Statistical Lockdown

By Larry Barrett  |  Posted 2003-11-01 Print this article Print

New Balance had nearly faded into irrelevance six years ago. Then, accurately forecasting demand for its shoes became a sport for the entire company and its retailing partners. Now it's making up ground quickly, in its footrace with Nike.

Statistical Lockdown

So Holland brought in a sales-forecasting application from a small company in Portland called SRC Software. SRC was founded 20 years ago by Phil Sandstrom, now the company's chief financial officer and chief systems architect, and Stephen Reiff, the chief technology officer, out of frustration with the software tool of the day—the Lotus 1-2-3 spreadsheet. That software couldn't handle the thousands of records' worth of data, and didn't have the security that was needed for financial forecasting.

With the SRC system, information about customers can be distilled for each sales rep from corporate databases. The reps download the information from a secure Web site as each month ends. Using the data and consulting with customers, each sales rep updates the forecast of each customer's orders, not just for the rest of the current year, but for the following year as well. Then, instead of using a malleable spreadsheet, sales reps enter their revisions in a locked-down template created by a "master user" such as Holland.

The template makes it easier for the sales rep to fill out required information and a snap for the system to roll up all the forecasts. If the sales reps send in their new predictions before the dawn of the first Monday of the month, by noon Holland can shoot back consolidated reports and breakouts by account and product.

In early 2001, Holland and Tom Murdock, a manager in New Balance's 30-person information-technology department, started to depl0y the software with the aid of an SRC consulting team.

It took only a few days of programming and debugging to get historical data out of New Balance's general-ledger system in a formatted file. That file could then be transferred by SRC's software into a Microsoft SQL Server database on a regular schedule. Meanwhile, Holland went to work building the templates that sales reps would be asked to fill out.

By the spring of 2001, the system was ready to use. Holland started distributing software and training the sales force at New Balance's regional sales offices in April. She did additional training on the software at the company's annual sales meeting in Acapulco in June. By summer, the forecasts were starting to roll in.

For the first time, New Balance sales managers could tell which representatives could best predict orders and could recognize who was responsible for managing problems with key accounts when they arose.

"We really didn't have any checks and balances before SRC," says Steve Prince, the West Coast regional sales manager for New Balance. "What SRC has done is added accountability to everyone's role."

Sales managers review each forecast that comes in, and generate their own "recap" reports. If orders from an account such as Nordstrom have deviated from the forecast, it shows up in those reports—and the sales manager can move to find out why immediately.

Senior Writer
Larry, of San Carlos, Calif., was a senior writer and editor at CNet, writing analysis, breaking news and opinion stories. He was technology reporter at the San Jose Business Journal from 1996-1997. He graduated with a B.A. from San Jose State University where he was also executive editor of the daily student newspaper.

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