At School Specialty, staff are responsible for delivering all the supplies a school needs—more than 75, 000 products, from pencils and desks to lab equipment, sporting goods, and curriculato 90,000 schools before the next academic year begins. It’s a huge three-month push: typically teachers write orders before school lets out, and around July 1 (when the school budget year begins) districts begin submitting purchase orders (POs) to School Specialty’s sales team. The supplies need to be in classrooms by August or September.
“It’s like a tsunami, ” says Mike Killoren, vice president of purchasing at School Specialty, noting that filled order lines jump from 100,000 per week in December to more than 800,000 per week in July.
Employees at School Specialty use Oracle E-Business Suite to plan for and execute the company’s response to this extreme seasonal fluctuation, both in the back office and the warehouse. Oracle tools are also used after the rush to evaluate performance and refine models and processes. The resulting automated, nimble operation also helps people at the company react to the shrinking budgets affecting many school systems today.
Smart Operations Demand and Supply
School Specialty employees prepare all year for the summer rush. Planning begins with sales data from previous years, pulled weekly from the company’s Oracle Order Management system and passed to a demand-planning application from Logility.
The resulting demand plan estimates how many units of each product School Specialty will sell; this figure is adjusted to account for the 5, 000 or so products in School Specialty’s catalog that chum annually (about 20 percent), economic conditions, and other factors. School Specialty buyers also use the demand plan to begin discussions with the company’s 3,000 vendors about needs for the coming season.
“Logility does the math and then passes the information back into Oracle as a forecast, ” Killoren explains. “Then we use Oracle MRP [materials resource planning] functionality to calculate what we should buy based on the forecast. We refer to that as a supply plan. ” The supply plan incorporates not just hereby solving critical supply chain problems), already allows Lojas Renner staff to measure customer behavior and modify product offerings based on local tastes. Now managers can clear stock (avoiding markdowns) and accurately meet market demand (avoiding out-of-stock situations). In fact, managers have been able to reduce markdowns by as much as 20 percent through better demand planning. This, in turn, has lowered inventory costs and enabled inventory managers to focus on the right products for each store. As a result, Oracle Retail applications have helped Lojas Renner increase gross margins by 2 percent, a significant improvement.
On the supply side, the company needed to be flexible with its suppliers. “Supply chain excellence, ” Simone says, “goes directly to the bottom line. ” According to Simone, Lojas Renner’s suppliers are a key to the company’s continued success, because one challenge that comes along with Brazil’s growth is competition. “Suppliers have more options now for whom to work with, ” he says. “We need loyalty from our suppliers. ”
To help ensure that fidelity, Simone says, Lojas Renner is trying to give its suppliers more visibility into its demand forecasts so they can adjust their capacity in advance. Simone and his team built a portal with Oracle iSupplier Portal (part of Oracle E-Business Suite) to give suppliers visibility into the company’s demand system. “We have between 700 and 800 suppliers, both big and small, from LOréal to Chinese suppliers to suppliers with home-based businesses, ” Simone says. The portal enables Lojas Renner to give all of them “the big picture of their future with the company: volumes, order anticipation, a working partnership. We can say to our suppliers, ‘Let’s start booking production for next year. ’” That, in turn, enables the suppliers to perform with greater efficiency and keeps them doing business with Lojas Renner.
Smart Operations and Retail CloudBurst
Lojas Renner’s greatest technological leap forward was its decision to move into the cloud, taking advantage of Oracle’s SaaS offerings. According to Balbinot, the advantages of the SaaS model are multiple and substantial.Continue reading Smart Operations and IT Help Prevent Tardy Deliveries