Fashion Merchandising 2.01

inventory control Finances
-Cost of borrowing money to stock your inventory.
-Watching interest rates help plan purchases.
-An installment loan requires payments regardless of your sales.
-An equity loan usually doesn’t require repayment until you’ve made some profits.
-Warehouse operations and transportation costs.
-Cost of gas
inventory control Goals
-Sales goals
-Customer service objectives (ex, if you promise same-day delivery, your inventory management must have the product on hand to meet customer demands.)
-Flexibility to deal with market ups and downs
-Offer discounts or sit on your inventory when shifts in consumer buying habits occur
inventory control Responsibility
-To oversee your inventory
-Ensure orders are placed appropriately and regular audits performed.
-Your primary overseeing duties are the only internal control you can count on. (Employees typically don’t have the same stake in your business as you do and may not keep a close eye on inventory.)
-Employees who maintain inventory controls set in place can be rewarded and those who continually make bad inventory decisions can be removed.
inventory control Avalibilty
-Product suppliers who deliver poor-quality merchandise also can throw unexpected snags into your inventory supply chain.
-Understanding suppliers’ lead-time requirements can help you maintain sufficient inventory.
-Find and utilizing backup suppliers is an internal decision that also can cover inventory shortages.
-Joining a bulk-purchasing group places some of your inventory control in the hands of others, but may prove to be worthwhile.
what are inventories
goods held on hand for the production process or for sale to customers
Manufacturers 3 main groups of inventory & define each one
-Raw materials : production fabrics, trimmings, and notions.
-Work-in-Process : includes partially completed products in parts or sections that have not yet been joined together.
-Finished Goods : completed post production items.
What is inventory control?
the process of maintaining inventories at a level big enough to prevent stock-outs yet small enough to minimize holding costs. Keeping large or wrong inventories is expensive (higher insurance premiums, taxes, warehouse space, etc). Fashion goods lose their appeal, becoming obsolete as time passes.
What is materials handling?
includes all activities of the goods not involved in actual production processes. (Examples include moving, storing, packing, and transporting of the raw materials, semi-finished parts, or final products. )
Intensive distribution
sold pretty much everywhere
Selective distribution
only relies on a few intermediaries to carry their product (Birkenstock’s)
Exclusive distribution
sells only in their own stores, extremely limited intermediates
Channel 1
contains two intermediary levels – a wholesaler and a retailer. (A wholesaler typically buys and stores large quantities of several producers’ goods and then breaks into the bulk deliveries to supply retailers with smaller quantities. For small retailers with limited order quantities, the use of wholesalers makes economic sense. This arrangement tends to work best where the retail channel is fragmented – i.e. not dominated by a small number of large, powerful retailers who have an incentive to cut out the wholesaler.)
Channel 2
contains one intermediary. In consumer markets, this is typically a retailer.
Channel 3
is called a “direct-marketing” channel, since it has no intermediary levels. In this case the manufacturer sells directly to customers. (An example of a direct marketing channel would be a factory outlet store.)
direct distribution system
allows the product to reach the intended final user of their product by distributing the product directly to the customer. There are no other parties involved in the distribution process that take ownership of the product. The direct system can be further divided by the method of communication that takes place when a sale occurs.
Direct Marketing Systems
the customer places the order either through information gained from non-personal contact with the marketer, such as by visiting the marketer’s website or ordering from the marketer’s catalog, or through personal communication with a customer representative who is not a salesperson, such as through toll-free telephone ordering.
Direct Retail Systems
when a product marketer also operates their own retail outlets. As previously discussed, Starbucks would fall into this category.
Personal Selling Systems
The key to this direct distribution system is that a person whose main responsibility involves creating and managing sales (e.g., salesperson) is involved in the distribution process, generally by persuading the buyer to place an order. While the order itself may not be handled by the salesperson (e.g., buyer physically places the order online or by phone) the salesperson plays a role in generating the sales.
Assisted Marketing Systems
the marketer relies on others to help communicate the marketer’s products but handles distribution directly to the customer. (The classic example of assisted marketing systems is eBay which helps bring buyers and sellers together for a fee. Other agents and brokers would also fall into this category.)
Channel level
Each layer of marketing intermediaries that performs some work in bringing the product to its final buyer
distribution channel is important because…
provides link between production and consumption, can be simple or complicated
specialty service firms
organizations that provide additional services to help with the exchange of products but generally do not purchase the product (i.e., do not take ownership of the product)
agents & brokers
Organizations that mainly work to bring suppliers and buyers together in exchange for a fee.
Distribution service firms
Offer services aiding in the movement of products such as assistance with transportation, storage, and order processing.
other firms
This category includes firms that provide additional services to aid in the distribution process such as insurance companies and firms offering transportation routing assistance.
makes goods for sale
Intermediaries who assist in the sale and/or promotion of goods and services but do not take title to them
Organizations that purchase products from suppliers, such as manufacturers or other wholesalers, and in turn sell these to other resellers, such as retailers or other wholesalers.
Organizations that sell products directly to final consumers.
A wholesaler of inexpensive accessories and small non-fashion products. They distribute goods between and retailers or users.
The person or group that owns a franchise business. a certain location
The person or firm with the famous or established name used by franchisees
people who buy and use finished products
soft goods chain
channel of distribution for apparel and home decorating textiles. It is also called the textile/apparel pipeline. (3 main segments)
retail segment
sells the merchandise directly to consumers. Retailers buy in large quantities at wholesale prices and then
mark up the goods in order to cover costs of heat, lights, taxes, sales help, and other expenses and then sell individual items to the consumer. The retail price also includes some profit for the retailer. Consumers are at the end of the soft goods chain, but satisfying their wants and needs is the objective of all the preceding companies in the pipeline.
apparel segment
produces finished garments and accessories. First the apparel must be designed. After fashions have been designed, they must be manufactured. Almost all are mass produced in factories. Apparel sales involves selling the manufactured garments in large quantities to retail stores. This serves as the wholesale sales step in the chain since apparel does not have a separate wholesale segment the way many other industries do. Most garments are sold and shipped directly from the manufacturer s at a wholesale price, to retailers. The lack of a separate wholesale segment also helps to keep prices low since fewer middle men are involved. Inexpensive accessories and small, non-fashion products do go through wholesalers, often referred to as resellers.
Textile segment
tarts with fiber production. The next step is yarn production. Next is fabric manufacturing, which is done in textile mills. The final step in textile production is fabric finishing. This is done by bleaching, dyeing, printing, or applying special coatings. These processes impart color, texture, pattern, ease of care, and other characteristics to fabrics. They change the appearance, feel, and/or performance of each fabric to suit various end users.
periodic inventory
At the end of an accounting period, the ending-inventory is determined by an actual count of every item and its cost is computed by using a suitable method such as FIFO. This amount is subtracted from the sum of purchases (or cost of goods manufactured) and the beginning-inventory of the new accounting period to arrive at the cost of goods sold.
perpetual inventory
inventory is accounted for in a real-time basis with adjustments, delivery, movements, and receiving being updated at they occur
physical inventory
actual count, weight, volume, measure, or sighting of items in an inventory
point of sales (POS)
a data collection system that electronically receives and stores bar code information derived from store transaction
difference between book inventory and physical inventory due to counting and recording errors or resulting from pilferage or theft.
vendor-managed inventory
Inventory replenishment arrangement whereby the supplier monitors the customer’s inventory or receives stock information form the customer
order processing
activities involved in managing the details of preparing and receiving a consumer order