Inventory: Never the Right Amount – Part 2

By Josh Coughlin, CTO, Enhanced Retail Solutions LLC

As I share episodes from my career in this blog, this post takes us back to my time working at a manufacturer.  Something a designer said sticks out in my mind, “Same circus, different clowns”.  I would always get this response when asking how other companies handled some situation.  What I believe she meant was that all the companies have the same issues and basically the same solutions. It is just the people implementing those same solutions that are different.  As much as you may think a particular situation is unique, chances are, it really is not.  The issues, opportunities and challenges you face have been solved thousands of times and may just need some outside insight to come up with the best solution.  Think about it- people have been manufacturing and selling products for over 5,000 years. The only thing that has really changed is the length(distance) of the supply chain has increased.

In the last blog I wrote about the small production units left over that can be used to fill back stores. It requires you to act early and do all the work to show the buyer or planner what to do.  In the same vein of acting early, what if an item is a “dog”? Let us say it just is not going to sell no matter what you are going to do. Or your size or color mix is off. If this is a short program (“set and forget”) there is not much you can do other than look for the bright spots (think stores, regions that are selling). There is no real action you can take to mitigate the damage (markdowns) because you set the stores with all the inventory you have.  But what if the program has at least a 6-month life? If you have future orders still being Dyed, Cut and Sewn in the factories as the product is selling, then you are really in the driver’s seat. If you can quickly get an early read, and turn on a dime, you have some options.

I remember one item that we loved and worked very hard to bring to a retailer at a fantastic cost.  And since everyone (retailer and manufacturer) loved the item and worked months to get it in the store, there was no possibility it could be a dog, right?  It was going to be the best-selling product in that category without a doubt! But what if it was the worst selling product and you had orders stacked up for the next 6 months?  It sometimes takes an outsider (subject matter expert, consultant, etc.) who has no emotional connection to the product to bring the facts to your attention.  In a situation just like that- I was that person.  I fought with everyone, screaming at the top of my lungs- sharing the numbers to show everyone the product was not going to perform as they expected.  I came to that conclusion within the first 3 weeks of the floor set by looking very closely at the selling at the SKU/store level and comparing it to other product launches.  Finally, I got people to understand what I was seeing, and they started cancelling future orders, keeping the fabric from being dyed and cut.  This allowed them to mitigate the loss for the retailer while preserving the fabric which they could design into a more successful item.  Without looking at the details everyone would have just been using the same old line “It isn’t on the floor yet, once it gets out there, sales will pick up”- costing everyone a lot of time and money.

At ERS we see these and similar situations with clients in every product category. Having the ability to rely on facts and real-time data enables you to act more quickly and mitigate a potential profit disaster. Contact us today to learn how we can help.

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