Yenra : Shopping : RRP : Retail Resource Planning : Retail planning, forecasting, and inventory management

Retail Resource Planning

Tomax has introduced Retail Resource Planning (RRP) functionality within its application suite.

The new capability is provided as a result of the acquisition of the technology created by Retail Pipeline and its founders, Darryl Landvater and Andre Martin -- pioneers and leaders in distribution resource planning (DRP). The new solution incorporates a single instance, single view of the enterprise from a planning and forecasting perspective, delivering a multi-echelon picture of exact inventory, space, capacity, and financial requirements from the store item level all the way back to the distribution center.

The RRP solution provides a simplified model, which allows retailers to reduce inventory, improve margins, and calibrate assortments more easily and at a more granular level than traditional methods.

"If you want to take costs out of the supply chain, you have to start at the store," said Andre Martin, co-founder and author of Distribution Resource Planning and Infopartnering, the leading books on DRP and retail supply chain planning. "The store is the beginning of the information flow and the end of product delivery. Once you know the projected sales, inventory, promotions, receipts and shipments at all your stores and distribution centers for the next year, you can make better plans for how much space, labor and transportation you will need to execute your plan."

"Our approach to RRP was architected to accommodate retailing as we envision it five to ten years from now, when realtime supply chain planning from the store level up will be commonplace. Tomax' application supports this vision today.

"Retailers have been awaiting the arrival of DRP taken to the item/store level for years. Now that it's arrived, we expect a great deal of interest. The empirical construction of planning derived from store level data should yield higher quality demand management, reduced inventory levels, and a smoother operating logistics infrastructure overall," says Darryl Landvater, co-founder and chief architect of the Retail Resource Planning solution.

To this point, retailers have had to contend with disparate forecasting and planning systems across their supply chain, from supplier through DC to the store. At each echelon, separate approaches yield different answers to the questions: "What's in stock?"; "What do I need and where?"; and "When do I need it?". Traditional systems offer only short-term view of inventory, often only 30 to 40 days. Now, with RRP, retailers have a single view of inventory down to the store level, within a planning horizon that extends out a full year. Better visibility into the future reduces surprises, allows more proactive initiatives and facilitates coordination and negotiation with suppliers, effectively improving inventory turns and gross margin.

It's long been thought that the item forecasting capabilities in distribution resource planning (DRP) systems could not be extended past the DC to the store. The volumes of data at the item/store level seemed overwhelming. As a result, "push" or simplified "pull" models still predominate retail practice, resulting in less accuracy, higher than required inventory, and exacerbated out-of-stocks. The few efforts to date to retrofit existing DRP systems to the store level have largely failed. A true RRP system must be designed from the bottom up. The Tomax RRP solution incorporates proprietary, patented techniques that solve this problem enabling forecasting out to a full year by item by store in support of the needs of the largest Tier One retailer down to the regional chain operator.

Another reason retail resource planning systems have been slow to evolve is that few retailers have high data integrity by item in the store. This has made it difficult to centrally aggregate inventory information on an item/view basis for every store in the chain. By contrast, provides a realtime view of inventory on hand, on order, in transit and reserved that is continuously updated and which serves as a unique, single instance platform on which to support the advanced capabilities of the RRP solution.

"Our entire development focus behind has been in the execution round -- the byproduct of which happens to be this incredibly rich repository of by item by store information including inventory, price, customer, employee, and hundreds of other attributes. The idea that this information is available in one place, and is updated in realtime across the chain, is an explosive and unique opportunity for retailers to dramatically simplify their planning and business-modeling process," says Eric Olafson, CEO for Tomax. "It has taken us years to perfect this model and deploy it in over 35 chains. Now, with RRP, we have a way to exploit the power of and create enormous ROI for our customers."

In effect, RRP obviates entire processes and systems by collapsing the retailer's view of their world to a single system that is easy to interpret and manage. Suddenly, problems that in the past have required separate systems with complex interactions can be solved with simple arithmetic in a single system.

For example, superior levels of customer service happen because all the necessary resources are lined up in advance. It's not enough for a store to order a product. The distribution center has to have the product on hand, the labor has to be available to pick and pack the product, and the transportation has to be available to ship the product. The only practical way to make this happen is for there to be a single system that shows what's needed in terms of product at the DC, picking hours, and transportation requirements.

The alternative is to have four different systems: a store-level ordering system, a DC-level replenishment system, a capacity planning system for labor at the DC, and a transportation planning system. Additionally, the retailer would also need to build and maintain all the complex interactions to keep these systems up-to-date and consistent with one another.

Retail Resource Planning replaces all this complexity with a single, simple solution that allows retailers to simultaneously improve customer service and reduce costs, and to focus their associates' energy in a way that has not been possible before.