70%
60%

60%

60%

55%
50%

50%

40%
30%

50%

50%

40%

40%

50%
45%

45%

40%

OverStocking

30%

Good

30%
25%

20%

20%

UnderStocking

20%
15%

10%

10%

10%

10%
5%

0%
Week1

Week2

Week3

Week4

Week5

0%
Week6

Week7

Week8

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Jordan
Factory

JDN

RM
WH

Watson
Factories

WAT
WH

RM
WH

Barker
Factory

BKR
WH

RM
WH

Bagshaw
Factory

BGW
FG
WH

RM
WH

RM
WH

Mossops
WL

FG
WH

WH

BF
Retail

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Conclusion

Retail verydifficultsale!
Simulationsareverypowerful,but.
Enablingsystemsmature
Lesseffortrequiredthanproduction
Fashionhasdefinitecomplexity

27th InternationalConferenceoftheTOCPractitionersAlliance TOCPA