The Power Of Planning: 9 Inventory Factors To Consider
One undisputable challenge in retail lies with the goods we sell. We need them at the in the right place at the right time, we need to make sure we have enough to meet demand, with the proper mix of basic and seasonal items to ensure the mix entices shoppers to return frequently. Linen Chest, one of Canada's most prestigious Bed and Bath chains with 13 stores, headquartered in Montreal, Quebec, decided it was time to move away from their excel spreadsheets and move into an application that would provide the retrending and analysis they need to remain profitable.
Linen Chest selected Easy Retail Inc., a Montreal-based software company, to provide a Planning solution, EasyPlan, to integrate to their existing JDA MMS merchandise management system. The challenge was to provide practicality for planning, reporting to monitor purchases, as well as "on time" receipts to meet sales forecast and targeted inventory turns – a tall order for any one application.
"We always kept a close eye on our product, the challenge was planning with so many departments and classes; it was just simply unmanageable." said Stan Leibner, Co-owner of the Linen Chest.
Jacques Azoulay, President of Easy Retail added, "We came in and prioritized the clean-up and consolidation of the product hierarchy for the Linen Chest on Day 1. This process is one of the toughest, and most gratifying for any retail chain. Every grouping of merchandise being planned for must be warranted – therein lies the major challenge."
Mr. Leibner adds, "The proof is there, we are carrying less merchandise and are more profitable, greatly due to the comparative views from Plan, Actual and Last year, in addition to the GMROI indicator within the planning software. It's great to have improved turns, but GMROI is more telling."
The management group meets on a weekly basis to review sales and inventory performance and if necessary, dollars are reallocated to respond to trends immediately – a process that would have taken weeks of effort in the past. Our stock to sales ratio can quickly tell us whether we have the right level of inventory based on projected sales. Anyone can sell more with more inventory; the real trick is to sell more with less inventory.
These are the top 9 factors to consider in evaluating your inventory:
- Identify sellers that meet inventory turn requirements
- Meets Gross Margin (GM) criteria
- GMROI – measures impact of margin and turn
- Products that fit the 20/80 rule – 20% that make 80% of the sales in that grouping
- Replenishable at Distribution Center – buy from vendors who allow repeats and to modify orders
- Accessible goods (short purchase cycle) – buy from vendors with quick turnaround time
- Inventory management – goods at the right store, right time
- Planning tools which allow re-trending capabilities (i.e. identifying opportunities & shortfalls)
- Markdown on time (don't fall in love with your goods)!
For more information on Linen Chest, visit their website at www.linenchest.com or e-mail info@linenchest.com. For more information on Easy Retail Inc. visit their website at www.easyretail.ca or contact Suzana Cindric at scindric@easyretail.ca.
SOURCE: EasyRetail Inc.