Story #4 Chase/Cut Flashcards
How would I open Chase/Cut?
In my current role as a senior product manager at Gap, I was tasked with a project that had a great deal of ambiguity. There was no clear path solution, so I had to get creative, and time was critical because my end-users were getting very frustrated.
Here was the situation: Old Navy Planners were frustrated because they were struggling to calculate how much supply they needed to chase a retail trend with substantial demand. For example, if an Old Navy customer is loving a new pair of dark wash jeans, the Old Navy Planner would want to send more jeans to stores to capitalize on the trend, but they were struggling to figure out how many more pairs of jeans they should send.
If they send too many pairs of jeans, there might be jeans left over, that would have to be marked down, hurting profit margin.
If they don’t send enough pairs of jeans, they will miss out on potential sales. Lost Sales.
What was the situation?
Here was the situation: Old Navy Planners were frustrated because they were struggling to calculate how much supply they needed to chase a retail trend with substantial demand. For example, if an Old Navy customer is loving a new pair of dark wash jeans, the Old Navy Planner would want to send more jeans to stores to capitalize on the trend, but they were struggling to figure out how many more pairs of jeans they should send.
If they send too many pairs of jeans, there might be jeans left over, that would have to be marked down, hurting profit margin.
If they don’t send enough pairs of jeans, they will miss out on potential sales. Lost Sales.
Whats the framework for Chase/cut?
Situation
Task
Action
Result
Lessons Learned
What is the task?
Let’s talk about my task here, and my call to action
- Call to Action: I track profit margin, service level percentage, and lost sales to measure how well Old Navy orders supply.
- Lost Sales: I can see for areas that rely heavily on chasing trends, such as Men’s Denim, we have very high Lost Sales, almost 10% of our weekly demand.
- Service Level: I can see that for areas such as Men’s Denim, service level is between 70% - 75%, much lower than an expected 80-90%.
- What this showed me is that some areas are struggling to meet customer demand with supply, I knew I needed to understand more about how the planners “calculate” the supply they need to chase retail trends today.
- I knew I needed to come up with a way to help them make these calculations more accurate.
What are the actions that I took?
- Here are the actions that I did to solve this problem:
- Gain full understanding of the problem
- Gain full understanding of the needs and pain points of the customer
- Propose a series of potential solutions to stakeholders
- Run and A / B test
Action 1: How did I gain a full understanding of the problem?
- To gain a full understanding of the problem I talked with both the VP of Inventory Planning and the Old Navy Planners themselves, my end users. I wanted to understand what steps does a planner take when chasing retail trends? What decisions do they make, and how do they take action?
- The VP of Planning told me that Old Navy Planners are frustrated and lost. Planners are trying to chase trends but are using “back of the napkin” math to figure out how much to order.
- The end users told me that the current Inventory Planning system allows Planners to create orders sequentially, for weeks, sometimes months in advance.
- The Planning System does not break this sequence, so it cannot provide an “earlier” receipt.
- Due to limited time, they are forced to do “back of the napkin” math.
Action 2: How did I gain a full understanding of the user?
- Fully understand the Old Navy Planners - what are the needs, and pain points of my end user.
- What were the needs of the Planner?
- Needed to understand at a hierarchy level, what classifications needed to be “chased”.
- Where do we need to focus our investment?
- Needed to understand their own budget limitations.
- Needed to ensure an order met a minimum order quantity.
- Needed to act quickly, and couldn’t wait to do any complex match (speed)
- Needed to provide vendor communication and visibility to a “Chase” to ensure they could provide the inventory.
- Needed to understand at a hierarchy level, what classifications needed to be “chased”.
- What were the needs of the Planner?
What is the problem for Chase/cut?
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Problem - Here’s the problem,
- I met with the VP of Planning for Old Navy on short notice. The VP of Planning, frantically, told me that Old Navy Planners are frustrated and lost. Planners are trying to chase trends but are using “back of the napkin” math to figure out how much to order. He said that the Old Navy Women’s Planner is using very simple calculations to calculate how many extra yellow sundresses she should buy for Mother’s Day.
What is the bad thing that happens?
- This VP said that this “simple math” is causing Planners are making poor predictions about how much they need to order to chase a trend. They end up either:
- Not ordering to for the customer, and not capitalizing on the trend
- Or, they are ordering way more than what the customer actually wants, leaving the stores stuck with way too much inventory on their shevles, and they end up having to heavily promote the product to sell it.
- Its why you might see a yellow sundress on a shelf in the middle of September..
Who is the user for chase/cut?
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User - An Old Navy Planner’s job is to predict the future. Predict the future about how much of a product the Old Navy customer is going to want to buy, in a certain store in the country.
- Part of a Planner’s job is to chase trends.
- Chasing a trend is when a Planner does the following. They:
- Find out what is selling well - what does the customer love right now?
- Calculate how much more they should buy.
- Order more.
- Chasing a trend is when a Planner does the following. They:
- Part of a Planner’s job is to chase trends.
What is the hypothesis?
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Why are Planners doing “back of the napkin” math to figure out how much to order when chasing a trend, if they have an Inventory Management System to help them figure it out?
- I need to get to the root cause of why so I can figure out a solution.
- “What if we can better understand why Planners are doing “back of the napkin math” when they have an Inventory Management System, and how we can enable them with the right tools?
What actions did I take for chase/cut?
- Fully understand the problem - Understand the Planner and what it means to “chase” product (journey)
- Needs/Pain Points
- Propose a series of solutions with our stakeholders
- Build out a version for A/B testing *** THIS IS THE KEY
- Iterate and measure post deployment
What are the tasks that I did?
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Defined a hypothesis - “What if we can better understand how a Planner does “back of the napkin math” so we can provide the Planner with a systematic calculation for how much to “Chase”?
- We can take the guesswork out of the process, improve our service levels and fill rate, as well as improve the workload efficiency of our planners.
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Understand the Planner and what it means to “chase” product (journey)
- What were the needs of the Planner?
- Needed to understand at a hierarchy level, what classifications needed to be “chased”.
- Where do we need to focus our investment?
- Needed to understand their own budget limitations.
- Needed to ensure an order met a minimum order quantity.
- Needed to act quickly, and couldn’t wait to do any complex match (speed)
- Needed to provide vendor communication and visibility to a “Chase” to ensure they could provide the inventory.
- Needed to understand at a hierarchy level, what classifications needed to be “chased”.
- What is “Chasing”?
- “Chasing” is identifying a product that is selling well and can be ordered into to capture additional sales.
- What was wrong with the current process?
- The current Inventory Planning system allows Planners to create orders sequentially, for weeks, sometimes months in advance.
- The Planning System does not break this sequence, so it cannot provide an “earlier” receipt.
- What were the needs of the Planner?
- Propose a series of solutions with our stakeholders
- Proposed a solution that provides a receipt recommendation “out of order”, allowing Planners to “Chase” for an individual CC.
- Build out a version for A/B testing
- Iterate and measure post deployment
What did I learn from Chase/Cut?
- Think broadly first - think of the “chase” process outside of simply - what does the Old Navy Planner functionally do to execute.. Think about how should the company and all players involved be thinking about how to execute a “chase” order.
- Tap into my curiosity of business process - how does this work for more than just the Planners? - what about the vendors, what about the monthly budget that a planner is held accountable for?
- Stand my ground on what is right for the company - needed to develop the algorithm by size, we can’t ignore size and run the risk of overfunding certain sizes.
STEP 1: Fully Understand the User and the Problem
- What were the needs of the Planner?
- Needed to understand at a hierarchy level, what classifications needed to be “chased”.
- Where do we need to focus our investment?
- Needed to understand their own budget limitations.
- Needed to ensure an order met a minimum order quantity.
- Needed to act quickly, and couldn’t wait to do any complex match (speed)
- Needed to provide vendor communication and visibility to a “Chase” to ensure they could provide the inventory.
- Needed to understand at a hierarchy level, what classifications needed to be “chased”.
- What is “Chasing”?
- “Chasing” is identifying a product that is selling well and can be ordered into to capture additional sales.
- What was wrong with the current process?
- The current Inventory Planning system allows Planners to create orders sequentially, for weeks, sometimes months in advance.
- The Planning System does not break this sequence, so it cannot provide an “earlier” receipt.
