New Balance: Shoe Fits - ' Breaking Free From the ' (
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Breaking Free From the Pack
The system Holland inherited was an improvement from the days when sales quotas
were simply pushed down from headquarters, with the forecast basically being
last year's number plus some gut estimate of growth for the coming year.
The sales force would disavow the quotas, even as footwear flew off the factory
floor. "They would say, 'Those weren't
our numbers, those were
your
numbers,' " says Stan Mescon, the head of New Balance's sales-planning department.
So New Balance often got stuck with excess inventory.
In 1997, New Balance put the shoe on the other foot. "We decided, let's let
the reps give us what
they think are their numbers," Mescon says, "with
some topline direction." The management, after consulting with New Balance's
major retailers, would set a general sales goal, while leaving the details of
how to hit that target to the sales force.
The approach required information sharing on an unprecedented level—not
just with the sales force, but with retailers as well.
New Balance's management and sales team began meeting with executives of its
top retailers each season, to develop a consensus on goals for overall sales.
The retailer's buyers and merchandisers, along with New Balance's product teams
and sales force, hash out the details of reaching the agreed-on goals, down
to production runs for each shoe style.
In theory, New Balance would have the ability to manage its marketplace account
by account, region by region. But to make it work, Holland's spreadsheets had
to be replaced completely.
In 1997, New Balance brought in iProcess demand-planning software from the manufacturing-software
division of SCT Corp. in Malvern, Pa. The software ran on Windows NT and could
pull in data from files generated by the company's existing planning system.
The software helped Mescon's team take into account such predictors of demand
as general economic indicators, current orders, historic sales data and competitive
plans. The team produced forecast numbers for each style that could be given
to New Balance's manufacturing and sourcing managers to guide how they planned
for production capacity.
But it wasn't what Holland was looking for. "When we do the [overall]
New Balance forecast," says Holland, "what we've realized is that the sales
reps really are the ones who know what's happening with each of their accounts.
We wanted to be able to give them a tool [with which] to forecast more
accurately."
Projects: Management 
