HED 460

Sourcing Simulator Licenses

Liz Claiborne
Woolrich
Glen Oaks
Lebanon Apparel
Val DOr
Whisper Knits
Brooks Brothers
Tropical Sportswear
Fruit of the Loom
S&S Distribution
Virginia Apparel
Red Well
Dayton Hudson QA
Vertical Threads
Kellwood Company
Ackermans Ltd.
Se
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 Olords Inc
Nat Inst Fashion Tech
Limited Dist Services
Wolverine Worldwide
Cajah Mountain Hosiery
Bain & Co.
HED 460
Sourcing Simulator Licenses
Texas A&M University
University of Missouri.
Colorado State University
Western Kentucky University
Texas Christian University
Murray State University
Michigan State University
University of Kentucky
Oregon State University
University of Nebraska
Southern Illinois University
Indiana State University
Iowa State University
UNC Chapel Hill
UNC Greensboro
Kansas State University
Se
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 University
Ball State University
Clemson App. Res.
Delta State University
Oklahoma State U.
East Carolina U
Tampere University
North Carolina State U
Integrated Consulting
Stonefield Josephson
Prime Tanning Co
Bayer Clothing Group
May Merchandising
Logistics Training Intl
Exterior Wood, Inc.
Firmin House
Glen Oaks Industries
Se
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 Intl
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 SBUs
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 SKUs 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
UnileverRalston PurinaPillsbury
QuakerKelloggsCoke
HED 460
Leading Retailers CM
HEB
Safeway
Wal-mart
Ahold
Kroger
Wegmans