tailieunhanh - Lecture Management of retail buying – Chapter 5: Planning and control

In this chapter, you will learn about: How budgets are determined (& checked periodically) for a buying season or dept, stockturn & how to determine the productivity of the merchandise as an investment, staple stock controls, or how stores ensure their basics & best-sellers are always available, | Ch. 5: Planning & Control How budgets are determined (& checked periodically) for a buying season or dept. Stockturn & how to determine the productivity of the merchandise as an investment Staple stock controls, or how stores ensure their basics & best-sellers are always available Factors to consider when dealing with seasonal merchandise How to buy even when the budget is very tight Copyright © 2006 by John Wiley & Sons, Inc. All rights reserved This is the topic overview found at the beginning of Chapter 5. Determining a Planned Purchase Amount Sales for the month + Markdowns for the month + Stock required at end of month (EOM) or beginning of following month (BOM) – Stock provided (on hand) at start of month ---------------------------------------------------------- = Planned purchase for the month Copyright © 2006 by John Wiley & Sons, Inc. All rights reserved Planning monthly purchases is a way of viewing a department’s inventory as a reservoir from which goods are drawn or added to as needed to meet the fluctuations of customer demand. Don’t let it run “too low” (with too few goods to sell) or “too high” (by tying up too much cash in inventory). Correcting OTB Budget Problems: Is the Open-To-Buy amount Less than what More than what buyer needs? buyer needs? Incorrect forecasting (planning errors) Improper distribution of merchandise mix (buying errors) Unsuccessful promotions Late receipt of goods (timing errors) Incorrect forecasting (planning errors) Insufficient amounts purchased (buying errors) Unexpectedly successful promotions Failure to place orders on a timely basis (timing errors) Copyright © 2006 by John Wiley & Sons, Inc. All rights reserved Open-To-Buy amounts are usually guidelines, not set in stone. But when the buyer consistently spends either more or less than these guidelines, it indicates a problem to be analyzed and corrected. Keeping Inventory Low (but not too low!) Reduce number of price lines Avoid similar styles or brands Eliminate slow-selling items or lines Buy more frequently, in smaller quantities Reduce staple stock amounts slightly Create a system to mark incoming stock by date, then mark it down or promote it at regular, timed intervals to prompt sales Copyright © 2006 by John Wiley & Sons, Inc. All rights reserved A good basic stock plan always requires some tinkering. Here are ideas to keep items moving and keep inventory fresh. Stock Controls: When & how much to order The point is to reduce out-of-stock incidences without having too much merchandise in inventory. Depending on type of merchandise, reordering is done by: Continuous replenishment Long commitment (major initial order) with subsequent readjustments to reorders Long commitment with little or no reordering Facts necessary for stock control of any item: listing and description of item probable rate of sale reorder period reserve provision (maximum) amount unit OTB (minimum) current stock on hand stock on order Copyright © 2006 by John Wiley & Sons, Inc. All rights reserved Stocks are replenished and reordered differently depending on the type of item and how quickly it sells. Every item in a retail store’s inventory must be tracked in terms of order frequency and sales frequency.