9 Create Merch Plan Task
The Planner role is usually associated with the merchandise planner in the merchandise planning organization. During pre-season planning, the Planner receives department targets from the Planning Manager and uses those targets as the financial direction for planning.
The Planner references those targets when creating the subclassmerch plans. The Planner then reviews the plan against target expectations, reconciles it with location planning when location plans exist, and submits the completed plan for approval.
The Planner will start pre-season activity with the Create Merch Plan task. This task belongs only to the Merch Planner role.
In Modular MFP, pre-season and in-season plan activities are organized into separate tasks. Use the pre-season workspace to create the initial plan, review it against targets, reconcile it with location planning, and approve before the season begins.
Use the in-season workspace after actuals are available to review performance, update the forecasted plan, manage Open to Buy, reconcile changes, and re-approved plans.
The planner is presented with the activity Create Merch Plan, and it consists of two tasks: Create Merch Plan Pre-season and Create Merch Plan In-season.
Create Merch Plan Pre-Season Task
The Pre-Season Plan workspace is where the Planner builds the original merchandise plan before the season starts. The Planner creates the plan for the required subclass, channel, and calendar scope by completing the pre-season planning activities in sequence.
The pre-season task includes the following steps:
- Create Plan
- Review & Submit Plan
Create Plan Step
To create the plan, the basic approach is to complete the following steps within the views provided in the Create Plan step:
-
Review the published Target values so the subclass plan is created within the Planning Manager's direction. The Targets are easily reviewed in the Reconcile with Targets view. Because you have not seeded any plans, the Wp versions of the plan will be irrelevant in the Target review.
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Select the local currency rate for planning.
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In Sales/Markdowns, plan the sales, markdowns, returns, and so on, you are projecting. Use forecasted sales and Ly as a guide.
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Plan the required inventory and receipts.
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Review the Gross Margin results.
Tip:
As you build your plan, click Commit when you are satisfied with the intermediate state. This creates a permanent snapshot of the as-is state. This creates a restore point you can revert to if you go down a path that is unsatisfactory.
Tabs and Views in this Step:
- Seed Plan Tab:
- Initialize View
- Review Portfolio Optimization View
- Select Local Currency View
- Set Alert Thresholds Voew
Seed Plan Tab
The first action that the Merch Plan users complete when creating a new plan is to seed the plan with the Seed Plan view.
Application Action
- Seed: Seed the plan; this copies the seed source into the Wp version.
- Clear Plan: Clear the seeded data from the Wp plan.
- Receive Portfolio Opt: To retrieve the Portfolio Optimization results for the selected product.
Initialize View
With this view, you can choose to seed your plan with Last Year (LY), Forecast (Fcst), or Portfolio Optimization data to create a demand curve on which to spread the new plans initial targets. Or you can instead choose to not seed the plan, which allows you to create a plan that is not influenced by last year's performance, forecast (plus last year's performance), or Portfolio Optimization results.
When seeding the plan, you can choose which information is seeded. For instance, you can seed just one half or all halves in the task. You can also choose what locations and products to seed.
Table 9-1 Initialize Plan Measures
| Measure | Description |
|---|---|
|
Seed Source |
The seed source used to seed the working plan. Use this option to seed or not seed the working plan. You can seed with Last Year (LY), Forecast (Fcst), or Portfolio Optimization data output. Alternatively, choose the blank option if you do not want to seed the working plan. |
|
Seed Info |
Includes a few pertinent facts about the last time that the Seed custom menu was executed: last seed source concatenated with last seeded date and the last user to seed. If blank, then the given intersection has never been seeded. |
|
Seed Returns Setup |
Use this option to seed the working plan returns. You can seed the returns values with Last Year (Ly) or Forecast (Fcst) data. You can also choose the blank option if you do not want to seed the working plan returns. |
Seeding One Level at a Time
To seed a target, you set the seed source information. Then, to seed the next department in the Product dimension within the Brick & Mortar channel, complete the following steps:
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Modify the dimension level of product and calendar to be seeded (Individual position or aggregations).
Note:
Before seeding with Portfolio Optimization data, you need to retrieve results from Portfolio Optimization using the Review Portfolio Optimization view.
Figure 9-1 Seeding Options
- Choose the appropriate seed source, such as Last Year, Forecast, Target, or Portfolio Optimization for Wp Seed Source picklist.
- (Optional) Select Wp Seed Returns Setup to populate the returns values.
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When you have selected all the data you want to seed, click Seed in the actions.
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Review the confirmation message and click OK.
After you have seeded, the view refreshes. The seed information measures show the source and date of the latest seed.
Review Portfolio Optimization View
The Portfolio Optimization output can be used for seeding the Merch Plan. Select the Boolean for dimension scope click the custom menu action, Receive Portfolio Opt. After the results are populated against the MPO (Portfolio Optimization) measures, you can proceed with seeding the plan from the Initialize view. By default, MFP GA receives Net Sales R as output from Portfolio Optimization and it populates MPO Net Sales R in the view. The portfolio optimization results are retrieved at the year level which are then split into weeks using LY data reference while seeding. You can choose to configure it for Gross Sales Portfolio Optimization output. Module Reference: Merch Target Portfolio Optimization. For more details on modules, refer to the Oracle Merchandise Financial Planning Cloud Service Starter Kit Guide.
Note:
When creating the Merch Plan workbook, the scope of the workbook should be at the same level of the scope of the Portfolio Optimization run.
Figure 9-2 Review Portfolio Optimization View
Select Local Currency View
Use the Select Local Currency view when local currency planning is provisioned. The local currency chosen will be applied to the views of local currency found throughout the Create Merch Plan task. Module Reference: Merch Plan Sales & Returns Local Currency. For more details on modules, refer to the Oracle Merchandise Financial Planning Cloud Service Starter Kit Guide.
After selecting a currency, you can click Calculate to apply the rate. If you have not yet performed a seeding action, the rate will be applied at the time of seeding.
Set Alert Thresholds View
In this view, you set the threshold minimums (mins) and maximums (maxs) that will trigger alert formatting and alerts in the MP: Exceptions dashboard. The following table lists the conditions under which an alert is triggered. Thresholds must be non-zero to trigger alerts.
| Threshold | Condition |
|---|---|
|
Wp GM R % Max Threshold |
Alert is green when Wp GM R % is greater than the threshold |
|
Wp GM R % Min Threshold |
Alert is red when Wp GM R % is less than the threshold |
|
Wp Markdown POS R % Max Threshold |
Alert is red when Markdown POS R % is greater than the threshold |
|
Wp Markdown POS R % Min Threshold |
Alert is green when Markdown POS R % is less than the threshold |
|
Wp Net Sales R Max Threshold |
Alert is green when Net Sales R is greater than the threshold |
|
Wp Net Sales R Min Threshold |
Alert is red when Net Sales R is less than the threshold |
|
Wp Returns R % Max Threshold |
Alert is red when Returns R % is greater than the threshold |
|
Wp Returns R % Min Threshold |
Alert is green when Returns R % is less than the threshold |
|
Wp Sell Thru R % Max Threshold |
Alert is green when higher than the threshold |
|
Wp Sell Thru R % Min Threshold |
Alert is yellow when less than the threshold |
|
Wp Do Not Alert |
Prevents alerting of the subclass/channels that are checked |
Create Plans Tab
The Create Plans tab brings together the core planning views used to build the merchandise plan after the plan has been seeded or manually initialized. In this tab, the Planner develops the sales, markdown, and return plan; builds the supporting inventory and receipt plan; and reviews gross margin to confirm that the plan supports the intended financial outcome.
Forecast, Last Year, and Target values should be used as reference points while adjusting the Working Plan to reflect the subclass strategy for the season. As the plan is developed, sales and markdown decisions should be reviewed together with Beginning-of-Period inventory, End-of-Period inventory, receipts, turn, and stock-to-sales to confirm that inventory flow supports the projected demand and intended stock position.
Gross margin and net gross margin should be reviewed throughout the planning process. If the plan does not meet the intended margin objective, review the sales, markdowns, returns, receipts, inventory, markup, vendor funding, royalty, and cost assumptions before continuing to reconciliation and approval.
Sales and Markdowns View
In the Sales and Markdowns view, you plan net sales, promotions, and markdowns. Sales are the revenue generated by selling goods or services. Regular priced sales yield the greatest margin, however successful promotions drive more traffic and completion of sales. Though the promotional sale likely includes markdown, the overall increase in sales should outweigh the markdown and drive at good margins. Module Reference: Merch Plan Sales & Returns, Merch Plan Sales & Returns Units. For more details on modules, refer to the Oracle Merchandise Financial Planning Cloud Service Starter Kit Guide.
There are several measure profiles available to logically guide you through the plan variables.
The following measure profiles are available for review:
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Sales and Markdowns (Default)
The measures in this profile represent totals which are not broken down by type of sale such as Promo, Clearance, and so on. This view also incorporates the forecast for viewing on top of all Ly actuals.
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Sales by Type
The measures in this profile display and capture sales and returns figures by type of sale: Regular + Promotional, and clearance. Regular + Promo, and Clearance added together equate to the total sale or total return.
The planned figures for these sales types populates the Wp Sales R measure.
-
Markdowns by Type
Markdown is the difference between the original retail price and the actual selling price. The measures in this profile display and capture markdown figures as a total as well as by sales type: Regular + Promotional, and Clearance. The markdown types added together equate to the markdown (Wp Markdown POS R).
-
Units
Some lines of businesses may prefer to build the plan, or at least closely couple the financial plan, by sales in terms of units. You also use this view to review the Average Unit Retail (AUR) to ensure it aligns with your strategic plans for the department.
Figure 9-3 Sales and Markdowns View
Follow these steps to basic sales and markdown generation:
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Using the Sales and Markdowns (default), review and compare the total sales to the forecast.
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Change the measure profile to Sales by Type.
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In the Sales by Type measure profile, plan your sales by type. The sales types are Total Sales, Regular + Promo Sales, and Clearance Sales.
Start by planning the regular sales. Then, using your marketing calendar as a guide, align the promotional sales to the calendar. Refer to the calendar again for the exit weeks for the products, and plan the clearance sales for those weeks.
The planned figures for these sales types populates the Wp Sales R measure.
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Return to the Sales and Markdowns measure profile.
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With the total Wp Sales R populated, you can adjust the total to your target while still maintaining the relationships between the different sales types.
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Change the measure profile to Markdown by Type. In the Markdown by Type profile, edit the Wp Markdown Reg+Promo POS R% to adjust the Wp Markdown POS Reg+Promo Rate.
Note:
Since sales and markdowns are both planned at the type level, you must first complete the sales by type planning before you can plan the markdowns by type.
Local - Sales and Markdowns View
Use the Local - Sales and Markdowns view when local currency planning is provisioned. The key planning KPIs are available in local currency for cross-referencing and high-level planning. Module Reference: Merch Plan Sales & Returns Local Currency. For more details on modules, refer to the Oracle Merchandise Financial Planning Cloud Service Starter Kit Guide.
Figure 9-4 Local - Sales and Markdowns
Receipts and Inventory View
Use the Receipts and Inventory view to plan BOP inventory, EOP inventory, receipts, turn, stock-to-sales, and related inventory measures. Inventory turn is an important indicator of the effectiveness of the planned inventory. It tells you how many times stock is being sold and repurchased over a given period of time. Turn is reviewed in this workspace view. Module reference: Merch Plan Inventory & Receipt, Merch Plan Inventory & Receipt Units. For more details on modules, refer to the Oracle Merchandise Financial Planning Cloud Service Starter Kit Guide.
Note:
The adjustments you made to the Sales and Markdowns view are visible in this view if you have clicked Calculate.
There are several measure profiles available to guide you through various approaches to planning inventory and receipts:
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Retail
The Retail profile is the default profile. The planning is focused on total retail rather than units, and sale type. This profile is the most comprehensive view of variables impacting inventory.
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Inventory by Type
In this profile, you can review and maintain a breakdown of inventory by sales type: Regular + Promo, and Clearance.
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Units
The most important asset metrics are inventory units and inventory cost because these metrics impacts cash flow. In this view, you can directly maintain EOP inventory, Average Unit Retail, plus shrink, Mark Out of Stock (MOS), and Move to Clearance (MOC) in terms of units.
Use the following best practices to plan the receipts and inventory:
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Plan the receipt flow and then evaluate the average inventory and turn.
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Review the Receipts Markup (MU) for accuracy. Often this will follow the keystone 50%, but many variables can impact the decision on markup: from competitor pricing to freight costs, and overhead operating expense.
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Review the Wp CMU % measure. Cumulative markup rate (CMU %) is a blend of the beginning of period (BOP) inventory retail and cost with the future receipt retail and receipt cost. The Wp CMU % directly affects the cost of goods sold (COGS), which then affects the gross margin.
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Review the Wp Stock to Sales R ratio. Make adjustments to Sales and other inventory measures (Receipts, Move out of Stock, Move to Clr, and so on) to achieve the desired stock to sales ratio.
Figure 9-5 Receipts and Inventory View
Move To Clearance View
Use the Move to Clearance view to plan inventory that should transition into clearance. This is an important step in maintaining the balance between Regular + Promotional inventory and Clearance inventory. Module reference: Merch Plan Inventory & Receipt, Merch Plan Inventory & Receipt Units. For more details on modules, refer to the Oracle Merchandise Financial Planning Cloud Service Starter Kit Guide.
Gross Margin View
Use the Gross Margin view to evaluate the gross margin created from your sales and markdown plan and receipts and inventory plan. Determine whether the planned gross margin meets your gross margin goal. If it does not, return to the Develop Sales and Markdown Plan and Develop Inventory and Receipt Plan steps to adjust your receipt markups and receipt flow.
Finally, return to the Gross Margin view to adjust additional contributors to net gross margin such as vendor funds and royalties. Module Reference: Merch Plan Gross Margin. For more details on modules, refer to the Oracle Merchandise Financial Planning Cloud Service Starter Kit Guide.
Figure 9-6 Gross Margin View
Reconcile and Approve Step
The Review, Reconcile, and Approve Plan tab is used after the Planner has completed the plan for all required subclasses in a department. In this tab, the Planner reviews the Working Plan against the published department targets and, when location plans are available, reconciles the merch plan with the location plan. This review helps confirm that the plan supports the Planning Manager’s direction before it moves forward in the approval process.
If at any time during the pre-season you need to revise your plans to better align with the targets, you can follow the same procedures described in this chapter.
The approval process begins after the plan has been reviewed and reconciled. The Planner self approves the plan. Once the plan is approved, the working plan is copied to Original Plan (Op) and Current Plan (Cp).
Tabs and Views in this Step:
- Reconcile Plans tab
- Reconcile to Targets view
- Reconcile to Location Plans view
- Review and Approve Plan tab
- Review Plan view
- Approve Plan view
- Review Approved Plan view
Reconcile Plans Tab
Use the Review and Reconcile step after the Create Plan step is complete for the required subclasses in a department. This step can also be used earlier in the planning process when the Planner wants to check whether the plan is moving toward the published targets.
Reconcile to Target View
The Review with Target view contains the Planning Manager's Target (Tgt) measures as well as planning (Wp) measures. Use this view to compare the Tgt measures to the corresponding Wp measures. By comparing the targets to the planning metrics, you can better understand what your plan needs to achieve. There are several Tgt-to-Wp variance measures that quickly guide you to areas of difference.
If targets are not published yet, the Tgt measures have no values. If targets have been published or republished by the Planning Manager since you last reviewed them, click the Refresh menu option to reload the latest values.
Figure 9-7 Review with Target View
Reconcile with Location Plan View
In the Reconcile with Location Plan view, you directly compare Wp (working merch plan) to the current location plan. By comparing the merch plan to the location plan metrics, you can better understand where there are misalignments that need to be corrected. There are several variance measures that quickly guide you to areas of difference.
Figure 9-8 Review with Location Plan View
There are several measure profiles in this view to quickly guide you to the plans you wish to review.
Wp/LPCp
This measure profile shows the key Working Plan metrics for comparison with Location Plan, Current Plan metrics. Current Plan is a version of the plan that is approved in-season (and is actualized for elapsed/historical periods).
Wp/LPOp
This measure profile shows the key Working Plan metrics for comparison with Location Plan, Original Plan metrics. Original Plan is the plan as it was initially approved-typically it got approved pre-season and stays fixed when the period becomes in-season.
Review & Approve Plan Tab
When you believe you are ready to approve your working plan , first use the Review Plan view to make sure the plan meets expectations.
There are several measure profiles in this view to quickly guide you to the plans you wish to review:
-
Wp with Ly (Default)
This measure profile shows the main Working Plan metrics for comparison with last year metrics. This is the profile you will use after initially performing the Create Plan step.
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Wp with Cp
This measure profile shows the main Working Plan metrics for comparison with Current Plan metrics. Current Plan is a version of the plan that is approved in-season (and is actualized for elapsed/historical periods).
-
Wp with Op
This measure profile shows the main Working Plan metrics for comparison with Original Plan metrics. Original Plan is the plan as it was initially approved. Typically, it got approved pre-season and stays fixed when the period becomes in-season.
Application Action
- Approve: Approve the plan, it copies Wp (Working Plan) values to Cp (Current Plan) & Op (Original Plan).
Approve Plan View
In this view, you can approve the completed merch plan.
When plan is approved, the Working Plan (Wp) is copied to Original Plan (Op) and Current Plan (Cp).
To submit a plan for approval by the Planning Manager:
- Select a check mark in the Wp Submit measure.
- Optional: Enter information about the working plan in the Wp Submit Notes field.
- Click the Submit Planbutton at the top right of the view.
- A success message is displayed. Click OK to close it.
Create Merch Plan In-Season Task
Use the in-season workspace after the season has started and actuals are available. The Planner reviews current performance, updates the forward-looking plan, manages Open to Buy (OTB), reconciles changes against targets and location plans, and submits revised plans when approval is required.
In-season planning focuses on keeping the plan aligned with current business performance. Open to Buy is a key part of this process because it shows the amount available for future receipts after considering planned and projected sales, markdowns, receipts, on-order activity, and inventory. OTB is the amount of money budgeted during the In-season to purchase goods that have not yet been received or ordered. The Planner decides In-season how to spend this money to reach strategic targets.
The in-season task includes the following steps:
- Update Plan
- Review & Submit Plans
Update Plan Step
Use this step to update Open to Buy and review weekly projections. Planning Manager compare planned and projected inventory levels, evaluate available OTB, and determine whether future receipts should be purchased, reduced, or canceled based on projected sales, markdowns, receipts, and inventory.
Views in this Step:
- Sales & Inventory Tab:
- Open to Buy Projection view
- Sales & Returns view
- Inventory & Receipt view
- Gross Margin view
- Seed Updated Sales view
Open to Buy Projection View
Managing Open to Buy (OTB) is the primary In-season task for the Planner. Each week, you will review last week's sales and its impact on your BOP/EOP inventory for the current and future weeks.
OTB helps identify out how much inventory you need to buy to make your sales projections. It represents the amount of money you have available to spend on merchandise. Simply put, OTB is the difference between how much inventory is needed and how much is actually available. This includes on hand, and on-order (including in-transit).
You will look to increase receipts if you have available open to buy and decrease receipts if not. You may have some flexibility to go over your OTB for a week as long as the month is on target. Consider the month as a whole and whether you want to withhold some OTB for opportunity buys that may come up. Use OTB to understand the variance between the planned and projected inventory levels. This variance is shown in the Wp OTB R measure. OTB indicate how many additional receipts can be purchased. Users should understand if their planned receipts keep them on the overall Cp EOP inventory plan. To understand the variance between the Cp EOP inventory plan and the Wp EOP inventory plan, reference the measure Wp EOP R var Cp%. Use this view to validate what OTB you have available and then start adjusting your plan. Then, confirm that your updates can be obtained given the OTB constraints you may have. Module reference: Merch Plan Inventory & Receipt, Merch Plan Inventory & Receipt Units. For more details on modules, refer to the Oracle Merchandise Financial Planning Cloud Service Starter Kit Guide.
The following profiles are available:
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Default
This measure profile focuses on key metrics of total sales, markdowns, receipts, and on order to summarize open to buy.
-
Units
This measure profile focuses on unit and average unit cost key metrics for sales, receipt, and on order.
Figure 9-9 Open to Buy View
Sales & Returns View
After the pre-season plan, review the Sales Return plan during the In-season process for those departments against targets. This has similar measures as Sales and Returns steps from the Pre-season step. Module reference: Merch Plan Sales & Return, Merch Plan Sales & Return Units. For more details on modules, refer to the Oracle Merchandise Financial Planning Cloud Service Starter Kit Guide.
Inventory & Receipts View
This step can be used to review the inventory and receipts during the In-season planning. This step has similar measures as Inventory / Receipts from pre-season step. Module reference: Merch Plan Inventory & Receipt, Merch Plan Inventory & Receipt Units. For more details on modules, refer to the Oracle Merchandise Financial Planning Cloud Service Starter Kit Guide.
Gross Margin View
The Planner can use this view to review the margins against the target during the Inseason process. This step has similar measures as Gross / Net Margin sub-step from the Preseason step. Module reference: Merch Plan Gross Margin. For more details on modules, refer to the Oracle Merchandise Financial Planning Cloud Service Starter Kit Guide.
Seed Updated Sales View
The Seed Updated Sales view is used in the Merch Plan In-Season workspace to refresh the Working Plan sales values with the latest updated sales position. This provides the Planner with a current starting point for reviewing the in-season plan and making any required sales, inventory, receipt, or margin adjustments.
Review and Approve Step
Use this step to Review, Reconcile, and Approve the plan.
Review with Location Plan View
In the Review with Location Plan view, you directly compare Wp (working merch plan) to a location plan. By comparing the merch plan to the location plan metrics, you can better understand where there are misalignments that need to be corrected. There are several variance measures that quickly guide you to areas of difference.
There are several measure profiles in this view to quickly guide you to the plans you wish to review:
-
Wp/LPCp (Default)
This measure profile shows the key Working Plan metrics for comparison with Location Plan, Current Plan metrics. Current Plan is a version of the plan that is approved In-season (and is actualized for elapsed/historical periods).
-
Wp/LPOp
This measure profile shows the key Working Plan metrics for comparison with Location Plan, Original Plan metrics. Original Plan is the plan as it was initially approved. Typically, it got approved pre-season and stays fixed when the period becomes In-season.
Review & Reconcile with Target View
The Review & Reconcile with Target view contains the Planning Manager's Target (Tgt) measures as well as planning (Wp) measures. Use this view to compare the Tgt measures to the corresponding Wp measures. By comparing the targets to the planning metrics, you can better understand what your plan needs to achieve. There are several Tgt-to-Wp variance measures that quickly guide you to areas of difference.