Manual VS automated planogram creation
The category management software market offers many solutions, and they can be divided into manual or automated planogram creation. There are many questions: what solution to choose for a retail chain, what solution will be really useful for business, who will help you set up the system and train employees on how it works? Let's look for answers with our category management expert and MCM consultant at Consulting for Retail – Polina Leonenko.
Manual vs Automated Planogram Creation - What's the Difference?
In previous articles, we have talked in detail about planograms and their importance for improving the efficiency of a retail business. Now let's take a closer look at how planograms are constructed.
In the case of manual creation of planograms, all decisions regarding the layout are made by the merchandiser. The specialist puts the product on the shelf, he has to analyze the financial performance of the SKU, and take into account whether the product belongs to a certain decision tree (DT) or a commercial classifier, besides, the merchandiser himself determines the number of facings for each product.
For the manual creation of planograms, a solution is used that visualizes the process and gives access to the final calculations of the laying efficiency. And all the analytics falls on the shoulders of the merchandiser. That is, to effectively use the shelf space, a specialist needs to distribute goods taking into account the rules of merchandising, and the layout scheme that is accepted in the retail chain for this product category.
When implementing systems for the manual planogram creation, it is optimal that the store clustering performs in a retail chain. When the assortment is designed for a cluster of outlets that are similar in terms of consumption structure, then one planogram can be created for several dozen stores. Since the creation of a unique planogram for each of the shops is resource-intensive and unprofitable.
Clustering helps to create an assortment focused on visitors to an entire cluster of stores. In turn, the automated system planogram creation helps to take into account the individual shop commercial indicators. Thus, you can achieve the most targeted presentation of goods, and this helps to increase sales.
One of the main advantages of the automatic process is the creation of individual planograms for each store. The solution places goods on the shelf automatically, while taking into account all the necessary factors:
- store range;
- individual sales or summary KPIs defined by the user;
- rules that are initially determined by a specialist and can be adjusted if necessary;
- goods attributes;
- equipment parameters.
To work, it is enough to initially write down all the rules for building, which are set schematically in the software.
We invite you to check the business processes of category management: download the MCM checklist and see where and what can be improved.
The automatic system for creating planograms extracts equipment parameters, and the assortment belonging to this store from the database, and, based on the characteristics and financial performance of the goods, arranges them on the shelves.
In the block of rules, the ability to set the desired inventory in days, and the number of pieces or faces is implemented. The program itself will select the optimal number of faces to fall within the specified limits.
Benefits of automatic planogram building:
- reducing the labor costs of merchandisers for manual placement of goods on the shelves;
- reduction of time for calculation and construction;
- increase the speed of creating planograms.
As a result, we get a finished planogram that can be sent to shops. If necessary, the merchandiser can make adjustments.
Learn more about C4R retail automation solutions from our consultants. To order a callback, write to [email protected] or fill out the form at the link.
Comparison of manual and automatic planogramming systems
The C4R team implements effective solutions for retail, distribution, and logistics. Our portfolio includes software for manual construction of planograms – Space Planning and software for automatic creation – Space Automation. What are the benefits of each?
Space Planning simplifies the work of the merchandiser as much as possible, thanks to integration with the central system of the distribution chain, and Space Automation fully automates the process of creating planograms.
For the qualitative operation of both solutions, a certain set of data is needed:
- active assortment for the store;
- sales data;
- attributes of each product.
As for product attributes, these are all signs of SKU. For example, for beer, these will be parameters: light or dark, filtered/unfiltered, in glass containers, cans or plastic bottles, imported or regional, and others. And the more attributes, the more accurate and faster the planogram creation will be.
To start working with the system of manual creation of planograms, a minimum set of the necessary information is sufficient.
To get started, all you need is the following information:
- item number;
- product dimensions;
- equipment parameters.
That is, for the implementation of such a system, the requirements and restrictions are minimal. It would seem, take and work. But the more data a merchandiser sees, the easier it is for a specialist to create a planogram. In turn, the automatic creation of planograms significantly saves the merchandiser's operational time but requires more input data and preparation time to start.
Feature of the automatic system:
- the system works perfectly with standardized shelving and perforations;
- you need to work out the range well – the entire range that does not physically fit on the shelf will not be placed on the planogram. The system itself will select the best products in terms of performance and deliver them;
- placement rules are formed based on product attributes, which must be in the product card and/or in the central system in sufficient quantity;
- sales or other financial indicators must be available for loading into the system, based on these data, the number of faces is calculated;
- equipment data - information about the type of equipment, and the number of racks and shelves in the context of each category.
The program for automatic planogram creation allows you to create optimal planograms, taking into account the financial performance of each shop.
Even with a cluster assortment, sales of certain goods may differ for different stores within the same category. For example, in one shop light beer of brand A can be sold more, light beer of brand B will be sold better in another store of the same range cluster, and large packages or light canned beer will be popular in the third store. When clustering planograms manually, all shops in the cluster will receive the same number of facings. In this case, it will be the number of facings in which it is difficult to ensure the highest possible level of sales according to the demand for a particular outlet.
The program for automatically creating planograms individually calculates the number of faces, even if the stores belong to the same cluster. This approach helps to minimize out-of-stock and maximize display efficiency. That is, considering the demand for each particular store, we can provide a sufficient amount of goods on the shelf.
Whatever solution you choose for your retail chain, it will simplify the work of the merchandiser to a greater or lesser extent:
- Space Planning - a solution for manual creation that will improve and simplify the work of specialists with planograms;
- Space Automation for the automatic creation of planograms will significantly speed up the process, reduce time and labor costs, and also allow you to take into account the individual characteristics of the store.
Learn more about the possibilities of C4R`s solutions for retail, about retail audit and consulting services for building business processes, and automating logistics from our specialists. To order a consultation, write to [email protected] or fill out the form below.
The author of the material is Polina Leonenko,
MCM Consultant Consulting for Retail
