Teradata

Retail operations have always wrestled with accurately predicting and adjusting to those times when intense demand overwhelms distribution centers and stores. Everything from the holiday rush to seasonal peaks unique to your business can pose a consistent challenge that few, if any, retailers have had the tools to address with confidence.

Teradata® Capacity Planning, part of our Teradata Demand Chain Management (DCM) solution, elegantly addresses the flaws in distribution capacity planning. By basing projections on SKU level forecasts that you can convert into cubes, cases, pallets, or dollars, Capacity Planning enables you to meet customer demand, minimize exorbitant rates for outside storage, and avoid winding up with excessive inventory or lost sales due to stock outs.

In short, Capacity Planning for Teradata DCM is a systematic process for forecasting throughput and holding capacity at your distribution centers and your stores. With new levels of precision, it highlights times when expected merchandise will exceed the physical capacity and human resources of distribution centers and retail stores.

This process enables sales and operation planning teams to make the right decisions about scheduling shipments and receipts and having the proper people on hand. In turn, you can lower costs and achieve entirely new levels of efficiency.

The concept is simple. Calculate what’s needed for a specific period of time, identify the available capacity, and calculate the adjustments needed to stay within that available capacity. The challenge has always been making the proper calculations.

In the past, the reasons for less-than accurate capacity planning boil down to three:

1. Key suppliers are unpredictable and inconsistent – and every year retailers must confront a series of headache inducing negotiations.
2. Organizations base projections solely on dollars – on sales activity and projected growth – rather than on SKU level forecasts that you can convert into cubes, cases, and pallets, which are really the keys to capacity planning.
3. Organizations do their projections manually and sporadically, without a system that regularly and systematically gathers and reports all the relevant numbers.

To address these problems, each week Capacity Planning for Teradata DCM produces a 65-week planning view at the cube, case, and pallet levels, for all locations. Analysts can then compare the capacity to the order forecasts to determine whether they have the needed capacity – and make adjustments where necessary.

The weekly reviews include:

• Rollups at cube, case, pallet and dollars (retail or cost) for all order forecasts, for all locations, for a 65-week planning horizon.
• A corporate view of all product types for all distribution centers.
• Distribution center views for all product types.
• Conveyable, non-conveyable, pallet and repack picking types.
• Pallet and bulk storage types.
• Each with a variable weekly capacity.
• A store level view.
• A calculation of capacity usage and adjustments needed to stay within capacity.
• Results displayed in cube, cases and/or pallets quarterly, weekly, or over another specified period.

We’ve also linked this process to our Teradata DCM replenishment simulation, which allows you to run experimental changes to your replenishment policies to improve throughput. For example, after simulating such things as planned sales days, lead times, and service levels, you can change the order strategy to pull forward or push out new orders.

You can also perform what-if analyses of timing (moving forward or delaying either inbound or outbound volumes) and holding capacity as you solve capacity concerns. You can view the results of these analyses immediately.

The benefits are clear: lower costs, more efficient operations, and more satisfied customers. Capacity Planning achieves those benefits because it allows you to better:

• Meet the demand for peak period sales.
• Avoid the use of outside storage.
• Minimize corporate inventory.
• Minimize January inventory in stores.
• Reduce distribution center overtime.
• Maximize sales by reducing stock outs.

To find out more about how the Teradata Demand Chain Management solution and its Capacity Planning module can help you grow a better, more productive business, contact your Teradata representative.