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Copy of Chapter 11 - Buying Systems
Transcript of Copy of Chapter 11 - Buying Systems
Evaluate the situation - the other party's strengths and weaknesses, as well as opportunities
Communicate well and properly
Plan to have as many negotiators as the vendors Chapter 11 - Buying Systems Buying systems make sure that the items you stock would not also bought up quickly but also not run out. In business, when a hot item is not re-stocked immediately, loss of potential sales happens. The use of the appropriate buying system prevents that from happening. - Staple Merchandise Buying Systems (SMBS)
- Merchandise Budget Plan for Fashion Merchandise 2 Distinct Buying Systems SMBS helps in - Monthly sales percent distribution
- Monthly sales
- Monthly reductions percent distribution line
- Monthly reductions
- Beginning of Month
- Stock-to-Sales ratio
- BOM stock
- End of Month stock
- Monthly additions to stock MBFM - Tracking and measuring average current demand for items at the SKU level
- Sales forecasting future SKU demand
- Establishing ordering decision rules for optimum restocking Fashion Merchandise buying systems (or MBFM) Allocate Merchandise to Stores Analyze Merchandise Performance Open-to-Buy systems Analyzing merchandise performance Three typical methods
- ABC analysis method
- Sell-through Analysis method
- Multi-attribute model Negotiating with Vendors Developing Strategic Relationships with Vendors Staple Merchandise buying systems Buying Systems The four pillars of a successful strategic relationship
- mutual trust
- open communication
- shared vision
- shared commitments What's the "Open-to-Buy system"? It's a system that guarantees that any item
delivered will be sold. This is done to
comply with the store's sales
and inventory objectives ABC analysis> a method that employs performance measures that tell what items should always be available, occasionally in demand or removed from sales entirely
Sell-through analysis > a method that employs comparing actual and planned sales to check whether some items ought to be discounted or ought to be replenished to meet demand
Multi-attribute model> merchandise is evaluated by putting attributes to them. Items with the highest attributes are given priority in the budget plan for acquisition. Allocating merchandise to stores
Retailers, generally, use historical sales information, but with an open mind to current supply and demand situations in each particular location and the potential of each store, for proper and effective inventory allocation. Hence, stores located in high-traffic areas are usually given the lion’s share of merchandise allocation, such as business district centers and urban centers.