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Chapter Objectives
To describe the steps in the implementation of merchandise plans: gathering information, selecting and interacting with merchandise sources, evaluation, negotiation, concluding purchases, receiving and stocking merchandise, reordering, and re-evaluation To examine the prominent roles of logistics and inventory management in the implementation of merchandise plans
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Gathering Information
After overall merchandising plans are set, more specific information about ongoing target market needs and prospective suppliers is required. A retailer should gather appropriate data before buying or re-buying any merchandise. In gathering data about the marketplace, a retailer has several possible sources.
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The most valuable is the consumer. By regularly researching target market demographics, life-styles, and potential shopping plans, a retailer can learn about consumer demand directly. Loyalty programs are especially useful in tracking consumer purchases and interests. Other information sources can be used when direct consumer data are insufficient.
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Suppliers(manufacturers and wholesalers) usually do their own sales forecasts and marketing research. Retail sales and display personnel interact with consumers and can pass their observations to management. A want book(want slip) system is a formal way to record consumer requests for un-stocked or out-of-stock merchandise.
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Competitors represent another information source. A conservative retailer may not stock an item until competitors do and employ comparison shoppers to study the offerings and prices of competitors. In addition, government sources indicate unemployment, inflation, and product safety data; independent news sources conduct their own consumer polls and do investigative reporting; and commercial 15-7 data can be purchased.
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To acquire information about specific suppliers and their merchandise, retailers can talk to prospects, attend trade shows, visit merchandise marts, and search the Web.
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Evaluation
The merchandise under consideration is evaluated by inspection, sampling, and/or description. The method depends on the product (cost and attributes) and situation (purchase regularity).
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Inspection: every single unit is examined (a case of jewelry) Sampling: with regular purchases of large quantities Description: standardized, nonbreakable, and nonperishable merchandise; ordered in quantity based on a verbal, written, or pictorial description (a stationery store can order paper clips, pads, printer paper)
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Contd.
Opportunistic buying: Off price retailers and other deep discounters may require negotiated contracts for most purchases. Especially low prices are negotiated for merchandise whose sales have not lived up to expectations, end-of-season goods, items consumers have returned.
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Slotting allowances: (for product placement on store shelves) Note: Unlike many other retailers, industry leader Wal-Mart does not charge any slotting allowances and often gets new products first from suppliers as a result of this policy.
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Concluding Purchases
At many medium-sized and large firms, computers are used to complete and process orders (based on EDI and QR inventory planning), and each purchase is fed into a computer data blank. Small retailers often write up and process orders manually, and purchases are added to the inventory in the same way.
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Now a days even small retailers may have the capability of placing orders electronically- especially if they are tied to large wholesalers with EDI (electronic data interchange) and QR (quick response) systems.
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Reordering Merchandise
Four critical factors: * Order and delivery time * Inventory turnover * Financial outlays * Inventory (holding) versus ordering costs Note: QR inventory planning lowers inventory and ordering costs via close retailer-supplier relationships.
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Logistics
Logistics is the total process of planning, implementing, and coordinating the physical movement of merchandise from manufacturer (wholesaler) to retailer to customer in the most timely, effective, and cost-efficient manner possible
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Performance Goals
Relate costs incurred to specific logistics activities Place and receive orders as easily, accurately, and satisfactorily as possible Minimize the time between ordering and receiving merchandise Coordinate shipments from various suppliers Have enough merchandise on hand to satisfy customer demand, without having so much inventory that heavy markdowns will be necessary
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Performance Goals_2
Place merchandise on the sales floor efficiently Process customer orders efficiently and in a manner satisfactory to customers Work collaboratively and communicate regularly with other supply chain members Handle returns effectively and minimize damaged products Monitor logistics performance Have backup plans in case of breakdowns in the system
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Reverse Logistics
All merchandise flows from the retailer back through the supply channel Reverse Logistics Decisions * Under what conditions are customer returns accepted by the retailer and by the manufacturer? * What is the customer refund policy? Is there a fee for returning an opened package? * What party is responsible for shipping a returned product to the manufacturer? * What customer documentation is needed to prove the date of purchase and the price paid? * How are customer repairs handled? * To what extent are employees empowered to process customer returns?
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UPS E-Logistics
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