New Balance: Shoe Fits - ' The Final Kick '
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The Final Kick
Of course, the impact of the improved forecasting really is most immediate and
visceral on the individual salesperson. The performance of every single salesperson
is laid bare to every single member of senior management. Visibility of the
numbers fosters communication, Holland says. Like Tompkins' phone calls.
Tompkins and Fran Allen, New Balance's vice president of sales, made the first
few rounds of calls. Now they're
made on a weekly basis by regional sales managers such as Steve Prince.
Sales reps, says Mescon, "are always on the hook, one way or the other." The
result, he says, is that the reps are becoming better at their business. "The
salespeople are much more accountable, and they're spending more time managing
the business, especially the larger accounts."
Part of managing the business means finding ways to continue the torrid rate
of growth that New Balance has seen over the last five years. To do that, the
company intends to create athletic shoes that make women and children consumers
of its footwear on the same scale as the male middle-aged athlete.
To make that happen, the company not only needs to design products that appeal
to the other gender and the younger ages, but to gauge and respond to demands
from all consumers faster and more accurately.
Expansion also will have to come from areas other than shoes. The apparel division,
for example, last year chipped in a paltry $52 million in sales, roughly 4%
of total sales. New Balance executives have laid down an ambitious gauntlet,
asking sales representatives to raise that share to 10% by 2005.
As New Balance gets better control over its demand forecasting, it can afford
to do things that might have been deemed too risky in the past, such as allowing
customers to place their actual orders closer to the delivery date.
Rather than pushing retailers to make orders six months out, New Balance now
can take orders five or even four months in advance of delivery. The company
may even instruct manufacturers to build shoes before it has orders for them,
if its confidence in its forecasting is high enough.
Holland's system also helps O'Brien deal with his 200 different styles of shoe.
O'Brien has to forecast a basketball-shoe line, for example, which has, he says,
"not just multiple widths but nine different colors."
Before the collaborative-forecasting system was put in place, O'Brien might
have had to forego sales for fear of picking the wrong kind of shoe to order.
"You don't want to buy that much inventory of a color that isn't going to sell,"
he says.
The forecasts now have power. They can make or break a new shoe design. Today,
no new shoe goes to market until it's a big enough number on a rollup to be
worth building. "We've been able to make decisions and cancel a project that
we wouldn't have cancelled before," says O'Brien.
"A product manager may say his style is great, but the sales rep says, 'I'm
only going to grow 10% or 20% with this account and I know I'm not going to
get another five slots on the wall.' So some of those fringe styles just lose
out," he says.
Projects: Management 
