A household name in footwear, Paragon Footwear first forayed into the Indian market in 1975 in its home state of Kerala. And in the next few years, it made its name all over the country. Today, Paragon is one of the most trusted footwear brands for the everyday Indian. The company manufactures over 4,00,000 pairs every day, amounting to a whopping 14 Cr pairs every year.
Despite its ecommerce channel success and growing by double digit % each year, inventory planning for a mature brand comes with its own unique challenges online.
Their challenge: Inventory management of large catalogs Across Fulfillment Centers
Inventory planning is essential to the smooth functioning of any ecommerce channel. But it is downright critical when it comes to a company with nearly 12+ fulfillment centers and a large catalog. Effective planning of inventory allows organizations to choose the right strategies to control the movement of goods – from production till the final sale. Naturally, this also impacts the organization’s profits and cash flow.
For Paragon, owing to its diverse product range, product seasonality and large number of SKUs, and multiple fulfillment centers across the country due to region wise demand, the company faced challenges such as losses in sales and high out-of-stock percentages.
Our strategy: Revamping the inventory planning process
To offset these losses, we made some strategic transformations in the entire inventory planning and replenishment process, keeping in mind the numerous issues faced by the supply chain team.
- We used an in-house metric from Tensight – effective ROS – which is defined as the rate of sale of an article factoring the actual number of days the inventory was available. Using this metric, we created a highly-customized inventory plan tailored to each marketplace on a style-level based on the channel’s performance.
- We then broke down the allocated inventory, categorized on the basis of region and warehouse, and placed special emphasis on discounted products and new launches.
With this two-step approach, we were able to solve a majority of the issues faced by Paragon’s supply chain team. This strategy helped pave the way for seamless replenishment. Ultimately, we were able to decrease out-of-stock percentages as well as broken set percentages.