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Season - Fiscal Planning Concept

How to adjust your corporate planning to the constantly changing market requirements? You can reach that objective with the implementation of shorter planning cycles, ensuring velocity, agility and as a result, a competitive advantage.

Tobias · Thursday, November 15, 2018

Introduction

There is a time and a season for many events. Industries, the fashion industry, for instance, plan on different time dimensions - the fiscal calendar and seasons. This allows more precise planning of their demand at any time of the year. To give a simple example, the Christmas time as a season fiscally takes place in the months November and December. If the plan would only be executed on a fiscal time horizon, on a half-year basis, a proper plan to specifically reflect this significant time of the year would not be possible.

The Concept

DAHLBEER has successfully introduced a concept to enable fashion companies to plan on seasons, which could be translated to fiscal half-years and the other way around. The fashion industry usually focusses on two seasons: fall-winter and spring-summer. Each season is split into three portions: EARLY, CORE and LATE. The portions are corresponding to fiscal half-years. This concept enables our customers to plan on different time dimensions: seasons – for the demand plan and fiscal half-years – for the financial visibility of the plan.  
There are two approaches to planning, the fiscal and the season focused. The fiscal focused approach provides all season portions for each half-year, but not necessarily all half-portions of a season. For example, the fall-winter 2017 season, illustrated in table one, doesn’t contain a full season. The season focused approach always provides full seasons, as illustrated in table two. If the plan is changed on the fiscal dimension first half-year of 2018, only the early portion of the season will be planned.  
The tables below illustrate how the seasons correspond to fiscal half-years. Table one with a fiscal and table two with a season focused approach:   

Table1. Fiscal Focus  

Table 2. Season Focus

The concept offers the flexibility to choose whether to plan on fiscal half-years, or seasons. If a planner plans on a half-year, the planning application automatically distributes the plan on the three corresponding seasons. The behavior is the other way around if the planner chooses to plan on seasons, the plan is distributed to the corresponding half-years. How the distribution takes place can be decided individually. Self-reference distribution is one of the options. It will be executed based on the already existing or copied in data.

The Portions

EARLY – the phase that forms the first portion of season plan. These are by nature sales, which are done prior to the season’s core half-year. All the sales classified as EARLY are restricted to the half-year prior to season’s core business half-year. 

CORE – the core half-year represents the most significant part of the business done. This is the half-year when all the products from a collection are getting to the market. Here the company will reach the peak in sales for the season. Spring-summer seasons have their core business in the first half-year of the corresponding year. Fall-winter seasons have their core business in the second half-year of the corresponding year. 

LATE – is the last portion of the plan for a season. These are by nature sales, which are done post season’s core half-year. All the sales classified as LATE are restricted to the half-year after the season’s core business half-year. 

In the final planning steps, it is common practice to choose only a single time dimension for planning. 

Outlook

Looking forward, especially the fashion industry is all about velocity. Velocity stands for shorter product cycles, to attract more customers by continuously releasing products outside of the classic spring-summer and fall-winter seasons. This leads to less bound capital because very little stocking is needed.

As an extreme example of the concept, the fashion retailer Zara restocks with new designs twice a week. The sports fashion industry also shows a clear trend to run shorter cycles. Nike introduced the “express lane” and Adidas the “speed” initiative to reflect in-season creation.  

Conclusion

To be a competitive player on a demanding market, a swift reaction on changing market needs is crucial. Introducing company-wide changes to build up such flexibility is a massive challenge which involves huge investments. DAHLBEER’s multi-dimensional planning concept is a flexible approach. It can be used and if necessary be enhanced, to reflect such changing needs and thus, secure a competitive edge on the market.

Tobias

Tobias

Certified SCRUM Master, specialized in areas of Project Management, data quality assurance, SAP planning and reporting. Tobias has one clear objective when approaching each project: To deliver on time, with the best quality, while working in close and honest interaction with the client.

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