The Supply Chain and Inventory Planning Blog

You may be wondering what exactly a planner does with their time, besides the obvious planning. Put simply, your main responsibility as a planner is to order the right amount of inventory, at the right time. But in order to do this, you must put in place and manage quarterly, monthly, weekly, and daily processes consisting of pre-season, in-season, and post-season planning and analysis. In other words, no two days are the same!

1. Check Your Emails

Pour yourself a large cup of coffee and get ready for the day ahead! Because your role as a planner is integral to the connectedness of the organization, it’s important to stay up to date on all relevant information from the teams you bridge. This means staying on top of what your Finance, Supply Chain, and Marketing teams are requesting or sharing with you.  

2. Know Your Sales

While you’re probably naturally curious and want to know how you’re performing, having a pulse on performance will also help you with the day’s decisions and ensure others you are well informed. Trust is a fundamental component of any Planner’s relationship with their team and knowing what your sales are is a key part of building it. Stay on top of performance highlights, wins and losses, and you’ll be sure to leave a good impression!

3. Manage Your Inventory

A big part of planning is having a good handle on where your inventory lives. This means staying on top of deliveries and any shifts in receipts, stock levels, and any other inventory records that may impact sales and performance. This time may be spent running and analyzing reports, asking and answering your own questions, and most importantly, taking note of anything that will impact product planning.

4. Forecast

Alas, you have the most up to date information to influence your planning strategy and projected sales. Now’s the time to put these learnings into effect. This is the part of your day spent in any systems and/or excel models used to forecast demand and inventory needs. While this may be among the most time consuming of the day’s activities, it is undeniably the most important.  

5. Submit Your Handoffs

Similar to how you start the day making sure you’re up to date on everything, you typically end the day ensuring anything that may impact others is shared in the appropriate manner. Once you’ve cleaned everything off your plate, spend some time planning the rest of your week and making sure all monthly and quarterly to-do’s are being taken care of as well. 

Enjoy the Ride

Being a planner truly is an exciting role. You get to work with every part of the business, buy products, and watch mathematically backed guesses unfold. Not only do you forecast inventory needs and performance, you’ll be on top of both short term and long term business planning as well. A great practice to make the ride as smooth as possible is ensuring information is up to date and accessible to others, asking questions, and staying curious! 

At this point, you may be wondering, “Are planners superheroes, too? How is all of this done in one day?” The short answer is, it won’t always be. That’s where Fuse comes in. Our goal is to help simplify the inventory planning process and make a Planner’s role easier. We take out the grunt work from these tasks so that you can focus on the big picture. Less day-to-day, more accomplishment-to-accomplishment. 

While the two go together like peanut butter and jelly, there are key differences between the role of a Buyer and that of a Planner. For instance: 

• The Planner determines the right order quantity and order time whereas the Buyer determines the right selling quantity and selling time. 
• In some cases, the Buyer is also responsible for making sure the business has the right product, in the right place, at the right price. 

In any case, it’s important to note that Buyers and Planners must work together, challenge each other, and ultimately align on what’s best for the business. 

So what exactly are the main differences? 

1. Working with Marketing

The main difference between a Buyer and Planner as they work with Marketing is that a Buyer provides information to Marketing whereas a Planner receives information. Since a Buyer’s responsibility is determining the selling quantity, their objective is to sell products as effectively as possible. This means providing the Marketing team with product strategy to optimize selling. Explaining who the products were purchased for and why can help inform the marketing strategy.

A Planner, on the other hand, is a recipient of this strategy. Their objective is to understand the outputs that will impact future demand so that the right order quantity can be determined for a later point in time.

2. Working with Supply Chain

Similar to the relationship mentioned above, Buyers are often providing information in the earlier part of the supply chain whereas Planners are often receiving information in the latter. A Buyer may work with the team on the development or procurement of goods, whereas the Planner is more involved from the stages of PO placement to receipt. 

Put simply, a Buyer is responsible for product records such as vendors and costs, whereas a Planner is responsible for inventory records such as receipts and timing of ownership. 

3. Analyzing the Business

While both will dive deeply into understanding the business, a Buyer will most often speak to top sellers and the result of marketing efforts on product sales, whereas a Planner will go further into category insights, comparison to forecasts, and monitoring inventory. 

This process is one where the two roles must work the closest together to best understand the business.

4. Using Data

While the data both Buyers and Planners read to understand performance may be similar, a key difference is that Buyers are more focused on data related to the future and upcoming trends whereas Planners are more focused on past demand and historical sales.

5. Organizational Structure 

Because their worlds overlap so much, you’ll often see a Buyer and Planner by each other’s side. However, they may technically sit under separate teams. A Buyer will often sit under a function that oversees revenue, such as Sales or Marketing. On the other hand, a Planner may sit on a team that oversees inventory and budgets, such as Finance. This separation helps ensure there are healthy challenges across interests, thus supporting what’s best for the overall business. 

Two Peas in a Pod

The synergy of Buyer and Planner is integral to the success of any organization. While the Buyer focuses on who, what, why and where in order to build a top down approach, the Planner focuses on how much and when to build a bottoms up logic to eventually align at the optimal level. 

Fuse helps align these two forecasting methodologies systematically so that less time is spent on the nitty gritty, and more time can be spent on building the best relationship and strategies for the business.   

After conducting almost 200 customer interviews, we’ve gained some insight into what separates the great from the good when it comes to inventory.

We started by asking our advisor, Oseyi Ikuenobe, the Senior Product Manager of @WalmartLabs’ Smart Forecasting product for his thoughts. At @WalmartLabs, Oseyi and a team of data scientists and engineers plans the inventory for Walmart’s $13 bn e-commerce business. 

Inventory management should have ROI benchmarks

According to Oseyi, "The best inventory strategy is one that allows you to buy the 'right amounts of the right inventory' to maximize revenue, profitability and growth. Instead of trying to simply control costs, it is better to think of inventory decisions the way we think of marketing spend - in terms of ROI. Once you have that mindset, you quickly realize that the ultimate smart inventory solution is one that can synthesize the collective wisdom of the organization and deploy it to drive decision making."

We’ve gleaned two insights from Oseyi’s thoughts:

1. Best-in-class retailers think about inventory as an investment, not a cost center
2. Collaboration between key functional areas is key to successful inventory planning

Reframing inventory as an investment

We work mostly with start-ups and all too often we see them allocating a fixed budget to inventory. But, inventory is an investment, much like marketing. The investment that a company makes in its inventory supports the company’s sales target. We’d propose that companies go through a series of questions to set their inventory budget:

1. What is our marketing budget?
2. Based on our marketing spend and our organic reach, what is our revenue target?
3. How much product do we need to sell to support our revenue target?

This third question is the start of the planning process. Once the revenue target is established, a planner can go through and make a determination regarding the product mix and volume of product needed. 

Collaboration improves inventory planning

The process described above only works if there is tight collaboration between all of the functional areas that impact sales like finance, marketing, merchandising and operations. 

Unfortunately, we have seen a lot of avoidable crises caused because one functional area forgot to tell operations about planned changes. Things like changing the discount amount on a promo or A/B tests planned on the site. While these lapses might seem small, they can have a big impact if there isn’t enough product in stock to support these initiatives.

So What?

We want to encourage our customers to reframe the way you think about inventory: it’s not your biggest cost center, it’s your biggest investment. At Fuse, we’re designing a tool to help automate the grunt work of planning so that you can focus on important, strategic decisions. 

We’re here to help you focus on your business, not your inventory.

At Fuse, we are excited about the wave of online first brands that we’ve seen succeed over the past decade. In a recent post by Andy Dunn, he called these brands “digitally native vertical brands” and later, “v-commerce”.

Will digitally native e-commerce brands succeed?

We asked Matt Heiman, a consumer investor at Greylock to share his perspective: “My view is that vertically focused direct to consumer online brands are better positioned than pure 3rd party e-commerce concepts over the next few years. Particularly as Amazon approaches 40% of US e-commerce, competing with them is extremely difficult, so the idea of creating a new brand and owning your own customer experience is a better position. Some examples of brands I think have done this well are Casper, Dollar Shave Club and Warby Parker.”

We agree with Matt, and we think that the sale of Dollar Shave Club to Unilever earlier this year for $1 bn has convinced others that it’s possible to build a valuable brand that caters to a different kind of consumer online. Dollar Shave Club’s true value is in the company’s fantastic brand and it’s ability to appeal to and engage with Millennial consumers in an authentic way over social media and other digital marketing channels (1).

E-commerce platforms make it easy to build a brand

We’re seeing this trend first hand at Fuse. Our target customers are fast growing companies with at least 25 employees and anywhere from $10 - $100 million of revenue who are excelling at building their own online first brands. One company, Ipsy, knows all about brand building. Ipsy was started byMichelle Phan, who built her own personal brand as a make-up guru on YouTube. As the company has evolved, the brand which originally appealed to Michelle’s followers and the make-up obsessed, has started to reach more casual consumers looking to expand their horizons.

The good news for many of our customers is that it’s much easier to build a strong brand online today than it was five years ago. Due to the proliferation of front-end e-commerce platforms like Shopify,BigCommerce and Squarespace, it’s much easier to build a great brand with minimal upfront investment. With the emergence of Shopify Plus as an enterprise e-commerce platform for companies looking to scale, we expect this trend to continue.

Inventory management systems haven't kept up (until now)

Although this is good news for many aspiring brand builders, the unfortunate reality is that back-end tools and platforms haven’t necessarily kept up with the front-end. Shopify has done a great job building an ecosystem around its API, but there are still a lot of gaps on the back-end. That’s where we at Fuse come in. Our goal is to help simplify the inventory planning process to help companies answer the key question related to their biggest investment: “How much should I order?” We’re really excited about the growth of online first brands in the market, and are just as excited to be able to help those brands focus on their business, not their inventory.

(1) Source: Bloomberg

Marc Andreessen famously stated that “software is eating the world.” In e-commerce today, Amazon is certainly eating Whole Foods, but is it eating the world? While the full implications of the acquisition remain to be seen, there are a few things that we can infer from the acquisition and its impact on both food and e-commerce.

Standalone food start-ups will continue to struggle

Since the first tech bubble, standalone food start-ups have struggled to succeed. In the early 2000s, Webvan, a precursor to today’s Fresh Direct and Instacart went belly-up. There are several key factors that contributed to the start-ups failure, but the main one was a lack of scale. Today, despite being tremendously popular among Millennial audiences, food start-up Maple shut down last month. Others, like Munchery, continue to struggle and may not be long for this world. On the other side, the shining success in the industry has been Blue Apron, which announced its IPO. While some attribute Blue Apron’s success to marketing, we attribute it to a laser focus on implementing operational efficiencies and constantly improving with scale. 
 
In general, that will continue to be the theme. Food (and more broadly, inventory) waste has the potential to take a company down and creates notoriously tight margins. In many ways, Amazon, who has made its name operating on razor tight margins, is the perfect acquiror for a food business that tends to experience these issues to the extreme. 

The war between Amazon and Walmart is about to heat up

With a slew of acquisitions recently - Jet.com, Bonobos, Modcloth - Wal-Mart made it clear that it’s making it’s presence known in e-commerce. Amazon has countered with the Whole Foods acquisition and will start going after the bread and butter of Walmart’s business. Not only that, but given Amazon’s expertise in operating on low margins, it’s actually well positioned to decrease Whole Foods notoriously high prices. This will broaden Whole Foods’ reach and put it in more direct competition with Walmart Grocery shoppers. At the same time, Amazon can offer a slew of other attractive food related services online and in stores. 

But can brands still stand up to Amazon?

As we look to the broader ecosystem, what does this mean for brands and retailers? Is everyone else doomed? While this may be an unpopular opinion, we here at Fuse don’t think so. 
 
As the competition between Amazon and Wal-Mart heats up, the two will tend to converge into two very similar players with limited differentiation in the consumer’s eye. The number one differentiators will be price and convenience. In many ways, while Amazon’s success has put pressure on physical retail, it’s acquisition of Whole Foods actually validates that physical retail isn’t going away.
 
By 2020, Millennials will account for 20% of retail sales. Unlike prior generations, Millennials are looking for unique experiences and deeper connections to the brands they shop with. While Amazon and Walmart will always win on convenience, brands that work hard to facilitate unique experiences, value props and bespoke feeling (if not actually bespoke) products will continue to speak to Millennials. What’s more, creating these brands online is easier than ever today and there is so much more flexibility in what a brand’s physical presence needs to look like. It doesn’t have to be a fully stocked store, but rather, it can be a showroom or pop-up. 
 
In the early days of e-commerce, all brands were essentially competing on convenience. But, today, as e-commerce becomes more and more ubiquitous, it’s clear who’s poised to win on convenience. In many ways, this can be liberating for brands given that instead of competing on faster shipping, they can compete on delivering the brand experience Millennial consumers are searching for. 
 
In short, we don’t believe that the rest of retail is going away, but we do believe that retailers have to get smarter not only on brand, but also on the operations side. As tools like Fuse continue to grow, scale and become more ubiquitous, brands can help themselves compete against larger players who have vastly more resources. No matter what type of brand you’re building, Fuse is here to help you focus on your business, not your inventory.

In a previous post, we highlighted five reasons why e-commerce brands still need a physical presence, but we don’t think that that physical presence needs to be traditional store. Two new models, the showroom and the pop-up have emerged, and we think they can be just as effective if not more so than a traditional physical store.

According to Pop-Up Republic, pop-ups have driven $10 bn of sales annually and are continuing to grow. Even big brands like Nordstroms have created in-store pop-ups embracing the trend. Why are pop-ups so popular? And how can they be effective for growing brands over having their own retail store? And where do showrooms fit in?

Pop-ups provide flexibility

As a temporary location, a pop-up can provide ample flexibility for experimentation. As a brand, you can lease different size spaces in different locations at different times of year to figure out what works for your brand and resonates with your customers. The inherent transience of a pop-up allows you to A/B test different concepts, something that e-commerce brands are already doing all the time on their websites. Think of a pop-up as an opportunity to A/B test key variables like size, location, layout and assortment of your physical stores. In addition to these benefits, pop-ups are also a temporary expense thereby minimizing the risk of making a bad, long-term financial decision.

Pop-ups create a sense of urgency

The great thing about a pop-up is that it’s something new and temporary. These two elements can combine to encourage customers to buy now and to buy more than they otherwise would. Because they know your store won’t be there forever, customers are encouraged to make their purchase right when they see something they like rather than waiting until the next time they come back. While a physical lease runs 5 - 10 years, most pop-ups won’t be in a single location for more than three months.

Pop-ups can support your e-commerce business

For many emerging brands, the goal of their physical presence (whether wholesale or other), is ultimately to drive traffic to their higher margin direct to consumer business. Not only do pop-ups help you maintain your margin, but they accomplish a similar objective. If the customer was curious about your store, they’ll search for you online and be more likely to buy something than had they not walked by your pop-up. In a lot of ways, you can think of pop-ups as more like event marketing rather than a distribution channel.

Social media creates great marketing reach

In a world of social media, pop-ups become even more attractive because there’s an easy and convenient way to share the fact that you’re opening a pop-up with consumers. What’s more, it creates an opportunity for a conversation with your customers over social media in which you invite your loyal followers to come visit you in person. In the pre-social media days, it would have been very difficult to actually attract customers to your temporary location.

Showrooms are a natural extension of the pop-up

Most showrooms tend to be permanent and have been used successfully by brands like Warby Parker. While traditional stores hold inventory, pop-up shops often do not. Instead, they give the customer an opportunity to experience the product, decide what he or she likes and then place the order. Instead of walking out with the item, the customer gets the exact product they picked out delivered to their home. 

In a world in which physical retail stores are closing left and right, brands are searching for a great way to connect with customers and own the customer experience without taking on the liability that a physical retail store often comes with. The great thing about both pop ups and showrooms is that they derisk the financial investment required in creating your own physical space. In the case of the pop-up, the fact that it’s a temporary space limits the financial risk. In the case of a showroom, the fact that there’s little to no inventory investment is a different way to minimize that same financial risk. 

Regardless of whether you choose to keep your business e-commerce only or open a pop-up, we’re here to help you focus on your business, not your inventory.