Every year, thousands of people try to give up smoking. When you consider that smoking is both incredibly expensive and hugely detrimental to your health, why wouldn’t you quit? The problem is however that, as habits go, smoking is a difficult one to kick. After all, as soon as you quit, the withdrawal symptoms take hold. Consequently, it’s easy to focus on the absence of cigarettes and lose sight of the long-term benefits of going smoke-free. When it comes to assortment management, businesses face a similar plight!
Like smoking, many business leaders know they are offering products which have a detrimental impact to the financial health of the organisation. However, stubbing these products out is often easier said than done! So what can businesses do to give up bad buying habits and adopt a healthier approach to assortment management?
Make assortment management a priority in 2018!
In the second part of our three-part series focusing on supply chain improvement projects, we explore how you can strategically refine your approach to assortment management.
Through adopting the following 4 simple steps, you will be better positioned to offer your customers the products they want while systematically removing the items put your finances under pressure:
- Analyse your assortment and identify what products matter most to your customers
- Prioritise items within your assortment in order to determine a more strategic stocking strategy
- Establish robust business rules to ensure your assortment remains in line with the corporate objectives of your organisation
- Re-focus your investment, time and energy on the products that add the most value
Download our guide to better assortment management
In order to offer your customers a more focused and valuable range, we have put together a simple guide to better assortment management. Complete the form below to and discover how you could improve customer satisfaction while minimising supply chain costs!
Missed part 1? Check out our guide to shredding obsolete stock
As part of your assortment management improvement project, you may find a number of products are no longer worth stocking. The question is: what do you do with these items? How can you remove them from your operation without any painful consequences?
What does your historical demand really mean? Can you explain why demand in a particular period is exceptionally higher or lower that what you had forecasted? More importantly, do you know how best to manage these exceptions?
Historical demand data is a critical source of information for assessing both the performance of a business as well as anticipating future demand. Given that this data will be used by a broad range of departments across the business to determine everything from future purchasing requirements to production plans, it is vital that the demand history is as accurate as possible. However, even if the process for recording retrospective demand is flawless, this raw data alone may not be sufficient to base such critical demand forecasts.
After all, how can you be sure that a shift in demand is the result of “normal” business conditions? What if your sales team were incentivised to push this particular product or what if a customer decided to make a larger order than usual to save on logistics costs? Given that such factors may be totally irrelevant for the purposes of forecasting, should such data be included in the forecasting process? If so, to what extent?
Unless you have a complete understanding of the true causes behind an exception, you cannot be sure how relevant such data will be in determining future demand. Ultimately, without working in collaboration with the wider business, you simply cannot guarantee the reliability of your demand history. Equally, unless you review demand history effectively, how can you be sure that your service levels are appropriate?
Watch the video now
Watch out latest instalment of the “5 steps to supply chain success” webinar series as we explore how you can work more effectively with the sales, supply chain, operations and finance team in order to gain a greater understanding of why exceptions in the demand history exist and how you can utilise insights from across the business to manage them. This short recording of the webinar will highlight the steps you can adopt within your organisation to overcome the following challenges:
- Ensure sales related supply chain KPIs (OTIF, fulfilment rates, etc.) are achieved
- Highlight problem areas and identify the true causes of such expectations
- Adopting the right approach to manage demand history exceptions
- Communicate a single "one truth" of historic demand across the business
- Alignment of your forecast to the "real" demand
Every year, China witnesses one of the largest human migrations in the world. As the nation’s workforce down tools and return to their home town’s to enjoy the Chinese New Year celebrations, factories across the country close shop for up to 40 days. Meanwhile, businesses across the rest of the world face a huge amount of supply chain disruption. Given the level of volatility during this time, what can you do to safeguard your operations before, during and after the factory closures?
With extensive lead times of up to several months, importing goods from China can be challenging at the best of times. However, when you consider that you may be left in the dark for over a month during the holiday period and even then, production may still be constrained for a further few weeks, it is vital that steps are taken to minimise the disruption during this time. Failure to do so could result in costly stock outs, missed opportunities and disappointed customers.
Download our Chinese New Year Infographic
Complete the form below to download our infographic and discover how you can help your organisation mitigate disruption before, during and after the Chinese New Year period!
Inspired by Team GB’s triumph over the last few years, it seems more and more of us are getting back on the saddle. Last year alone, we cycled an impressive 3.5 billion miles; 6.3% more than in 2015! However, as Brexit jitters take hold and the Government forges ahead with a major initiative to double the uptake of cycling by 2025, the next few years will be no easy ride for the bicycle industry! To explore the challenges that lie ahead, we have embarked upon an epic tour of the bicycle supply chain.
With so many factors to contend with, what challenges should retailers, wholesalers, and manufacturers prioritise in order to keep up with the huge anticipated growth in the industry?
As part our epic tour around the bicycle industry, we have identified the biggest hurdles that businesses across the bicycle supply chain must overcome in order to stay ahead of the pack. From managing inventory across a growing number of channels to responding to ever-more demanding customer expectations, in order to endure the challenges that lie ahead, businesses must strive to ensure their operations are as efficient and effective as possible.
Starting from the perspective of retailers and etailers, our tour begins with the challenging nature of managing complex retail environments before factoring the impact of shirnking product lifecycles. The next stage looks at the uphill struggle faced by wholesalers and distributors. The final leg of our three stage tour encompasses explore the difficulty manufacturers have in forecasting demand.
Complete the form below to download your map of the bicycle supply chain!
To help summarise the challenges faced by the bicycle businesses, we have put together a route map of the bicycle supply chain. This map Complete the form below to download a full-size version of our clever infographic today!
While the sales team may expect consistently high levels of availability in order to satisfy customer demand, the finance team are typically more interested in inventory cost. Consequently, operational teams are under constant pressure to strike the balance between service levels and investment in stock. However, in order to ensure that supply chain decisions are in line with the expectations of the wider business, it is vital that information and insights from across the business are readily available. Yet, despite this, many organisations fail to harness the full potential of internal supply chain collaboration.
Why does supply chain collaboration matter?
So what can you do to demolish the internal silos that exist within your organisation? More importantly, how can you lay the foundations to establish more collaborative internal relationships? While inventory management decisions are typically based on rational supply chain data such as historic demand and confirmed orders, for many businesses, there is a strong argument to encompass further insights from finance, sales and marketing teams.
After all, through attaining a greater understanding of customer demand as well as the financial constraints in place, supply chain teams will be able to make better decisions. As a result, the business will become better positioned to guarantee customer satisfaction while still keeping a tight grip on investment in stock and supply chain costs.
Enhance supply chain collaboration within your organisation
As part of our “building blocks to a better supply chain” series, we explore how you can enhance internal collaboration within your organisation. This simple 6 step guide will demonstrate how you can gain access to valuable insights from across the business, as well as how you can rationalise and validate this information. Ultimately, this guide will help you construct a more collaborative environment in which to make more informed supply chain decisions! Complete the form now to download our latest whitepaper
Promotions management has always presented retailers with a dilemma: a huge headache but an unavoidable reality of modern retailing. Black Friday, for instance, was once seen as the single most important day in the retail calendar, like turkeys voting for an early Christmas, many retailers have now extended this promotional period to last for up to several weeks. With more complex promotions to manage than ever before, what can retailers do to keep bargain-hungry customers happy while still ensuring the promotional activity adds value?
When the concept of Black Friday first landed in British stores, retailers enjoyed a welcome boost in sales. The problem is that customers have now got a taste for promotions and are simply no longer willing to pay full price for anything. Given that the average consumer is unlikely to fork out for an item unless there is at least a 25 percent discount on offer, it’s virtually impossible for retailers to not have some form of promotional activity in place. Ultimately, Black Friday is the monster that retailers created, now they must do whatever they can to tame the beast and optimise their approach to promotions management!
According to research, sales of promotional items now actually outnumber sales of items at full price. Given the importance of promotions coupled with the unavoidable disruption that comes as a consequence, it’s vital that retail supply chain teams manage promotional activity effectively.
Put simply: ordering too much stock in advance of a promotion or poor replenishment during a promotion will tie up valuable working capital and could cause high levels of obsolesce at the end of the promotion. Equally, ordering at the wrong time or not ordering enough in the first place will result in lost sales opportunities and disappointed customers.
Download our guide to better promotions management
In our straight-forward guide to better promotions management, we explore how retailers can maximise the value of promotions while simultaneously protecting margins.
Tackling the growing mountains of waste created as a consequence of poor supply chain practices is a top priority for the food industry. But what can businesses do to reduce waste?
While mitigating the causes of shrinkage is undoubtedly good for the environment, according to the Grocer, taking action to curb avoidable waste can unlock huge potential costs savings. In fact, a recent study from the UK’s leading FMCG magazine found that for every £1 spent on reducing waste, businesses enjoyed an average return of £14. Few businesses can afford to turn down such an impressive return on investment, but how should businesses prioritise their investment?
Time for a fresh approach
From poor stock rotation to ineffective ordering processes, a whole host of supply chain inefficiencies are to blame. However, given the level of volatility in consumer demand coupled with the short product shelf lives of fresh produce, in order to achieve real reductions in waste, businesses across the food industry must totally re-think the way they manage fresh products!
The right ingredients for success
Our “Recipe for eradicating waste” is designed to highlight the tools and processes business across the food industry must put in place to combat the sources of waste and develop more efficient operations. By following these simple steps, businesses will quickly realise the vast supply chain efficiencies that can be achieved through improving their approach to inventory management.
Download our simplified guide today and discover how you can optimise your inventory management processes by focusing on the following waste hot-spots:
- Keeping up with fluctuating daily demand patterns
- Determining the optimal level of buffer stock
- Identifying the “true” economic order quantity
- Optimise allocation for all fresh items
Effective working capital management is all about juggling inventory, debtors and creditors. However, maintaining a healthy level of cash flow is a real challenge. However, how can you optimise your approach to cash flow management in order to free up invaluable capital?
What is working capital?
According to Investopedia, Working capital is the amount of cash needed for the day-to-day business, i.e. to finance the conversion of raw materials into finished products that the company can sell and to bridge the period until customers pay for those goods. An important aspect of cash flow management is the inventory risk due to products with a limited shelf life perishing or due to obsolete stock.
What is stock turn?
Inventory turnover days are used as an efficiency ratio based on the average number of days an item spends in stock before being sold. The working capital is tied up in stock for that time. The inventory turnover days are calculated based on the cost of goods sold rather than revenue.
What is a cash conversion cycle?
The cash conversion cycle is the number of days from the moment that a purchase order is paid until the moment that payment of the associated sales invoice is received. The company must use its own resources to fund the stock in the interim period. One important calculation is ‘Earn x Turn’, a product’s margin multiplied by the annual number of stock turns.
Download our checklist to financial decision making
As the lifeblood of every business, it is vital that working capital kept in check. Complete the form below to download our latest checklist. Discover how well your supply chain team is managing your cashflow discover best practices to free up capital unnecessarily tied up in your inventory! Ultimately, our simple checklist will help you to ensure that supply chain decisions always take in account the financial implications.
Holding too much inventory has some potentially disastrous financial consequences. After all, money tied up in inventory cannot be used anywhere else. Furthermore, capital tied up in items that you can no longer sell (e.g. obsolete stock) may be lost forever. However, when you consider that there are further inventory costs associated with holding inventory as well as financing the investment in inventory in the first place, determining the true cost of your inventory can be a real challenge.
Inventory costs can be defined as the costs your business incurs as a result of holding inventory. These costs can include anything from purchasing the inventory in the first place to processing, distributing and holding the stock. Furthermore, although often overlooked, inventory costs also concern any costs that come as a consequence of shrinkage. While an unavoidable reality if you want to keep your customers happy, there are a number of steps you can take to identify, allocate and minimise inventory costs.
How can you minimise your inventory costs
Understanding the composition of costs is about more than simply being able to calculate margins. Supply chain teams need complete visibility over all of the costs associated with holding stock in order to make informed inventory decisions. Equally, it is vital that businesses understand these costs in order to identify opportunities to improve as well as to calculate what benefit can be gained through optimising the inventory.
From the cost of capital to the cost of obsolescence, in our latest whitepaper we explore what factors you need to consider in order to calculate the true costs of your inventory. This whitepaper will not only help you determine your current inventory position from a financial perspective but also what return you can expect from reducing inventory levels!
Complete the form below to gain a better understanding of the how much your inventory is really costing you.
When it comes to building products, customers expect suppliers to be able to provide anything and everything at a moment’s notice. In response to this demand, many businesses in the building industry have exploded their assortment strategy to encompass many thousands of different SKUs. The problem is, however, how much do you really know about the items within the assortment?
Do you know which items offer the greatest return or which are most important to your customers? Equally, do you know which items are costing you money?
While offering literally millions of different products undoubtedly provides customers with plenty of choice, keeping up with these exploding ranges can prove a constant battle. After all, it’s no secret that, typically, 80% of a business's turnover is generated by just 20% of the assortment. Consequently, by holding such large assortments, many businesses may be unnecessarily investing a huge amount of resources into items that offer limited value to the business or the customer: all to the determinant of items that really matter! In order to ensure that assortment decisions are made inline with both the expectations of the customer as well as the demands of the wider business, businesses must ensure that the assortment strategy is a clear reflection of the businesses goals as well as the expectations of the customer.
With this in mind, what can businesses do to maximise the value of their assortment strategy without compromising their ability to meet the needs of their customers? How could redefining your approach to assortment management help improve the performance of your organisation?
As part of our “building blocks to a better supply chain” series, we have put together a toolkit to help you refine your approach to inventory management.
Complete the form below to download our simple guide to better assortment management!