HED 460. Efficient Consumer Response Efficient replenishment Systems, EDI Fewer stockouts Efficient promotion Promotions based on consumer demand.
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HED 460
Sourcing Simulator Licenses
Liz ClaiborneWoolrichGlen OaksLebanon ApparelVal D’OrWhisper KnitsBrooks BrothersTropical SportswearFruit of the LoomS&S DistributionVirginia ApparelRed WellDayton Hudson QAVertical ThreadsKellwood CompanyAckermans Ltd.
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Nike
Nantucket Industries
Private Label Concepts
Federated Merchandise
Levi Strauss
Garan
Edison Brothers
Context Group
Tanner
Cuddle Time
Chic by HIS
Eagles Eye
Claudel Lingerie
Starter Corp
Kikomo
Goldman Sachs
Kmart
Aztec Trading
Charles Gilbert Assoc
GIDC
UNITE
WL Gore & Assoc
Van Huesen
Patagonia
Danube Knitwear
Capital- Mercury Shirt
Lord Olord’s Inc
Nat Inst Fashion Tech
Limited Dist Services
Wolverine Worldwide
Cajah Mountain Hosiery
Bain & Co.
HED 460
Sourcing Simulator Licenses
Texas A&M UniversityUniversity of Missouri.Colorado State UniversityWestern Kentucky UniversityTexas Christian UniversityMurray State UniversityMichigan State UniversityUniversity of KentuckyOregon State UniversityUniversity of NebraskaSouthern Illinois UniversityIndiana State UniversityIowa State UniversityUNC Chapel HillUNC GreensboroKansas State University
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West Virginia University
Cornell University
Baylor University
University of Hawaii
Texas Tech University
Kent State University
Middle TN State University
Stephens College
California State University
University of Rhode Island
Sam Houston University
Ohio State University
Southwest Texas State University
U of Massachusetts
N Illinois University
U of California - Irvine
HED 460
Sourcing Simulator Licenses
Auburn UniversityBall State UniversityClemson App. Res.Delta State UniversityOklahoma State U.East Carolina UTampere UniversityNorth Carolina State UIntegrated ConsultingStonefield JosephsonPrime Tanning CoBayer Clothing GroupMay MerchandisingLogistics Training Int’lExterior Wood, Inc.Firmin HouseGlen Oaks Industries
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American Identity
Andersen Consulting
Adexa
Burlington Industries
Cone Mills
Dillards
DuPont Nylon
EDS
Galey & Lord
Glen Raven Mills
Hologix Inc
IBM
Milliken & Co.
Russell-Cross Creek
Sara Lee Casualwear
VF Corp
Wellman Inc.
Bios Group
Burlington Chemical Co
CFT Consulting
PricewaterhouseCoopers
T-MNA Inc.
Timberland
NHK International
Twin Star Int’l
Nordstrom
Bergdorf Goodman
LL Bean
Wal-Mart
Lands End
The Gap
Wigwam Mills
JBA International
Bradley Perspectives
HED 460
Efficient Consumer Response
Efficient replenishment Systems, EDI Fewer stockouts
Efficient promotion Promotions based on consumer
demand Lean inventory to support promotions
HED 460
Efficient Consumer Response
Efficient assortment Turnover Profit Enhances brand and retailer perceptions
Efficient product introduction Pull strategy for new products Based on unmet needs
HED 460
Category Management Technique used by retailers
Product is sub-divided into categories that
Reflect purchasing behavior of target customers
Are managed as separate business units
Supermarkets and mass merchandisers
HED 460
Categories as SBU’s Department is too broad and less
strategic 150-300 categories vs. 15-20
departments Product/brand is too narrow to
approach strategically 15-20,000 skus in a store and 16,000
new products/year
HED 460
Category Management Integration of Buying and
Merchandising responsibilities Management of price, shelf space, merchandising assortment strategy, promo efforts, replenishment
Affects manuf. sales and marketing Team approach between channel
members
HED 460
Category Plans
Jointly developed by retailers and suppliers
Define strategies and financial objectives GM Sales/cu ft.
HED 460
Buying/Merchandising Decisions
Responsibilities must be integrated Inventory allocation Space allocation/analysis Customer demand
HED 460
Category Management
Goal - Retailer Optimize each part of the store Allocate space that maximizes
Gross Margin/unit of space Goal – Supplier
To become the lead supplier or channel captain for that category
HED 460
Benefits
Increased category sales (5-15%) Increased category margins Assists in creating optimal
assortments Reduction of SKU’s in most cases
For Mfct., move from trade allowances (push) to trade promotions (pull)
HED 460
Manco example Merchandising of tape products
was difficult Different buyers bought tape Solution = tape center Later mailing center
Prevented other vendors’ access 19 SKUs to up to 32 feet in office
superstores
HED 460
Direct Profit Profitability (DPP)
Profit associated with each category
Per unit Gross Margin minus all variable costs Procurement Distribution Sales
HED 460
Defining Categories
Consider end uses (frozen, chilled, deli fresh)
Consider substitutablity (fresh/frozen) Consider complimentary purchase
decisions (pasta + sauce) Base decision on how customer buys Same “real estate”
HED 460
HED 460
Dairy category
Displayed by brand name Customers shop by type (low fat,
full fat, no fat, fruit) Then individual flavors
HED 460
Ready to eat meals category
Type – Chinese, Italian, meat/two vegetables
Cooking method – oven, micro, stove
Low calorie or regular
HED 460
Defining Categories
What products should be included? Beer Category- decisions
Shelf beer and cold beer part of total Shelf beer = 1 category and cooler =
2nd Sub category of beer/wine/alcohol Beer as a solution (picnic, party, meal)
HED 460
Roles/Implied Strategies
Destination
Traffic building Turf protecting Transaction building Excitement creation Cash generating Image creator
HED 460
Pasta Category
Strategy Examples
Traffic builder Std. Packs of dried spaghetti
Transaction builder
Parmesan, fresh herbs, pasta sauces
Cash generator Lge. economy packs of dried pasta
Image creator Filled pastas: ravioli, tortellini….
Excitement creator
Fresh, less well-known: stelline….
HED 460
Roles/Implied Strategies
Routine/ preferred
Transaction building Profit generating Turf protection
HED 460
Roles/Implied Strategies
Convenience
Transaction building Profit generating Image enhancing
HED 460
Roles/Implied Strategies
Occasional/ seasonal
Traffic building Excitement creation Profit generating
HED 460
Tactics – Traffic building
Aggressive pricing on loyalty products/low margins
Media on frequently purchased items
Prominent space
HED 460
Case Study - Toothpaste
Results Previous Current % Diff.
Sales 12.3m 12.64m 2.8%
Gross Profit
1.66m 1.52m (8.4%)
GP Margin 13.5% 12% (11%)
Turns 12.2 14.5 19%
Days supply
30 25.2 (16%)
GMROI 1.9 1.98 4.2%
HED 460
Leading Manufacturers – CM
P & G Kraft General Mills Unilever…Ralston Purina…Pillsbury Quaker…Kellogg’s…Coke
HED 460
Leading Retailers – CM
HEB Safeway Wal-mart Ahold Kroger Wegman’s
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