Following Footwear, Step by Step

By Sean Gallagher  |  Posted 2003-11-01 Print this article Print

How a pair of New Balance shoes gets to market.

A pair of men's 991 running shoes, grey, size 13D, has just left the Foot Locker athletic-shoe store in Towson, Md. And a replacement pair is coming. Soon.

How New Balance replaces the 991, a bread-and-butter running shoe designed for mildly flat-footed runners, exemplifies how it intends to keep picking up ground on Nike, still the dominant producer of sports shoes. New Balance can grab share by making sure no sale of its most popular shoes gets missed. That means automating the replacement of the heart of its lineup.

As with a can of soup at a grocery, the key is the bar code identifying the shoe that just left the store.

Scanning the code on a box of shoes at the cash register launches the electronic steps that lead to the arrival of a new pair in Towson.

The code is used to subtract the shoes from the store's inventory records, and simultaneously send a record of the sale to New Balance. That triggers the order for a replacement pair.

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At New Balance headquarters, the sale goes into a business-intelligence database, known as DI:Atlantis. This information library gives executives a snapshot of the current shoe market—by style, size and width of every shoe at every store in which it battles for consumer favor. If 991s have suddenly gotten hot throughout Maryland, two pairs may get sent to Towson, instead of one.

That decision will get made on the following Monday, when executives study the weekly "Top Accounts" report, which combines the DI:Atlantis data with information from the sales-forecasting system. "We're looking at the top 25 accounts to check the validity of the forecast," says Steve Prince. "If we see things that don't make sense, we dig down and find out why."

Noting that Foot Lockers in the Eastern Region are moving more 991 Greys than expected, sales planning manager Stan Mescon tells material suppliers and manufacturing managers to get ready to bump up production. "We can adjust our inventory plans faster than the sales rep can update his forecast," says Mescon.

The sale also goes into the SRC sales-planning database, which the sales force downloads at the end of each month. Armed with proof of greater-than-expected sales, a New Balance sales representative suggests to Foot Locker's regional manager that in-store stock of 991 running shoes should be increased, so no sales are lost. The Foot Locker manager agrees. The sales rep changes his business plan—and sales forecast—accordingly.

At a monthly forecasting meeting, the sales-planning team reviews the combined effect of scores of revised sales plans from the field. Using a statistical engine from Agilisys, the team revises forecasts for all product lines, up to four years into the future.

But for now, the result is much simpler. The Foot Locker in Towson keeps just enough men's grey, size 13D 991 running shoes in stock to satisfy any slightly flat-footed runners who may walk in during the next week.

Sean Gallagher is editor of Ziff Davis Internet's enterprise verticals group. Previously, Gallagher was technology editor for Baseline, before joining Ziff Davis, he was editorial director of Fawcette Technical Publications' enterprise developer publications group, and the Labs managing editor of CMP's InformationWeek. A former naval officer and former systems integrator, Gallagher lives and works in Baltimore, Maryland.

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