Taking the Lead
Even though Franklin Electronic Publishers Inc. is a world leader in handheld information, having sold more than 32 million electronic books since 1986, the company does not manufacture its own products. Instead, the company orders components from overseas vendors, sends the components to factories for production and distributes from its own distribution centers to Radio Shack, Staples, Wal-Mart and other major retailers.
Franklin's offerings include electronic dictionaries, language helpers, digital books, crossword puzzles and learning products equaling about 140 SKUs. Production takes about four months, which includes six weeks in transit.
"For a company of our size, we reach a very wide distribution with many SKUs consisting of many different components," says Toshihide Hokari, vice president, product management, Franklin Electronic Publishers. "Even if we are dealing with a simple re-order, we need to accurately forecast the need to make sure that all components are available when they are needed, given the long lead time on some of them."
A Better Way
In 2002, the company began looking for ways to improve its forecast accuracy. Up until then, it relied on a homegrown system featuring Excel spreadsheets, manual input, and a best-guess methodology. The system was cumbersome, time consuming and prone to human error. It couldn't handle exception reporting and also lacked the functionality to push forecasts into budgets. Forecasts were about 80 percent accurate, and Franklin's goal was to hit the 90-percent range. More accurate forecasts translate into more complete orders -- something of particular importance to small category suppliers such as Franklin, which have little leverage with the big retailers when they fail to meet required service levels.
By tapping into demand planning software from Prescient, Franklin has improved its major retail relationships by reducing errors and out-of-stocks. The effort landed the company on the top 10 on Circuit City's "Supply Chain Excellence Scorecard."
Making A Point
Franklin also wanted to automate the input of point-of-sale (POS) data from end consumers to more accurately reflect true product demand and better service to the retail customers that are its distribution channel. "Using Prescient, Franklin compares point-of-sale data to sales histories," says Hokari.
"Now Franklin's salespeople get to see a new forecast at the beginning of every month -- based on the previous month's sales."
For instance, Prescient's "Supersession" functionality allows Franklin to phase in new products through the use of historical information. This leads to fewer out-of-stocks, improved forecast accuracy and fewer returns.
Hokari says Franklin's products are a niche category for many of its retail partners, who rely on Franklin to provide guidance on specific products. With Prescient, Hokari says Franklin now has the confidence to present to the retailers market trends, how they can capitalize on them and what to expect in the coming months/years.
Because sales in the category of consumer electronics that Franklin targets is not nearly as large as, say television or DVD players, Hokari says it is very important to be seen as the leader in its niche category. For example, although Franklin may not represent 60 percent of what the Circuit City shopper buys for his/her category, by having a seal of approval from Circuit City, Franklin becomes the retailer's vendor of choice in its category that carries weight and relevance to buyers.
"It is important that we are seen as a very credible and intelligent vendor choice to the retailers," says Hokari. This allows us to work more closely with our retailer partners to further capitalize on promotion and merchandising opportunities. Before Prescient we were unable to do this."