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. Nike Nantucket Industries Private Label Concepts Federated Merchandise Levi Strauss Garan Edison Brothers Context Group Tanner Cuddle Time Se 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 HED 460 Bain & Co.
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 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 Se Sam Houston University Ohio State University Southwest Texas State University U of Massachusetts N Illinois University HED 460 U of California - Irvine
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 American Identity Andersen Consulting Adexa Burlington Industries Cone Mills Dillards DuPont Nylon EDS Galey & Lord Glen Raven Mills Hologix Inc Se 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 Traffic builder Examples
Std. Packs of dried spaghetti
Transaction builder
Cash generator
Parmesan, fresh herbs, pasta sauces
Lge. economy packs of dried pasta
Image creator
Excitement creator
Filled pastas: ravioli, tortellini.
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 Sales Previous 12.3m Current 12.64m % Diff. 2.8%
Gross Profit
GP Margin Turns GMROI
1.66m
13.5% 12.2 1.9
1.52m
12% 14.5 25.2 1.98
(8.4%)
(11%) 19% (16%) 4.2%
HED 460
Days supply 30
Leading Manufacturers CM
P&G Kraft General Mills UnileverRalston PurinaPillsbury QuakerKelloggsCoke
HED 460
Leading Retailers CM
HEB Safeway Wal-mart Ahold Kroger Wegmans
HED 460
