Case study

adidas
adidas uses Connected Retail Merchandise Planning to boost performance across the chain

Background

Connected Retailer
adidas facts at a glance
Live with Connected Retailer Merchandise Planning since autumn 2001 43 outlet stores located across the United States Three Sport Performance stores, in Seattle, Portland, and Santa Monica, offering technical sport, apparel, and footwear One Sport Heritage store featuring original lifestyle products, located in New York, with additional stores planned for Miami, San Francisco, and Los Angeles The system has improved our ability to flow product in and peak it before key selling times... and predict when to start the sell-down periods. Thats the hardest thing to anticipate, because no one wants to turn off the tap too soon. Now we actually get compliments from the stores.
MATT ARNIS Manager of Planning, adidas

Although adidas is one of the worlds largest and most prestigious sports and sports lifestyle manufacturing enterprises, its North American retail operation is comparatively small. The enterprise includes 43 factory outlet stores selling distressed or aged merchandise; three Sport Performance stores offering first-line technical sport products, apparel, and footwear; plus one Sport Heritage store featuring lifestyle products. Nevertheless, with three banners, a diverse range of merchandise, a national presence, and plans to expand, adidas has acquired many of the IT needs of larger retail chains.

Challenge
By the year 2000, adidas had outgrown its capacity to develop chain and store plans on spreadsheets, and had recognised the need for change. Matt Arnis, the chains Manager of Planning, says that although he and his staff of six had been using Excel for years, they had become increasingly frustrated with its limitations. We needed to become much more productive, he says. Spreadsheets are, by nature, very error-prone. Because we generated many different iterations of each sheet, I was able to spend only about 25% of my time actively planning, since most of my time was needed for updating and checking data. Spreadsheets also made it difficult for adidas to accurately track and respond to the sales trends of each store. With the outlet stores, we simply distributed and planned around maximum capacity, Arnis says. They were held consistently to their capacity limits, which were just split up as a percent across classes. But that often produced stock clogs, since you shouldnt be at maximum capacity all year round. The company needed to be able to plan with much more flexibility and detail. They needed an automated planning system that would ensure optimal allocations at each location and well-coordinated planning across the chain. They wanted to migrate to an open system that was easy to learn, but with capabilities and features as big as their ambitions. Among other things, that meant acquiring a system that would integrate well with all of their other applications, from a solution provider that offered a complete range of professional support services.

Solution
adidas found its answer in Connected Retailer Merchandise Planning, available in the UK and Europe from BT Expedite. Although Arnis had worked with and evaluated other systems, he says that the BT Expedite solution offered the best potential to effectively address a number of key issues, including overall performance, user flexibility, system integration, and long-term support. Merchandise Planning had all of the functions and features we were looking for, and it promised to give us maximum control over our system, Arnis says. And because we had achieved very positive results with other Connected Retailer products in our IT system, including Sales Audit, Replenishment, and Customer Information Management, we had a high level of confidence in both the solution and the provider. We liked the fact that our planning product would link smoothly and fully with our other key applications, and that we could continue to build on a range of best-ofbreed solutions from a single, proven source. adidas began the implementation in its Sport Performance stores, then rolled it out, district by district, to include the nationwide outlet locations. Arnis praised the overall process, including the training he and his staff received from the NSB team. Not only did they make sure we had all the technical and operational knowledge we required, they helped us migrate from our old way of thinking and working, he says. As we learned the open system, we were able to refine our process definitions, review our calculations, and set our execution rules. It was a major transition for our lean organisation but, thanks to NSB, it was a positive experience that has really paid off.

Results
Planning more effectively One of the most significant overall benefits adidas has acquired is the ability to plan more effectively at the chain level and work down to the stores. With their rolling implementation, it took them a while to develop enough history on which to develop a reliable chain plan. According to Arnis, Progressively adding a stair step of stores meant we couldnt do a whole chain plan right away and push it down, because we have such a huge variance in our locations. But it didnt take long before we were able to start with our original financial commitments, developing a chain plan, going down to the store, and reforecasting over time. Its wonderful now to be able to push the plan down, and its amazing how well it works. Using time more productively For Arnis and his staff, working well means being able to do more, in less time, with better results. Whereas most of his time had previously been spent checking and correcting spreadsheets, Arnis says that, With Merchandise Planning, my time is spent balancing between different planning modules and focusing on the core process. Its much more analytic and productive. Getting the right product to the stores at the right time Merchandise Planning has also significantly enhanced adidas distribution process. The system has improved our ability to flow product in and peak it before key selling times, Arnis says. It has helped us predict when the inventory should go down and when to start those sell-down periods. Thats the hardest thing to anticipate, because no one wants to turn off the tap too soon. Now we actually get compliments from the stores about the way goods come in. Moving forward, Arnis says he and his team intend to integrate planning with buying to a greater degree, and that they are looking forward to making continual improvements by tailoring the application to adidas needs and taking better advantage of all that the system can do.

Replanning in more detail and more frequently As part of this quest, adidas will be working to define which chain plan elements are transferred down to the store level and identify the best ways to do that, in order to reforecast more frequently. We currently run department down to class, but wed like to drill down to our store plans at a lower level, and to replan on a monthly cycle, Arnis says. Going forward, were also going to make greater use of the applications data filters to identify and automatically adjust for exceptions the stores that are over or underperforming relative to the plan. Asked to summarise his experience with Merchandise Planning to date, as well as his expectations, Arnis says, Theres no question that we made the right decision. Our experience with both the company and the products has given us the confidence to do what we need to do, and to continue with our plans for building on our Connected Retailer solutions. We know that we have a system we can grow with for years to come.

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