Seven Key Questions regarding Merchandise Management Systems
Last week, I worked with a retailer, whose management of inventory didn’t put them into the top 10 of effective merchandise managers. For one thing their Point of Sale system was not linked to their merchandise management system
They spent a large part of their time at Head office time "converting" this data via excel spreadsheets so efficiency, speed to market and competitive advantage was buried under a mountain of laborious time consuming data entry.
Here are the Doctor’s tips for finding that ideal fully integrated merchandise management system
Merchandise Management is the art / science of having the right stock in the right store at the right time. Driven correctly this discipline has enormous positive benefits on a retailer’s sales, margins and cash flow. Only a handful of retail management / POS systems extend this discipline into systemisation. As a retailer’s business grows in size or complexity the need for such systemisation with proven retail management products become critical.
1) Are systems fully integrated in terms of merchandise management? If the POS system is different to the back office, the system is not integrated. If the merchandise management occurs via spreadsheets, the system is not integrated. If the report writer is not the same as the system – it is not integrated.
2) Are the systems specialised in your market. Hardware / Fashion / Food & Beverage / Supermarkets etc all have different merchandise management needs. Ensure your vendor is an expert in your part of the retail markets. Generalist systems / manufacturing systems / inappropriate systems add time and complexity to the retailer’s life. Avoid such at all costs.
3) Does the system have Integrated Open to Buy (OTB) capability? OTB is the retail measure as to whether forward orders are above or below the needs of the business relative to anticipated sales performance per product category. OTB management prevents over or under stocks – both of which are very dangerous to retailers.
4) Does the OTB system manage all KPI’s correctly? For example, systems that do not plan and manage markdowns are not advanced and will ultimately cause undue tension in your OTB management processes.
5) Does the system automate the process of moving the first drops of stock into the right stores? Especially in multi site retail environments with high seasonal fluctuations, the correct first drop of product is critical if the retailer is to maximise the sales opportunities of the season.
6) Does the system automate the process of replenishment to optimal stock levels? Over and under stocks, especially of key items, are a disaster for the retailer. Ensure your system is on top of re-stocking in an intelligent manner. These functions can be automated. The higher the integrity of these processes, the less time your staff will spend on such AND the higher the accuracy level will be.
7) If you sell seasonal stock, does your system automate the end of season consolidation process. Such automation provides a powerful first line of management at season end – rather than discounting. The margin benefits are obvious.
If you have more than 5 stores and do not confidently answer yes to all of these questions, you are missing out additional on sales and margins that good fully integrated merchandise management systems can bring. Examples of such are RETEK, JDA and Futura. If you are planning to grow your business aggressively you will need such systems. Fully integrated Merchandise Management is a must with all advanced retailers.
Last week, I worked with a retailer, whose management of inventory didn’t put them into the top 10 of effective merchandise managers. For one thing their Point of Sale system was not linked to their merchandise management system
They spent a large part of their time at Head office time "converting" this data via excel spreadsheets so efficiency, speed to market and competitive advantage was buried under a mountain of laborious time consuming data entry.