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Case Study - Walt Disney Home Video Above the Standard Procurement Group, Inc.®, www.ATSPG.com

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Case Study - Walt Disney Home VideoNovember 10, 2014

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Summary

Above The Standard Procurement Group®, Inc. staff has more than twenty-five years experience in supply chain operations. This experience covers many indus-tries around the globe. Our staff has effectively managed complex, global projects and has worked with executives and world-renowned companies in the supply chain, distribution, and retail environment.

Specific Experience

Above the Standard has developed and implemented strategies for retail, supply chain and distribution for a variety of industries around the globe. We have man-aged hundreds of millions (USD) in annual spend and have generated significant cost savings and value through the development and execution of supply chain initiatives.

Problem DefinitionThis Disney project mainly focused on all of the areas and solutions listed below. Some of the challenges faced by Disney were:

� Find out the maximum number of facings to be allocated to each title depen-dent on various factors such as customer type, location, and so forth.

� Find out number of titles to be allocated for specific occasions such as Christ-mas, Good Friday, and many other holidays and events and analyze the sales accordingly.

� Analysis of sales (Plan versus Actual) for new titles. � Allocation of space for faster selling titles so as to improve sales. � Design of Micro tailored Assortments which consists of planning various as-

sortments for different types of customers.

Reduction of poor performing titles which simply occupy shelf space without gen-erating sales.

The solution has been designed keeping in mind not only the above mentioned challenges but also various other options that have been designed so as to help the Multi Billion Dollar Entertainment Retailer plan with the assortments accord-ingly and ability to generate optimized sales.

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SolutionIn order to devise a solution for the aforesaid challenges faced by Disney, Planning Prophet as a tool uses Base data (Previous Years sales) for analysis. Though title sales did not need a specific season to be sold; the base data plays an important role in forecasting and comparing like title sales. The important concepts taking into consideration were:

1. There were eight modules consisting of a step by step procedure starting from creating clusters, scenarios, allocating facings in strategy space and titles in strategy product and finally projection and comparison of the assortment in Primary assortment.

2. Store clustering that consists of grouping stores into specific clusters depending on specific attributes. Since there are large numbers of stores, it becomes very tedious to analyze the challenges for each store. With the help of clustering, it became very easy to analyze the stores having similar attributes and since there will be less clusters when compared to the number of stores, measures can be devised accordingly to improve sales and plan assortments.

3. Scenario Creation for specific accounts to eliminate poor performing SKU’s and more preference for faster selling SKU’s.

4. Forecasting of new released items (New Title Allocation).

Business Case ScenarioHere the main focus is on planning specific assortments based on diversified cus-tomer demand. The main factors important for planning are:

� Time Period (Month /weekly). � To analyze the sales (Planned versus Projected). � To Plan the assortment on Holidays (Christmas, Valentines Day, etc.) such as to

increase the sales for specific titles. � To add / drop titles such as to add fast selling titles to new stores and to drop

poor performing titles. � Comparison of fast sellers with other retailers and planning the assortment

accordingly. � To re-launch old tiles for the present season. � Various attributes such as Household Income, Race / Origin, Age, etc. These

attributes give an in depth analysis of the respective sales analytics. � To Plan the assortment at an all level or genre/sub genre level.

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ApproachThe solution for Disney consisted of nine major modules such as:

� Clustering. � Scenarios. � Strategy Space. � Strategy Product. � Attribute analysis. � Past Performance. � Concepts. � Candidates. � Primary Assortment.

Real Results | Real NumbersIn just one specific example, we implemented a Planning System for Walt Disney Home Video Division resulting in a cost savings of more than 50%.

The entire scope of this project included:

Brief explanation of every Module

ClusteringAs already discussed Clustering mainly helps to group stores based on specific at-tributes such as household Income, race, age, etc. Clusters are created taking into consideration the store profiling concept. Clusters are formed using three impor-tant methods such as Data mining, Grouping and Attribute Filtering.

� The Clusters are further subdivided into sub clusters depending on specific at-tributes and range values in order to achieve a refined assortment.

� Within each sub cluster is present an Average store. The average store resem-bles a particular sub cluster and it acts as a representative for other stores. The characteristics of an average store mainly help us in planning assortment for other stores. The average store is basically an ideal store of each sub clus-ter.

� The stores can also be moved within a sub cluster (Maintain Store cluster). For instance if there is a store A in cluster 1 of High Income category ; due to eco-nomic uncertainties, the store failed to generate sales in the present season when compared to last year. Thus this store A can be moved to cluster 2 of Low Income category where it fits the best.

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Scenario CreationA Scenario is basically created to eliminate poor performing SKU’s and more em-phasis is placed on faster selling titles.

� The scenarios are account specific to illustrate the assortment for particular accounts.

� It consists of an Assortment Base (facings/inventory) which is used to balance the space/inventory allocation for different clusters.

� The calculative measures such as ROS are achieved by using historical sales data from historic time period.

� Use of primary attribute to balance the assortment. The scenario reveals the respective sales analytics for the specified primary attribute.

Strategy SpaceThe basic objective in strategy space is to provide more facings for better selling genre / sub genre depending on new / existing assortment. It mainly emphasizes on facings.

Strategy ProductHere the basic objective is to provide more titles for better selling genre/sub genre depending on new / existing assortment. It mainly emphasizes on allocation of titles.

Attribute AnalysisAttributes play an important role in determining the sales of any product. Here the performance of the attributes is analyzed depending on last year’s performance. Thus a comparison can be achieved.

ConceptsMainly used for second level filtering when secondary goals are set.

ConstraintsUsed to evaluate the assortment.

CandidatesCandidates are mainly used to generate additional placeholders for the new/exist-ing assortment. It consists of:

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� Direct Input: Depicts details of all titles present in the assortment as well as provides options to add new placeholders.

� Previous Assortment: Here titles are added from historic assortment and sorted accordingly.

Primary AssortmentThe basic objective of primary assortment is to allocate more facings for better selling titles. It consists of:

� Universe of titles: Here we can view a complete list of all the titles for the selected Genre/Sub Genre. Also the titles added in the additional placeholders can be viewed in this module.

� Add titles: Here faster selling titles are added to stores which do not possess it. Once the addition is done, the updated list can be viewed in Universal of titles.

� Drop titles: Here the slow selling titles or the titles which absolutely do not generate any sales are dropped so that the shelf space occupied by these products can be made free for other faster selling titles or new titles.

� Assortment projection: This module is basically used for comparison of exist-ing and new assortments. Color coding is used to differentiate added and dropped titles. It’s also used for projection of sales for the particular assort-ment period (Yellow: Added Titles – Red: Dropped Titles).

� Add top Seller Title: The top sellers are usually those products whose perfor-mance in terms of sales ranks higher. Here by adding various top sellers from an account to other account (where it’s not present), a forecast of future sales can be achieved.

� Post scenario: Comparison of projected sales / margin to the actual sales / margin.

This one case study demonstrates engagement with the right company, how knowledgeable experts from Above the Standard bring short and long term change, and how savings can be realized even when a company thinks they be-lieve they have the right strategic plan in place.

We have coordinated and provided oversight for the creation of supply chain plans across multiple business units within many companies to leverage spend and maximize savings. When creating strategic supply chain plans we strive to apply a variety of value levers in order to provide optimal solutions to meet the business needs.