|Many General Merchandise retailers have too much cash tied up in inventory. Look at this chart and match your merchandise cost to calculate your own days on hand. With weekly deliveries, how many days on hand do we need? Increasing inventory turns in general merchandise retailing is an enormous opportunity.|
Inventories get out of line because one or more of these inventory categories is not well managed.
SKU's with a normal distribution pattern
These SKU's follow the familiar bell shaped curve . They have steady, year around volume. Unfortunately, too few items move like this.
SKU's with slow or erratic distribution patterns
The largest item movement tends to be in here. Existing systems that deal with this try to manage these SKU's with a series of complex algorithms "tailored" to "discovered" patterns. This approach does not work well at all. What we do is completely different and much simpler.
Back to School, Halloween, Christmas, Valentine's Day, Easter, Mother's Day/Graduation. Regional seasons like Winter automotive or Beach. Items that "climb a wall", then, "fall off a cliff". We have developed better routines for this than any we have ever seen.
No one wants to run a circular and be out of stock way early. Merchants only have to have that happen to them once to know what to do. Over ordering for circulars is a major cause of slow inventory turn. But merchants need confidence to stop doing it. In major retailers, we have slashed buying for circulars from 100% of the items in the circular to somewhere around 5-10% of items. This can and is being done with no impact on sales or customer service.
|What We Do|
The only way to manage retail inventories in large organizations is by SKU by Store. At store level, there are few bell shaped curves to work with. Movement moves closer to random and forecasting becomes perilous.
Our inventory management system introduces a new paradigm for inventory control. We use neither the mean nor standard deviation. Instead, we have, for each SKU in each store, the ability to calculate the Anticipated Maximum Demand(TM). Our system is indifferent to fast or slow movers and far more accurate for slow movers than any other system. It integrates smoothly with all existing inventory systems and can be managed by existing people. It is not necessary to hire degreed mathematicians to manage inventory.
When it comes to seasonal merchandise, we use a "preplenishment" feature to stage inventory closer to the season and create 90% sell through rates at season's end. We hate markdowns. The system sets inventory in stores prior to the season, and then only replenishes specified year round items to non-seasonal sales levels.
Our circular inventory system is a tool every merchant can use to build a circular and calculate the price/inventory position they need to reach the goals of the circular. Our system allows the merchant to model proposed circular performance before making irrevocable decisions on content and prices.
The system is dashboard driven. As well as displaying live data, the merchant uses the dashboard to generate "what if" simulations where he/she can adjust other variables the company decides to include such as number of deliveries per week, or ship pack size changes. In addition, we provide a NORAD type of control room to identify potential problems, and remove day-to-day inventory control from store management.