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CASE STUDIES

Merchandise Planning & Management - III

Issues on hand

This kidswear brand had its product offering for both boys and girls and wanted to get a fix on when and how much merchandise to produce every month, split in 2 seasons across 6 months each according to the highs and lows witnessed in Sale months.

The brand was not following the season drops as per the market movement which follows typical calendar for end-of-season sales (EOSS). Thus having too little merchandise when season opened and having too much as the season ended was ensuing.

Approach

Brand’s product categories were studied to identify best performing ones so as to prune some and add more width to some. Their display quantity and sales were studied for each store and totaled up to arrive at quantity required for each style in each category. A growth factor was considered taking into account the positive change rightly timed merchandise drops would bring. Sales estimates were made for upcoming new stores and added to respective product category. The sale quantity estimate was split into 12 months based on past data and market movement understanding.

Applying stock multiple to the sales estimates, required inventory at BOM (beginning of month) was derived so also desired EOM(end of month) inventory for the month. OTB (open to buy) based dynamic merchandise buying was explained to react as per actual sales taking place through the season. This was reflected in quantity to be planned + quantity to be replenished for each SKU.

The analysis showed a way to estimate sales more accurately and point to the license fees (rent) the brand could afford to pay for a certain size.

Solution

A month wise calendar was drawn for two seasons. The calendar plotted no. of styles required, quantity required at BOM (beginning of month), monthly addition to reach desired EOM (End of month) inventory. Additionally what that month’s production should be producing: for which season, for which month hit, in what quantity, how much capacity to keep for replenishment of FMS (fast moving styles) and for producing special merchandise for EOSS was determined.

Result

A clear guideline table for merchandise planning of each season was drawn up. Example on next page.

 
 
 
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