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Container Store Breaks Out Demand Forecasting Software

Improving demand forecasting is one of the best ways to reduce supply chain costs, thus driving higher sales and better margins, a company executive said.
The Container Store Inc. said Monday it will roll out demand forecasting software from John Galt Solutions Inc. in the first quarter of 2006.

Improving demand forecasting is one of the best way to reduce supply chain costs. The drive to reduce carrying costs and increase inventory turns would drive higher sales and better margins, said Beth Gonzalez, merchandise systems director at The Container Store.

The ForecastX Demand Management Engine, a software component in John Galt Solutions' Atlas Planning Suite, enables The Container Store to increase the number of times inventory passes through its central distribution center in Texas and out to its 36 stores. The objective is to keep merchandise in stock.

The software was tested over a one-year period with one of the company's top suppliers. The decision to deploy the a analytics platform came after the company increased sales by 24 percent with 49.5 percent less inventory during a one-year test. The 125 products from the tested supplier turned 24 times during the year, compared with an average of 4.2 times for other merchandise.

"We will start with 18 suppliers, and continually add others to the program," said Gonzalez. "And the best news, our actual sales are within 3 percent to our forecast."

The John Galt software easily integrates with The Container Store's a Oracle Retek merchandising system, so buyers didn't have to learn new technology. Oracle acquired Retek earlier this year. Taking historic sales into the equation, John Galt provides an average store forecast and allows buyers to group product types and forecast far out into the next season as well. "We forecast at the product, store, and week level," Gonzalez said.

Point of sale data from all stores is transmitted nightly into a main repository at headquarters where the information is filtered through a propriety application developed in-house. That software allows the retailer to view on-hand merchandise in each store. From there, data flows into John Galt's forecasting application.

The Container Store handles approximately 85,000 stock keeping units, (SKUs). That number increases during the holidays. The holiday gift-wrap "wonderland" in the store at the end of the year increases product selection by 2,000. The company's five buyers and two store merchandise planners needed a better method for controlling inventory levels.

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