Marketing bán hàng - Chapter 13: Merchandise planning

Chapter 13Merchandise PlanningMerchandise Management RetailCommunicationMix Merchandise PlanningSystems PlanningMerchandiseAssortments BuyingMerchandisePricing2Types of Buying SystemsStaple MerchandisePredictable DemandHistory of Past SalesRelatively Accurate ForecastsFashion MerchandiseUnpredictable DemandLimited Sales HistoryDifficult to Forecast SalesThe McGraw-Hill Companies Inc./Ken Cavanagh PhotographerThe McGraw-Hill Companies, Inc./Lars A. Niki, photographer3Staple Merchandise PlanningStaple merchandise planning systems provide information needed to assist buyers by performing three functions:Monitoring and measuring current sales for items at the SKU levelForecasting future SKU demand with allowances made for seasonal variations and changes in trendDeveloping ordering decision rules for optimum restocking4Staple Merchandise PlanningRyan McVay/Getty ImagesMost merchandise at home improvement centers are staples. 5Inventory Levels for Staple Merchandise6Factors Determining Backup StockLevel of backup depends on product availability retailer wishes to provideThe greater the fluctuation in demand, the more backup stock is neededThe amount of backup stock needed is also affected by the lead time from the vendorFluctuations in lead time affect the amount of backup stockVendor’s product availability affects retailers’ backup stock requirements7Relationship between Inventory Investment and Product AvailabilityProduct Availability (Percent)600500400300200100080 85 90 95 1008Cycle and Backup StockUnits AvailableWeeks150 -100 - 50 - 0 - 1 2 3 4Order 96Cycle StockBuffer Stock9Basic Stock List Indicates the Desired Inventory Level for Each SKUAmount of Stock DesiredCost of CarryingInventory Lost Sale Due to Stockout10Inventory Management Report for Rubbermaid Merchandise11Order PointOrder point = the point at which inventory available should not go below or else we will run out of stock before the next order arrives.Assume Lead time = 0, Order point = 0Assume Lead time = 3 weeks, review time = 1 week, demand = 100 units per weekOrder point = demand (lead time + review time) + buffer stockOrder point = 100 (3+1) = 40012Order Point continuedAssume Buffer stock = 50 units, thenOrder point = 100 (3+1) + 50 = 450We will order something when order point gets below 450 units.13Calculating the Order PointOrder Point = (Demand/Day) x (Lead Time +Review Time) + Backup Stock167 units = (7 units x (14 + 7 days) + 20 unitsSo Buyer Places Order When Inventory in Stock Drops Below 167 units14Merchandise Planning for Fashionable MerchandiseSteps in Developing a Merchandise Budget PlanSet margin and inventory turn goalsSeasonal sales forecast for categoryBreakdown sales forecast by monthPlan reductions – markdowns, inventory lossDetermine stock needed to support forecasted salesDetermine “open to buy” for each money15Merchandise Budget PlanPlan for the financial aspects of a merchandise categorySpecifies how much money can be spent each month to achieve the sales, margin, inventory turnover, and GMROI objectives.Not a complete buying plan--doesn’t indicate what specific SKUs to buy or in what quantities.Royalty-Free/CORBIS16Six Month Merchandise Plan for Women’s Casual Slacks17Monthly sales percent Distribution to Season (Line 1)Sales % Dist. to 1. Month 6 mo. data April May June July Aug Sept 100.00% 21.00% 12.00% 12.00% 19.00% 21.00% 15.00%18Monthly sales (Line 2)Sales % Dist. to Month 6 mo. data April May June July Aug Sept 100.00% 21.00% 12.00% 12.00% 19.00% 21.00% 15.00%Mo. Sales $130,000 $27,300 $15,600 $15,600 $24,700 $27,300 $19,50019Monthly Reductions Percent Distribution (Line 3)Reduction % Distribution to3. Month 6 mo. data April May June July Aug Sept 100.00% 40.00% 14.00% 16.00% 12.00% 10.00% 8.00% 20Shrinkage Inventory loss caused by shoplifting, employee theft, merchandise being misplaced or damaged and poor bookkeeping. Retailers measure shrinkage by taking the difference betweenThe inventory recorded value based on merchandise bought and receivedThe physical inventory actually in stores and distribution centers21Monthly ReductionsReduction % Distribution to3. Month 6 mo. data April May June July Aug Sept 100.00% 40.00% 14.00% 16.00% 12.00% 10.00% 8.00% 4. mo. reductions $16,500 $6,600 $2,310 $2,640 $1,980 $1,650 $1,320 22Beginning of Month Stock to sales ratio (Line 5)5. BOM Stock to Sales Ratio 6 mo. data April May June July Aug Sept 4.0 3.6 4.4 4.4 4.0 3.6 4.023BOM Stock (Line 6)6. BOM Inventory 6 mo. data April May June July Aug Sept 98280 98280 68460 68640 98800 98280 7800024EOM Stock (Line 7)7. EOM Inventory 6 mo. data April May June July Aug Sept 85600 68640 68460 275080 98280 78000 6560025Monthly Additions to Stock (Line 8)8. Monthly additions to stock 6 mo. data April May June July Aug Sept 113820 4260 17910 48406 26180 8670 842026Open to Buy Monitors Merchandise Flow Determines How Much Was Spent and How Much is Left to SpendPhotoLink/Getty ImagesPhotoLink/Getty Images27Six Month Open to Buy28Allocating Merchandise to StoresAllocating merchandise to stores involves three decisions: how much merchandise to allocate to each store what type of merchandise to allocate when to allocate the merchandise to different stores29Allocation Based on Sales Volume30Different Geodemographic Segments31Apparel Size Difference Across Stores32Sales of Capri Pants by Region33Analyzing Merchandise Management PerformanceThree types of analyses related to the monitoring and adjustment step are: Sell through analysis ABC analysis Multiattribute analysis of vendors34Sell Through Analysis Evaluating Merchandise PlanA sell-through analysis compares actual and planned sales to determine whether more merchandise is needed to satisfy demand or whether price reductions are required.35ABC Analysis An ABC analysis identifies the performance of individual SKUs in the assortment plan. Rank - orders merchandise by some performance measure determine which items: should never be out of stock. should be allowed to be out of stock occasionally. should be deleted from the stock selection.36ABC Analysis Rank Merchandise By Performance MeasuresContribution MarginSales DollarsSales in UnitsGross MarginGMROIUse more than one criteria Ryan McVay/Getty Images37Multiattribute Method for Evaluating VendorsThe multiattribute method for evaluating vendors uses a weighted average score for each vendor. The score is based on the importance of various issues and the vendor’s performance on those issues.C Squared Studios/Getty Images38Multiattribute Method for Evaluating Vendors Performance Evaluation of Individual Brands Across Issues Importance Evaluation Brand A Brand B Brand C Brand DIssues of Issues (I) (Pa) (Pb) (Pc) (Pd) (1) (2) (3) (4) (5) (6)Vendor reputation 9 5 9 4 8Service 8 6 6 4 6Meets delivery dates 6 5 7 4 4Merchandise quality 5 5 4 6 5Markup opportunity 5 5 4 4 5Country of origin 6 5 3 3 8Product fashionability 7 6 6 3 8Selling history 3 5 5 5 5Promotional assistance 4 5 3 4 7Overall evaluation = 290 298 212 34139Evaluating a Vendor: A Weighted Average Approach= Sum of the expression= Importance weight assigned  to the ith dimension= Performance evaluation for jth brand alternative on the jth issue1= Not important10= Very important40Evaluating VendorsA buyer can evaluate vendors by using the following five steps: Develop a list of issues to consider in the evaluation (column 1) Importance weights for each issue in column 1 are determined by the buyer/planner in conjunction with the GMM (column 2) Make judgments about each individual brand’s performance on each issue (the remaining columns) Develop an overall score by multiplying the importance for each issue the performance for each brand or its vendor41Retail Inventory Method (RIM)Two Objectives:To maintain a perpetual or book inventory of retail dollar amounts.To maintain records that make it possible to determine the cost value of the inventory at any time without taking a physical inventory. 42Retail Inventory Method: The ProblemRetailers generally think of their inventory at retail price levels rather than at cost. When retailers compare their prices to competitors’, they compare their retail prices. The problem is that when retailers design their financial plans, evaluate performance and prepare financial statements, they need to know the cost value of their inventory.One way to do this is to take physical inventories – time consuming and costly!Another way is to use the Retail Inventory Method (RIM)43Advantages of RIM The retailer doesn't have to “cost” each time. Follows the accepted accounting practice of valuing assets at cost or market, whichever is lower.44Advantages of RIM cont’dAmounts and percentages of initial markups, additional markups, markdowns, and shrinkage can be compared with historical records or industry norms. Useful for determining shrinkage.Can be used in an insurance claim case of a loss.45Disadvantages of RIM System that uses average markup. Record keeping process involved is burdensome.46Steps in RIMCalculate Total Merchandise Handled at Cost and RetailCalculate Retail ReductionsCalculate Cumulative Markup and Cost MultiplierDetermine Book Inventory at Cost and Retail47Retail Inventory Method ExampleTotal Goods Handled Cost RetailBeginning inventory $ 60,000 $ 84,000Purchases 50,000 70,000- Return to vendor (11,000) (15,400)Net Purchases 39,000 54,600Additional markups 4,000- Markup cancellations (2,000)Net markups 2,000Additional Transport. 1,000Transfers in 1,428 2,000- Transfers out (714) (1,000)Net Transfers 714 (1,000)Total Goods Handled $100,714 $141,60048Retail Inventory Method ExampleTotal Goods Handled Cost RetailGross Sales $ 82,000- Consumer Returns & Allowances ( 4,000)Net Sales $ 78,000Markdowns 6,000- Markdown Cancellation (3,000)Net Markdown 3,000Employee Discounts 3,000Discounts to Customers 500Estimated Shrinkage 1,500Total Reductions $ 86,00049Calculate Total Goods Handled at Cost and RetailRecord beginning inventory at cost and at retailCalculate net purchasesCalculate net additional markupsRecord transportation expensesCalculate net transfersThe sum is the total goods handled(c) Stockbyte/PunchStock50Calculate Retail ReductionsRecord net salesCalculate markdownsRecord discounts to employees and customersRecord estimated shrinkageThe sum is the total reductions51Calculate the Cumulative Markup and Cost MultiplierCumulative markup = total retail – total cost total retailIf the cumulative markup is higher than the planned, then the category is doing better than planned52Determine Ending Book Inventory at Cost and RetailEnding book = Total goods handled at retail inventory at retail – total reductionsThe ending book inventory at cost is determined in the same way that retail has been changed to cost in other situations – multiply the retail times (100% - gross margin percentage) Ending book = Ending book inventory x cost multiplier53