Retail

Lets build a smarter planet

To ensure that they have the right mix of products on the oor at any
given time, apparel manufacturers and retailers have to not only sense
changes in selling patterns, but quickly translate that intelligence into
a series of co-ordinated decisions that go right up the supply chain.
This means knowing when and how much to ramp up or cut back on
the production of some styles, and for which sizes and colors. It means
choosing the right mix of transport modes to balance the urgency of
delivery against cost. It can even mean ordering scarce fabrics months
in advance to ensure theres enough on hand when it counts.
The fabric of decision-making
Since its foundation in 1973, New York-based Elie Tahari has become
a prominent global fashion brand, with hundreds of millions of dollars
in revenues across 40 countries. Its experience illustrates the hobbling
efect process silos can have on agile and coordinated decision making
an efect amplied by the growing complexity of its supply chain. That
chain begins with suppliers in Asia, from which Elie Tahari sources
the majority of its clothing, and extends to a large network of retailers
that includes Macys, Saks Fifth Avenue, Neiman Marcus, Bergdorf
Goodman and others, in addition to its own chain of 35 stores and over
600 boutiques around the globe.
Elie Tahari found assembling the information needed to make key
decisions an arduous and time-consuming task The primary sources
of data were the ve separate systems that the company relied on to
run its business, as well as standardized product activity transaction
reports it received from its wholesale channel. To unify these sources
into a coherent and complete picture of the situation, employees in
various departments had to manually collate and analyze the data using
spreadsheets. Only then could managers make such basic decisions
as which products to ship to each store, which items to order from
suppliers, and how best to bring new shipments in from overseas to
name just a few.
Elie Tahari combines
fashion savvy with
powerful analytics
Harnessing predictive technologies to match production
with customer demand
Smart is...
Extrapolating historical sales
patterns to predict customers
future demand for each product
right down to the sizes and colors
required.
To enhance decision-making and keep
pace with customer demand, Elie Tahari
needed faster access to more actionable
information not only about current
production and inventory, but also about
future demand. Elie Tahari used a suite
of business analytics software from IBM
to create a seamless real-time reporting
framework and introduce highly accurate,
predictive demand planning capabilities.
Real-time insights on sell-through rates
and predictive management of production
planning and inventory enable Elie Tahari
to optimize store-level merchandising
decisions, ensuring that the most popular
stock-keeping units (SKUs) are available
in the right place, at the right time.
Retail
Lets build a smarter planet
Time the enemy
The inherent inefciency of this spreadsheet-based approach was only
the beginning of the problem. The broader issue was the limitations
it placed on Elie Taharis decision-making. Data generated by the
companys core systems could take as long as two days to analyze and
present in a format that managers could easily understand and act on.
In addition to timeliness and transparency, these reports were mostly
static, high-level overviews, which lacked the granularity managers
needed to make optimizing decisions.
Nevertheless, meeting commitments to retailers, and doing so on
time, every time, was a challenge of overwhelming importance for
Elie Tahari, especially when retailers were running special ofers or
promotions. To minimize the risk of late deliveries, managers often
decided to transport new stock into the country by air freight which is
around three times the cost of standard shipping just to be safe.
For store replenishment decisions, the lack of granularity in the reports
made it impractical for managers to ne-tune the product and size mix
they shipped to each customer or outlet based on diferences in sales
patterns from store to store or region to region. That all changed when
Elie Tahari implemented IBM

Cognos

Business Intelligence for real-

time reporting.
A close look at TREND
Inside the company, the reporting solution is known as TREND
(Tahari Real-Time Environment for Data). For Tifany Tankersley, a
divisional manager in charge of sales through Elie Tahari retailer stores,
it didnt take very long to see the benets of TREND. Tankersley had
previously followed the practice of ordering the same distribution of
Business Benefts
Ability to predict customer orders for
the Tahari ASL womens suits business
four months in advance with better than
97 percent annual accuracy, enabling
Tahari ASL to optimize production and
guarantee full availability of its products
while maintaining very lean inventory
levels
Both Elie Tahari and Tahari ASL beneft
from faster and more intelligent decision-
making through the availability of real-time
sales, inventory and logistics information
enabled by a near-real-time data
warehouse design where all transactional
data is updated within fve minutes or less.
Reduction in reporting cycle from two
days to a few minutes.
30 percent reduction in supply chain and
logistics costs.
Reduction in the proportion of shipments
sent by air freight from 80 percent to
less than 50 percent through improved
visibility of production schedules and
customer orders.
Increased sales and stronger margins due
to an optimized mix of products on the
shop-foor.
Smarter Retail Predictive analytics boosts product availability
Instrumented Real-time information on sales, inventory and shipments is
captured directly from Elie Taharis core transactional systems,
and combined with historical data from the companys data
warehouse.
Interconnected Transactional information from ve core platforms is integrated
into a single reporting framework. A suite of business analytics
tools provide real-time insight, predictive analysis, and detailed
planning capabilities.
Intelligent Real-time visibility into store-level sell-through and inventory
data enables optimized replenishment and merchandising
practices, while predictive analytics enable highly accurate
production planning, lower-cost logistics and more efcient
inventory management.
Retail
Lets build a smarter planet
clothing sizes for all stores less by choice than by practical necessity
and was delighted by the new degree of insight provided by TREND.
What jumped out from the Cognos reports were the diferences
in the distribution of sizes we sold by region and by store, explains
Tankersley. By seeing a pattern we couldnt see before, we were able to
modify the size spread for each of our stores.
In addition to ensuring that the hottest products are on the shelves
when customers want them, such smart replenishment practices have
a big impact on the bottom line. Stocking the right mix of products
right down to the size reduces requests from retailers to discount
slower moving products within the line, thereby maintaining margin
strength. By the same token, reducing the volume of returns cuts the
considerable costs associated with reverse logistics.
Elie Tahari is also making smarter decisions further up the supply
chain. With visibility into production, inventory and location
becoming more transparent and up-to-date, logistics managers have
the information they need to optimize their shipping strategies. Since
Elie Tahari began using TREND to support its logistics decisions, the
share of shipments sent by air has fallen from 80 percent to under 50
percent all without impacting its ability to fulll its on-time delivery
commitments to retailers.
Adopting predictive analytics
With the success of the TREND solution, the company decided to
extend its use of analytics further, and introduce a new predictive
analytics solution for a key area of its business the Tahari ASL
womens business suit product line.
Nihad Aytaman, Director of Business Applications, explains: Tahari
ASL was running a special program for one of the largest department
stores in the US. They wanted to be able to keep a full size range of
womens business suits in-store, so that they would never be out of
stock. To help them achieve this, we had to be able to supply them any
item in any size or color, whenever they asked for it. Initially, we tried
to manage this using spreadsheets, but it was just too complicated so
we began to think about how analytics could help.
Aytamans team realized that a combination of predictive analytics and
demand planning technologies could provide an ideal way of meeting
this challenge. As a result, Tahari ASL decided to build a new solution
based on IBM SPSS

Modeler and IBM Cognos TM1

.
From the predictive analytics point of view, there were various canned
solutions on the market that might have helped us with this specic
project, says Aytaman. But we were keen to invest in a platform that
would give us the exibility to meet other needs in the future. SPSS
Modeler, combined with IBMs pre-built solution blueprints, gave us
the freedom and rapid development capabilities we were looking for.
Solution Components
Software
IBM

Cognos

Business Intelligence
IBM Cognos TM1

IBM SPSS

Modeler
IBM DB2

for i
IBM InfoSphere

DataStage

IBM WebSphere

MQ
Servers
IBM Power

550 Express
Services
IBM Global Business Services

IBM Business Partner

Adaptive Solutions
ITS, Inc. (NY)
What jumped out from
the Cognos reports were
the diferences in the
distribution of sizes we
sold by region and by store.
By seeing a pattern we
couldnt see before, we
were able to modify the
size spread for each of our
stores.
Tiffany Tankersley, Divisional Manager, Elie
Tahari
Retail
Lets build a smarter planet
Tahari ASL now feeds three years of historical sales data for each item
into SPSS Modeler, which generates a sales pattern curve that smoothes
out anomalous demand spikes and can be extrapolated into the future.
The company uses the rst 12 months of this future projection as a
consensus plan, which is input into the companys Cognos TM1
demand planning model. By mapping other inputs including future
open orders, current production and current inventory against the
consensus plan, and adjusting for any unforeseen factors such as stores
opening or closing, TM1 provides target inventory gures to meet
anticipated customer demand levels for up to four months in the future.
The ability to look four months into the future and know what our
inventory levels need to be on a weekly basis is absolutely key to our
success, says Aytaman. Our production cycle in the Far East can
take three months, and we have a one-month cushion to adjust for any
problems.
He adds: We were condent the predictive model would work, but
what weve been really surprised by is its accuracy. Although individual
weekly predictions showed an occasional swing between 60 percent
and 120 percent in accuracy, the aggregate annual predictions were
extremely close.
To take an example, looking at one of our products, the average
variance between our predictions and the actual number of items sold
in 2011 was less than 2.5 percent. In raw numbers, we predicted we
would sell 175 of the garment in size 18, and we actually sold 174. We
predicted we would sell 40 in size 24, and we actually sold 38.
If the model was any more accurate, Id be using it to play the stock
market! he adds jokingly.
Ultimately, this ability to predict demand with such a high degree of
accuracy enables Tahari ASL to meet its customers needs in terms of
stock availability while maintaining very lean inventory levels.
The future prediction allows us to adjust production to a level
that reduces our exposure and still gives us the ability to supply our
customer with close to 100 percent of their orders, says Aytaman.
Agility in fashion
To Aytaman, Elie Taharis smart retailing practices have been an
important factor in the companys consistently strong growth and
more recently have been instrumental in its ability to adjust its
oferings to suit economy-driven changes in consumer tastes. Elie
Tahari has always combined a visionary sense with a keen eye for
changes in fashion trends, says Aytaman. With the real-time insights
enabled by IBM business analytics software, were better able to
translate our fashion market savvy into smart practices at every level of
our business.
The ability to look four
months into the future
and know what our
inventory levels need
to be on a weekly basis
is absolutely key to our
success... It allows us to
adjust production to a
level that reduces our
exposure and still gives
us the ability to supply
our customer with close
to 100 percent of their
orders.
Nihad Aytaman, Director of Business
Applications, Elie Tahari
Retail
Lets build a smarter planet
With the real-time
insights enabled by
IBM business analytics
software, were better able
to translate our fashion
market savvy into smart
practices at every level of
our business.
Nihad Aytaman, Director of Business
Applications, Elie Tahari
The Inside Story: Getting There
Right the First Time...
When Elie Taharis CIO rst proposed using analytics to simplify,
unify and speed up the reporting of key metrics, there was little
doubt as to the underlying demand for it among employees and
the signicant potential benets to the business as a whole. But
for all the promise of improved reporting, the Elie Tahari IT team
which took on the implementation in-house recognized the
risks and took every means to mitigate them. Data integrity was at
the top of the list, explains Nihad Aytaman: Together with Sam
Gottlieb, our BI manager, we recognized that our success depended
on convincing people to accept a whole new foundation for making
their most critical decisions, and that the only way to do this was to
gain their complete trust in the accuracy of the data from the start.
You really have one shot at this; if you put information in front of
users and its not correct, its very difcult to win them over again.
Ensuring Integrity...
To move data from its core applications to its data warehouse,
Elie Tahari relies on a combination of IBM WebSphere

MQ,
IBM InfoSphere

DataStage

ETL and remote journaling, a

data replication function of the IBM Power Systems servers
that run its core platforms. As an additional safeguard to ensure
its transactional systems and data warehouse are in complete
alignment, Aytaman and his team created integrity checking
programs that compare key information elements between the data
warehouse and the transactional systems on a nightly basis.
Pace is Everything...
Elie Taharis decision to roll out dashboards, reporting and analysis
capabilities throughout the organization on a department-by-
department basis was in part a reection of its lean IT resources.
But it also reected Aytamans conscious decision to focus time and
efort on nurturing adoption on a relatively small (i.e., department
or workgroup) scale, thus encouraging a deeper level of buy-in
among that groups users. Part and parcel of this approach was the
decision to deliver only the most important reports in a preliminary
deployment stage, which shortened the time required to make the
most important reports available through Cognos company-wide.
With this initial footprint established, Aytaman and his team then
doubled back to round out the implementation, completing the
initial rollout in just six months. By spending as much time as each
department needed [in the rst phase], we succeeded in making
people feel like IT was giving them its full attention, says Aytaman.
This really helped adoption to take hold.
Copyright IBM Corporation 2014
IBM Corporation
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Produced in the United States of America
April 2014
IBM, the IBM logo, ibm.com, Lets Build A Smarter Planet,
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TM1 and WebSphere are trademarks of International Business
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Other product and service names might be trademarks of
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at www.ibm.com/legal/copytrade.shtml
This document is current as of the initial date of publication
and may be changed by IBM at any time. Not all oferings are
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INFORMATION IN THIS DOCUMENT IS PROVIDED
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