Forward Cover Needs to Represent the Inventory's Ability to Meet 'Full' Priced Sales
(Doc ID 2410262.1)
Last updated on SEPTEMBER 08, 2020
Applies to:Oracle Retail Merchandise Financial Planning Cloud Service - Version 16.0 and later
Information in this document applies to any platform.
Currently, Forward Cover Retail measure is a relationship between EOP and Net Sales, not including Markdown. This is inaccurate and results in planning errors. Forward Cover is impacted by Markdown, i.e., higher the Markdown, the higher Forward Cover.
The Turn or Forward Cover needs to represent the inventory's ability to meet 'full' priced sales (where full price represents the selling price markdown) because the inventory (EOP R) is also represented as 'full price' value.
For example, consider $100 in inventory and $75 in reg+promo sales and $25 markdown, and inventory goes down by $100 yet cover (as it is calculated now) would report > 1 week of cover.
When a planner looks at Forward Cover (or weeks of supply) they will understand that it represents an ability to meet sales; however, the Forward Cover that they seek to achieve needs to factor in a host of inventory considerations such as: Shrink, presentation aesthetics, supplier/supply chain compliance issues, and safety stock (to achieve service levels).
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