In many organizations, a disconnect exists between what procurement, the CFO, and the CTO want and what the planning team needs when selecting enterprise software for merchandise planning.
Often, leadership pushes for an ERP system with merchandise planning capabilities, viewing it as the best long-term solution. However, this choice might not align with the planning team’s specific requirements, risking adoption challenges and reduced productivity.
Planners, though frequently sidelined, hold the key to bridging this gap by building a compelling business case with planning solution vendors, demonstrating how the right tool can deliver financial returns that resonate with the CFO’s and CTO’s goals of improving the bottom line.
Understanding the Needs: Merchandise Planning vs. ERP Capabilities
Merchandise planning encompasses critical tasks like demand forecasting, inventory management, and assortment planning—functions that directly impact inventory costs and sales revenue.
While ERP systems offer modules for these activities, they often lack the depth and specialized features of dedicated planning tools. Tools like Toolio provide advanced AI-driven forecasting, real-time tracking, and scenario testing, tailored to planners’ needs.
In contrast, ERP systems, designed for broad business integration, may fall short in delivering the precision and flexibility required for effective merchandise planning, potentially leading to inefficiencies that affect the bottom line.
The CFO and CTO Perspective: Cost, Integration, and the Bottom Line
The CFO prioritizes cost efficiency, favoring ERP systems that bundle solutions to save on licensing and maintenance fees—a valid strategy for reducing expenses. The CTO seeks a single system for easier integration, minimizing technical complexity and ensuring scalability, which aligns with operational efficiency goals.
Both are ultimately focused on improving the bottom line, whether through cost reduction or revenue growth. However, these priorities can overlook the planning team’s operational needs, creating a trade-off where short-term savings and integration ease compromise long-term productivity and profitability.
For CFOs and CTOs, the bottom line hinges on effective planning and investment in the right inventory. Excess stock ties up capital and incurs carrying costs, while stockouts lead to lost sales—both erode profits.
Research, such as Gartner’s findings, shows that advanced planning tools can cut inventory costs by up to 15% and boost sales by 10% through better forecasting and assortment planning.
This financial impact—potentially millions in savings and revenue—starts with selecting the right planning tool, not just an ERP system that might not fully meet these needs.
The Power of Planners: Building a Business Case with Vendors
Planners can influence CFO and CTO decisions by collaborating with planning solution vendors to build a data-driven business case that quantifies these financial benefits. Here’s how they can do it:
- Identify Current Challenges and Costs: Planners should document pain points like high inventory carrying costs or stockouts. For example, if a company faces $20 million in annual carrying costs and $5 million in lost sales due to poor planning, these figures set a baseline for improvement.
- Estimate Benefits with Vendor Data: Working with vendors like Toolio, planners can use industry benchmarks and case studies to estimate gains. Gartner reports a 15% inventory cost reduction and 10% sales increase with advanced planning solutions.
Applying these to the example, a 15% cut in $20 million saves $3 million annually, and a 10% boost in $500 million sales adds $50 million—significant impacts that outshine ERP’s broader but less focused capabilities. - Calculate Costs and ROI: Planners need to factor in implementation and maintenance costs, often lower and faster with dedicated tools than ERP systems.
If a planning tool costs $2 million to implement and $500,000 yearly to maintain, the net annual benefit ($53 million - $0.5 million = $52.5 million) yields a payback period of just weeks ($2 million / $52.5 million ≈ 0.038 years).
Over three years, this could net $154 million, a compelling ROI that CFOs can’t ignore, especially when ERP implementations might take longer and deliver less targeted results. - Leverage Vendor Resources: Vendors provide ROI calculators, case studies, and white papers showing real-world savings (e.g., $3.5 million over three years).
- Present Effectively: Tailor the case to CFOs with financial metrics (savings, revenue, payback) and to CTOs with technical alignment (integration, scalability), using visuals like this table:
Why User Involvement Matters
Involving planners isn’t just about meeting their needs—it’s about ensuring success. Gartner research shows projects with high user involvement are 50% more likely to meet objectives, reducing the risk of costly mistakes like selecting an ERP system that planners can’t effectively use.
Dedicated tools, tailored to their workflows, enhance adoption and productivity, delivering the financial and technical outcomes CFOs and CTOs seek, unlike ERP systems that might require extensive customization or fail to deliver on planning specifics.
Aligning Goals: Planning Tools vs. ERP Systems
The business case aligns with CFO and CTO goals by showing how a planning tool cuts costs (e.g., $3M in inventory savings) and boosts revenue (e.g., $50M from sales), directly improving the bottom line. It also addresses CTO concerns with faster implementation and modern integration options (e.g., APIs), reducing disruption compared to ERP systems’ often lengthy rollouts.
Planners can highlight risks of sticking with ERP, like falling behind competitors who use advanced tools to optimize inventory, losing market share—a CFO worry—or accruing technical debt from inadequate modules, a CTO concern.
Here’s a comparison:
Dedicated tools often deliver higher ROI and efficiency, making them a stronger fit for merchandise planning’s financial stakes.
Final Thoughts
Planners can shape CFO and CTO decisions by building a business case with vendors, showing how dedicated planning tools cut costs, streamline implementation, and boost the bottom line—outcomes ERP systems might not fully achieve. Their voice, backed by data like $154M in net benefits over three years, ensures the right tool is chosen, aligning operational needs with financial and technical goals. Empowering planners isn’t just about inclusion—it’s about driving organizational success.
In a data-driven world, planners’ insights transform software from a tool into a strategic asset. By quantifying their impact, they can turn the silent into the heard, ensuring decisions prioritize both profitability and efficiency. Interested in learning more? Speak to an expert today!
