PUMA is one of the world's leading sports life-style companies. The shoe, clothing and accessories manufacturer was founded in 1948 in Herzogenaurach, Germany, and now employs around 11,000 people. The PUMA Group with its brands, PUMA, Cobra Golf and Tretorn, is represented in more than 120 countries around the world with sales reaching 3.45 billion euros in 2012.
Sports lifestyle is a dynamic business. Great things are demanded of the industry in which PUMA has been successfully active for years. Fashion trends and seasonal changes in demand must be anticipated and taken into account at an early stage in the planning. The challenge is to have the right products on offer and to stock them at the right time to meet that demand instantly. This requires planning of the utmost precision, especially when products have to travel great distances from pro-duction site to delivery destination.
Before now PUMA tackled this challenge using a variety of software tools, designed to identify the needs of each country and consolidate them at headquarters. "However, the lack of integration of these tools with the overall process led to losses in efficiency. It meant we had no realtime data, inaccurate forecasts and inconsistent national product ranges.", says Kurt Walther, Global IT Director at PUMA, reflecting on how it used to be. Because the planning algorithms also worked offline and were neither departmentally nor internationally integrated, the entire system was non-transparent and inflexible. Combined with the fast pace of the market, we kept ending up with shortages and residual stock – exposing the gap between supply and demand. A universal shake-up was initiated, with the aim of bringing in a fully integrated planning process to instill the flexibility the company was missing.
On its search for a suitable tool and after extensive assessments, PUMA chose the all-in-one toolkit, BOARD. The software showed a striking level of technological flexibility, while its implementation partners, SDG consulting AG, showed an impressive level of professional expertise. In a proof of concept, the legacy solution already turned heads with its rapid application development and an unrivaled level of detail and precision.
The BOARD Solution
Before implementing the "integrated planning solution" (IPS) came the detailed requirements specification. Due to the complexity of the plan-ning process, the SDG consultants first visualized the processes to ensure a global common under-standing of these and the planning structures.
The solution implementation was modular – embracing the spirit of agile project management methods. In combination with BOARD's programming-free application development, individual sections of the solution were handed over to production at very early stages. In particular, the following modules are already implemented or planned:
- Product range planning
- Requirements planning
- Rolling forecast
- Procurement planning including stock strategy and order proposal system
- Sales and implementation planning (2014 plan)
- Resources planning (2014 plan)
By seamlessly interfacing every subplan in the IPS, the planning process could be integrated on a global scale. Worldwide, PUMA now does its entire planning with BOARD.
By looking at the central planning calendar at any time of day or night, the user can check their current planning step and when the next target deadlines are. There is also an automated email run, to remind the relevant positions to complete their allocated tasks on time. Individual areas of planning are released or blocked, according to the planning calendar. BOARD's comprehensive workflow support increases process reliability and guarantees the timely completion of individual tasks.
The product range planning element includes the entire merchandise and product planning. In the worldwide merchandise plan (MP), the financial planning budget is allocated at various detailed levels of the complex product range organization with the help of bottom-up and top-down planning algorithms. BOARD also collects qualita-tive market feedback in the form of written comments from all over the world, then evaluates it in a structured way. Finally, the schedule is transferred to the conceptual assortment plan (CAP) for the designers and product managers, who allocate the budget to each product line based on price scoring and article/style efficiency.
Demand-based planning is done at national level. Members of the PUMA planning team have all the information they need, in compressed form. They can check general targets from the upstream merchandise planning at any time.
Suggested values for new items are calculated based on pre-generated article clusters. This eliminates the need for time-consuming searches and mapping reference articles. The planner just has to rate the difference between the A (better), B (same) or C (worse) clusters to get a reliable suggested value.
Users can also view a detailed margin calculation in their local currency. The RRP is compared against the cost price – calculated based on the specific import conditions – to determine a mar-gin for that country. This gives PUMA planning team a precise calculation, which they can use to identify high-margin articles for each country and to supply the planned quantities.
Only little information is available at the first stage of planning, when most of the sales staff are yet to visit their customers. As such, to increase plan-ning accuracy, the plan is regularly updated right up to the monthly rolling forecast, with the target figures continuously adapted to changes in customer demand. The IPS supports this by calculating the forecast values based on the current season's sell-in figures and looking at cluster-based order trends of previous comparison periods.
Getting early and continuously updated information from the demand forecasts is crucial to the procurement planning team. Most importantly, this information is used to estimate the necessary production resources and material requirements, which need to be blocked well in advance with the appropriate suppliers. But the continuous forecast updates also mean the company can automatically adapt to any potential changes in the market demand situation.
In the course of time, the requirements get more defined and exact orders must be made. To do this, Puma first does a size break-down on the amounts which were until now planned with-out any size specifications. This is based on the cluster-specific size patterns calculated in the IPS.
Using up-to-date data such as available stock, pending supplier orders and pending sales orders, the BOARD platform determines the resulting net demand based on the planned gross figures. Based on complex computation and optimization algorithms, this is distributed on defined order dates or "order place dates" (OPD). The idea is to keep our order placements as even as possible over the available time period, minimizing excess and surplus stock and using production resources in the most efficient way possible. At the end of this step PUMA has the order proposals, which are sent separately according to their category – "with risk" (no existing customer orders) and "no risk" (existing customer orders) – to the relevant operative systems so they can create supplier orders.
In terms of managing and controlling the planning process, there are several ways to check the planning status centrally and in realtime. The software clearly shows which countries already completed individual planning steps and the current progress status of other regions. This helps us adhere to the schedule, increases transparency and therefore the stability of the entire planning process.
Over 500 employees from various departments (e.g. merchandise, supply chain and purchasing) now use the IPS to plan the entire wholesale business and the approx. 100,000 SKUs (stock keeping units) handled every six months. The number of users will gradually increase as the rest of sales and resources planning join up – in the latter part of 2014, around 2,500 staff will be working with the integrated planning solution.
Thanks to the BOARD-based IPS, PUMA can, for the first time, enjoy the end-to-end integration of all its planning processes. Fewer interfaces means less potential for errors and increases planning accuracy and reliability. They are able to eliminate most of the costs that have re-sulted from the inefficiency of previous planning. Demand and supply are now significantly better coordinated, and this is noticeable along the entire supply chain.
Today, all PUMA branches plan using the same tool and the main office has 24/7 access to the current planning status – in realtime. Multiple manual steps were automated in BOARD – entirely programming-free thanks to the Toolkit solution – and unproductive steps were eliminated. By optimizing their allocation of tasks, their planners can now concentrate on the core business. Thanks to BOARD's intuitive operation and helpful details such as product images and comment functions, users can quickly find their way around the IPS.
The IPS is a highly sophisticated tool and yet very easy on resources: "Now there's only one single system to manage, and one that's extremely low maintenance thanks to the efficient BOARD solution. Across five continents, PUMA branches are connected by a single server in Herzogenaurach, on a system that's stable and powerful. Storing data on a single, central database delivers consistent data, makes our administration tasks easier and offers users options that weren't technically feasible until now", explains Kurt Walther, IT Manager at PUMA.
By centralizing it on a single database, key data is available as early as the planning stage, in realtime. With this knowledge, the product range and, with it, the procurement volume of individual articles can be reduced at an early stage. Thanks to the tight integration of BOARD with the legacy systems, planning figures can be saved to them automatically, which reduces the number of steps and errors.
“With our integrated forecasts prompting early signals, we can now respond quickly to current market changes, and reduce any production and delivery delays, special productions and residual stocks. The result is a high level of availability while keeping stocks low. Our customers are happy with our impressive delivery times, securing, even increasing, sales. By centralizing pur-chasing we reduced our purchase prices and minimized our capital commitment costs, also contributing to a direct improvement in profit.” Says Kurt Walther.
Joachim Schück, Director Supply Chain EEA at PUMA, sums up the situation: "Until now we weren't responding quickly enough to trends and changes in demand. The lack of integration of our systems led to ongoing efficiency losses along the entire supply chain. With the new planning solution, we have significantly increased the accu-racy and speed of our forecasting, and are now in the position to continuously balance supply and demand. The combination of tools we used to work with would never have given us the level of detail we are enjoying in our planning today. Our BOARD-based Integrated Planning Solution gives us a clear competitive edge."