“Forecasting”What it’s really all

about…

“Forecasting”What it’s really all

about…

By Laurie LofgrenBy Laurie Lofgren

Vice President Planning & Forecasting Vice President Planning & Forecasting Warnaco Intimate ApparelWarnaco Intimate Apparel

SwimwearSwimwearIntimateIntimate ApparelApparel SportswearSportswear

Warnaco – Strong BrandsWarnaco – Strong Brands

DepartmentDepartmentStoresStores

SpecialtySpecialtyRetailersRetailers

ChainChainStoresStores

MassMassMerchantsMerchants

MembershipMembershipClubsClubs InternationalInternational

CanadaCanada

MexicoMexico

EuropeEurope

R

AsiaAsia

Warnaco – Diverse CustomersWarnaco – Diverse Customers

Tools Process & Disciplines

S&OP Collaboration Continuous Improvement

Tools Process & Disciplines

S&OP Collaboration Continuous Improvement

Main FocusMain Focus

ToolsTools

Build the foundation System is the enabler Information = Visibility

Build the foundation System is the enabler Information = Visibility

Point of Sale Analysis

Retail Planning

Demand Planning

S&OP

Inventory Planning

Core Systems

Core Systems

”Opportunity

for W

arnaco”

System “POS Analysis” Why Invest?

System “POS Analysis” Why Invest?

Increase Visibility Increase Sales Increase ROI

Increase Visibility Increase Sales Increase ROI

Implement VMIImplement VMIImplement VMIImplement VMI

Optimize Optimize AssortmentsAssortments

Optimize Optimize AssortmentsAssortments

Reduce Reduce MarkdownsMarkdowns

Reduce Reduce MarkdownsMarkdowns

Improve Sell Improve Sell

ThroughThroughImprove Sell Improve Sell

ThroughThrough

Maximize Maximize ProductivityProductivity

Maximize Maximize ProductivityProductivity

POS Analysis #1

Product LifecycleAccount

RankTY

SalesProj Fall

Sls Curr

OH TY Target

Inv. %

Variance

Need vs. Target

Inv. Target Inv $

Replenishment A 6,825 34,088 17,738 22,725 22% 4,988 $595,200B 12,600 62,963 38,213 48,413 21% 10,238 $1,273,388C 20,775 103,875 77,363 86,550 11% 9,188 $2,281,013D 25,088 125,438 120,375 119,438 -1% -938 $3,148,388E 15,938 79,613 100,388 88,425 -13% -11,925 $2,342,850F 6,900 34,425 61,838 49,163 -26% -12,675 $1,304,363

LV 3,863 19,313 36,450 38,625 6% 2,175 $1,025,288Replenishment Total 91,913 459,638 452,325 453,375 0% 1,050 $11,970,488Newness A 3,038 15,188 7,388 10,125 27% 2,738 $274,988

B 5,325 26,625 17,738 20,475 13% 2,738 $555,413C 8,550 42,825 35,025 35,700 2% 675 $970,688D 9,750 48,713 50,363 46,388 -9% -3,975 $1,267,875E 5,738 28,688 37,875 31,875 -19% -6,038 $876,188F 2,438 12,188 22,013 17,400 -27% -4,613 $479,738

LV 1,275 6,300 13,200 12,600 -5% -563 $347,025Newness Total 36,113 180,525 183,600 174,600 -5% -9,038 $4,771,838Runnout A 38 263 150 38 -75% -113 $900

B 150 750 375 75 -80% -263 $2,325C 300 1,463 750 188 -75% -563 $4,650D 525 2,700 1,125 263 -77% -825 $6,938E 375 1,838 1,275 300 -76% -938 $7,875F 225 1,200 863 225 -74% -638 $5,325

LV 113 638 525 150 -71% -413 $3,338Runnout Total 1,763 8,813 5,025 1,238 -75% -3,750 $31,350Dropped A 38 225 225 38 -83% -150 $1,425

B 113 525 413 113 -73% -300 $2,700C 338 1,763 863 225 -74% -638 $5,738D 675 3,450 1,200 300 -75% -900 $7,913E 713 3,600 1,275 300 -76% -938 $8,475F 638 3,150 1,238 300 -76% -938 $8,363

LV 450 2,175 563 150 -73% -413 $3,750Dropped Total 3,000 14,925 5,775 1,463 -75% -4,350 $38,400Grand Total 142,313 711,638 732,450 678,450 -8% -54,000 $18,229,613

Key Independent Store AccountInventory Analysis by Door Rank

Maximize Maximize ProductivityProductivity

Maximize Maximize ProductivityProductivity

“Independent Store Account”

Imbalance by door grade

POS Analysis #2

May-Fed Door TypeAccount

RankTY STDSales

LY STDSales

% Sls TY vs LY

Avg Wkly

OH TY

Avg Wkly

OH LY % OH

TY vs LY Turn TY

Turn LY

Retailer #1 Legacy Doors A ++ 18,263 18,525 -1% 49,200 41,738 18% 1.9 2.2A + 6,113 6,975 -12% 12,788 11,025 16% 2.4 3.2A 21,113 21,263 -1% 62,325 53,700 16% 1.7 2.0B 18,563 18,413 1% 64,125 49,725 29% 1.4 1.9C 9,488 9,188 3% 35,813 29,213 23% 1.3 1.6D 2,663 1,763 50% 10,388 6,225 67% 1.3 1.4

Comp Total 76,163 76,163 0% 234,675 191,588 22% 1.6 2.0New Doors A + 2,738 1,425 91% 7,913 5,625 40% 1.7 1.3

A 938 750 26% 2,813 2,250 24% 1.7 1.7B 788 338 142% 2,250 1,050 112% 1.8 1.6C 4,125 1,988 107% 17,025 6,900 146% 1.2 1.4D 375 225 59% 1,650 1,088 50% 1.2 1.1

Walk Over Total 9,000 4,763 89% 31,650 16,950 86% 1.4 1.4Retailer #1 Total 85,163 80,888 5% 266,288 208,538 28% 1.6 1.9Retailer #2 Account #1 A + 1,275 863 49% 3,263 1,688 95% 1.9 2.5

A 6,150 3,938 56% 25,200 12,375 104% 1.2 1.6B 5,250 3,338 57% 23,438 10,725 118% 1.1 1.6C 3,638 2,100 72% 18,750 8,438 122% 1.0 1.2D 450 263 79% 2,775 1,463 87% 0.8 0.9

Account #1 Total 16,725 10,500 59% 73,425 34,688 112% 1.1 1.5Account #2 A + 2,438 1,425 71% 4,088 2,813 47% 3.0 2.5

A 4,425 2,963 50% 11,438 8,325 37% 1.9 1.8B 3,638 2,138 69% 10,013 6,600 52% 1.8 1.6C 3,713 2,363 57% 12,788 8,888 44% 1.5 1.3D 1,050 413 154% 3,300 2,475 34% 1.6 0.8

Account #2 Total 15,263 9,300 64% 41,625 29,100 43% 1.8 1.6Retailer #2 Total 32,888 19,800 66% 117,638 63,750 84% 1.4 1.6Grand Total 118,050 100,688 17% 383,925 272,325 41% 1.5 1.8

Key Department Store Retailer #1 vs. Retailer #2 Sales & Inventory Comparison

“Key Department Store – Retailer #1

vs. Retailer #2” differing results by

account

Optimize Optimize AssortmentsAssortments

Optimize Optimize AssortmentsAssortments

POS Analysis #3

Geo Region Corp Rank Account Shipped Sales

Sales per

DoorInv. Per

Door % Sold

Northeast A+++ DEPT STORE 215 215 110 110 100%

A+++ Total 215 215 110 110 100%

A++ DEPT STORE 1,385 1,185 33 40 86%

A++ Total 1,385 1,185 33 40 86%

A+ CHAIN STORE 1,485 965 19 30 65%

DEPT STORE 1,600 1,170 15 20 73%

A+ Total 3,090 2,140 17 25 69%

A CHAIN STORE 2,515 1,590 12 20 63%

DEPT STORE 60 45 11 15 73%

A Total 2,575 1,635 12 20 63%

B CHAIN STORE 670 385 7 10 58%

DEPT STORE 240 160 8 10 67%

B Total 910 550 7 10 60%

C CHAIN STORE 340 180 5 10 53%

DEPT STORE 25 10 5 10 38%

C Total 365 190 5 10 52%

D CHAIN STORE 270 115 5 10 42%

D Total 270 115 5 10 42%

Northeast Total 8,815 6,025 14 20 68%

Key Collection Style # 1000 - Fashion Color Sell-thru9/25/05 thru 11/25/05 Deliveries, First 17 weeks of selling from Intro Date

“Dept vs. Chain Store”

Fashion Color sell thru

Reduce Reduce MarkdownsMarkdowns

Reduce Reduce MarkdownsMarkdowns

System “Demand Planning”

Why invest?

System “Demand Planning”

Why invest?

Reduce Inventory Improve Service Increase Collaboration

Reduce Inventory Improve Service Increase Collaboration

Statistical Statistical Forecast Forecast based on based on Best FitBest Fit

Pyramid Pyramid based on based on Consumer Consumer SpendingSpending

Collect Collect “ALL” “ALL”

Relevant Relevant InformationInformation

Provides Provides Flexibility Flexibility

Easy To UseEasy To Use

DS FM

Historical Bookings Seasonality Curve

Retail Inventory

Account Forecast

System & Adjusted Forecast

DSFM View #1

Account Collaboration

POS History POS Based System Forecast

Statistical Based

Forecast

DSFM View #2

MTD Shipments & Orders

Current Open Bulk Orders

Historical Cancellations

Historical Shipments

Historical Door Distribution

DSFM View #3

Collect all relevant

information

Historical Forecast

Forecast Accuracy

DSFM View #4

Utilize Forecast Accuracy

? ? ?

Customer Forecast – Unit Receipt Plan

DSFM View #5

Account Collaboration

System “Inventory Planning”

Why invest?

System “Inventory Planning”

Why invest?

Reduce Inventory Improve Service Collaboration

(Capacity Planning)

Reduce Inventory Improve Service Collaboration

(Capacity Planning)

““Dynamic” Dynamic” Inventory Inventory PlanningPlanning

Daily Daily Forecast Forecast UpdatesUpdates

Automatic Automatic PO PO

GenerationGeneration

Exception Exception ReportingReporting

DS RP

Reporting Systems

Provide Visibility

Reporting Systems

Provide Visibility

Emphasize ReportingEmphasize Reporting

DSRPDSRP

DS StoresDS StoresS&OPS&OP

Sales Sales PlanninPlanningg

DSFMDSFM

A successful implementation….A successful implementation…. Clear Business Plan

Detailed Project Plan

Allocate the Resources

Prioritize & Execute

Training & Training

Continuous Refinement

Clear Business Plan

Detailed Project Plan

Allocate the Resources

Prioritize & Execute

Training & Training

Continuous Refinement

Process&

Disciplines

Process&

Disciplines

Achieve results S&OP a must

Achieve results S&OP a must

S&OPWhat does it mean at Warnaco?

S&OPWhat does it mean at Warnaco?

Formalized & Structured Process Occurs on a Monthly basis Synchronize “all” Plans Cross functional ownership

Formalized & Structured Process Occurs on a Monthly basis Synchronize “all” Plans Cross functional ownership

2006 2006Monday Tuesday Wednesday Thursday Friday

2 3 4 5 6

9 10 11 12 13

Demand Meeting

16 17 18 19 20

Supply Supply Planning Meeting

Run S&OP Plans23 24 25 26 27

S&OP

Run S&OP Plans Meeting

Supply Planning Process

Demand & Supply Reconciliation

Meeting

OCTOBER

Month End RollDemand Planning Process

Demand Planning Process

“Utilize” Forecast Accuracy Collaboration with key accounts Reconcile demand & production Synchronize “all” plans Monthly Demand Meetings

“Utilize” Forecast Accuracy Collaboration with key accounts Reconcile demand & production Synchronize “all” plans Monthly Demand Meetings

S&OP ProcessDemand Planning Must Do’s

S&OP ProcessDemand Planning Must Do’s

S&OP Process Collaboration &Communication

S&OP Process Collaboration &Communication

Synchronize & Reconcile

Replenishment OTB Demand Plan Financial Production Capacity Inventory

Joint Ownership & Smart Decision Making

General Mgmt Sales Marketing Operations

Involvement at all levels

Synchronize & Reconcile

Replenishment OTB Demand Plan Financial Production Capacity Inventory

Joint Ownership & Smart Decision Making

General Mgmt Sales Marketing Operations

Involvement at all levels

S&OP Disciplines Warnaco USIA

S&OP Disciplines Warnaco USIA

Standard Operating procedures Cut to Order - New & Fashion Opp’s Confirm – New Doors & Model Builds

Critical Principles

One Number Forecast All Demand is Forecasted Supply = Demand

Standard Operating procedures Cut to Order - New & Fashion Opp’s Confirm – New Doors & Model Builds

Critical Principles

One Number Forecast All Demand is Forecasted Supply = Demand

S&OPWhy is Warnaco doing this?

S&OPWhy is Warnaco doing this?

Ensure Ongoing Improvements Establish “Best Practices” Informed Decision Making Increase teamwork

Ensure Ongoing Improvements Establish “Best Practices” Informed Decision Making Increase teamwork

Success Stories for Warnaco USIA

in 2006!

Success Stories for Warnaco USIA

in 2006!

Improved Service Increased Inventory Turn Reduced SLOB’s Increased Sales

Improved Service Increased Inventory Turn Reduced SLOB’s Increased Sales

What’s Next for Demand Planning at Warnaco?

What’s Next for Demand Planning at Warnaco?

System Roll Out Europe Expand Account Collaboration Advanced utilization POS Roll out Best Practices Evolve S&OP

System Roll Out Europe Expand Account Collaboration Advanced utilization POS Roll out Best Practices Evolve S&OP

Tools Process & Disciplines Collaboration Continuous Improvement

Tools Process & Disciplines Collaboration Continuous Improvement

Main FocusMain Focus

Q & AQ & A