Fetco Home Decor Builds Forecasting Framework
When a company begins an implementation of a new demand forecasting solutions, one of the first questions that the implementation consultants ask is: "How would you describe your current forecasting process?"
When a consultant posed this seemingly routine question to Katie Ward, director of Planning and Forecasting at Fetco Home Decor, designer and wholesaler of fashion frames, albums and wall decor products, she replied with a metaphor that symbolized her three-year experience of forecasting using spreadsheets: "I feel like I'm caught between hell and a dartboard!"
The phrase resonated with the implementation team who has heard similar responses, though less animated, from hundreds of other customers that have made the switch from spreadsheets to automated solutions.
Although the company's product lines are trendy, Ward's job was anything but glamorous and the existing planning system only made it worse.
The company chose to implement Demand Solutions Forecast Management (DS FM), Requirements Planning (DS RP) and DS View in 2007. Fetco's goals were to remedy the three main business issues it experienced with a spreadsheet-based process, and by doing so, increase its competitive advantage in the highly competitive picture-frame market.
Above all other factors, Fetco chose the new solution because it needed a flexible and stable system it could rely on. "We were so nervous using the old system that we second guessed every piece of data," says Ward. "There was no telling what numbers were accurate because if you sort it wrong once, the whole model could be lost."
Secondly, the company wanted to increase efficiency. This was fairly easy to do considering that in spreadsheets, for example, two people can not access a file at the same time. With Demand Solutions, it is no longer necessary to juggle documents back and forth -- saving time and sanity, says Ward.
The last drawback Fetco sought to fix was its seemingly unmanageable mid-tier accounts. "With the old model, we weren't spending enough time on mid-tier accounts so we ended up over buying inventory in order to maintain customer service levels," says Ward. "We turned on DS FM and all 15 or so mid-tier accounts suddenly had robust forecasts for their SKUs. It was exciting because these accounts rarely had solid forecasts before."
A Fashionable Solution
Year-one benefits from DS FM have been significant for Fetco, and needless to say, Ward no longer feels caught between hell and a dartboard. The new solution has alleviated the problems the company experienced as a result of planning with spreadsheets, and those benefits have translated into a real competitive advantage.
"I was in awe when senior-level management asked us to bring our inventory levels down by 25 percent, and we were actually able to do so without affecting our customer service levels because of Demand Solutions."
With rising gas prices and a questionable economy, reducing inventory carrying costs and transportation costs are important for Fetco to maintain its status as an industry leader. The 100 percent import business designs its products at its headquarters in Randolph, Mass., and third-party factories in Asia manufacture them. Even with a 90-day lead time for all of its products, Fetco has maintained a 99 percent customer service level. Ward says that the company's year-two goal is to maximize its use of DS RP to reduce inventory levels even more while maintaining high customer service levels.
Although specific cost savings were not a top objective due to the unreliability of spreadsheets, Fetco experienced a full return on investment in less than 12 months.
When asked if her job has gotten easier through the use of Demand Solutions, Ward responded with her usual quick and pithy tone, "Are you kidding me? No! But now I'm adding value to the forecast rather than just fumbling through a maze of spreadsheets."