6 Things to Consider When Selecting and Implementing a New Merchandise Planning System

According to the recent BRP Merchandise Planning Survey conducted by BRP, 63% of retailers are planning to upgrade their merchandise planning systems within 2 years.  It is surprising how many retailers are not satisfied with their current planning systems, given the amount of time and money they have put into them over the years.  This is probably due to the fact that legacy systems have not kept pace with recent changes in the industry and business processes, such as offering omni-channel services.

Whether replacing existing merchandise planning systems or implementing a new system for the first time, there are several key points that should be considered to select the right system for your needs:

Meeting_Small1. Understand what is and is not working with the existing systems

This may sound trivial at first glance, but it is critical to the ultimate success of the initiative because it will not only clarify the reasons for replacement, but will also highlight the positives that are worth keeping – yes, some things may actually be working well!  It also brings to light some business process issues that differ across the organization; perhaps the way the men’s department is planning gives better results but the women’s department is not following the same process.

2. Measure past results

In order to determine where the success and opportunities are, measuring past plans against actual results is critical.  This needn’t be an elaborate exercise and can be done with dollars, units or margin.  Looking at the plans at an appropriate level (department or class) for the past few seasons and years should be sufficient to see how well planning is being done throughout the organization.  It will also help to identify which planners are doing a good job and who needs some guidance.

3. Define the business strategy

Now we need to make some important decisions regarding the scope and method of planning.  Will we plan at an overall omni-channel level and then drive down to each individual channel?  Who will do the planning? Will the people who plan men’s shirts do so for all channels or will we have different teams of people planning each channel separately?  Will reporting roll up from individual channel plans?  What if the bottoms-up and top-down plans don’t match – who wins?  These are some of the same issues that have always been present in merchandise planning in a larger organization, but they are more critical now that we are in an omni-channel world.

4. Thoroughly examine each tool’s capabilities

When examining each vendor and their merchandise planning tools, it is critical to understand what functionality they offer.  Even more important is to discover how that functionality is going to work for your company and with your data.  Many companies prefer to follow the traditional RFP process while others focus more on detailed demos and working sessions using slices of real data.  In either case, there is more to learn than just having a checklist of requirements.  Of course other factors such as licensing cost, hardware requirements, cloud vs. on-premise are important to consider as well.

5. Ensure availability of internal resources with the needed skill sets and capacity

While implementing a merchandise planning system has many technology components, a large portion of the effort will reside with the business users.  This is rarely an easy task and frequently involves large blocks of time for data validation, testing, discussing results and re-planning.  All of this is in addition to the normal workload that planners must complete, particularly during the first detailed planning effort using the new tool.  While there is risk involved in moving to a new system and hoping for the best, it is frequently impractical to run the old and new system side-by-side.  This not only takes extra time but the results may not match due to changes in calculations or process changes that will be difficult to reconcile.

6. Don’t underestimate issues around data

Getting the right information into a merchandise planning system on a timely basis is a difficult process and may differ depending on the maturity of the old and new system.  For example, extracting data out of spreadsheets for input into a true planning system will raise different issues than moving from one mature system to another.  Some data that is required by the new system may be incomplete, inconsistent or simply not easily available.  It isn’t uncommon to discover during the project that new interfaces need to be written to extract data from other systems.  It is important to consider the timing, as loading all the detailed data by SKU for the past three years could require weeks of running extract and load programs.

Choosing and implementing a merchandise planning system is a complex, time-consuming and costly process but with the right plan and experienced resources to help with the process it can transform your business.

As always, I appreciate your insights and comments on this topic.


Todd was recently the founder and CEO of Jade Group, a retail consulting firm. Through his career he has been an IT Executive at companies such as Women’s Specialty Retail Group, United Retail and 9 West as well as a consulting Manager at Deloitte & Touche. Todd has extensive expertise in private equity acquisitions and has been an advisor to some of the largest private equity firms in the U.S. Todd’s expertise includes store systems, logistics, warehousing and distribution, merchandising, demand forecasting, fulfillment and business intelligence.

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