SS/ MB 301/ S & D M/ 09

Division - Apparel

It refers to the entire process of inventory planning & management in a retail establishment. When done properly, it leads to increase in ROI, & hence more profitability. At the start a merchandise hierarchy is to be finalized. It is a disciplined way of grouping merchandise mix at different levels.

Department Men's Category - Shirts Sub category Full Sleeves

Brand - Arrow

Style Button down collar

Options size, colour, design, price

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Starts with the open-to-buy plan, called the OTB plan. It helps control future buying. OTB refers to merchandise budgeted for purchase during a certain period of time for which stocks have not been ordered. Often a small increase in sales leads to excessive buying which ultimately affects the bottom line. OTB helps the retailer to fix the ideal amount of stock that should be on hand at the beginning of every month & the quantity of new merchandise to be received during the month.

SS/ MB 301/ S & D M/ 09

 1. 2.

An OTB plan consists of :

3.

4. 5. 6. 7. 8.

Sales forecast a month wise forecast of expected sales is prepared. Forward cover based on the stock turns in a store. If stock turns 4 times a year, then forward cover for 3 months is to be kept. Stock required based on forward cover. For 3 months forward cover, the stock reqd. will be current month plus the 3 months of forward cover. Opening stock for 1st month it is an estimate. From 2nd month onwards it is the closing of previous month. Intake requirement=Reqd. stock Open. Stock+forecast On order already ordered & due for delivery. OTB= Intake req. On order Closing stock= Open. stock-sales(forecast) + On order + OTB

SS/ MB 301/ S & D M/ 09

Month 1 Forecast sales Forward cover Stock reqd. Opening stock

Intake requirement

Month 2 1500 3 4500 5000

Month 3 2000 3 3500 4500

Month 4 1500 3 3000 3500

Month 5 1000 3 3000 3000

Month 6 1000 3 3000 3000

1000 3 5000 2000

4000
2000 2000 5000

1000
1000 0 4500

1000

1000

1000

1000

On order OTB Closing stock

1000 3500

1000 3000

1000 3000

1000 3000

SS/ MB 301/ S & D M/ 09

Mark ups percentage amount added to cost to arrive at the MRP of the product. Mark downs amount reduced from MRP to arrive at the new retail price. Shrinkage the difference between the book value of inventory & the actual one (after taking physical stock) is called shrinkage. This may happen due to incorrect paperwork, customer theft & employee theft. GMROI the ratio of total margin to the average inventory holding. It gives an indication of the profitability of the store; more the GMROI the better it is.

SS/ MB 301/ S & D M/ 09

SS/ MB 301/ S & D M/ 09

Pre purchase order (PPO) after inventory planning is done, a tentative plan for order placement is done to the supply. Purchase order (PO) the confirmed order for supply.

Goods Receipt Note (GRN) prepared when the merchandise received from the suppliers is checked & matched with the PO after certifying quality, quantity, etc. it then goes to the accounts for payment to the supplier. Then bar coding (if not done by the supplier) & security & price tagging is done.

SS/ MB 301/ S & D M/ 09

Inter-Transfer Note (ITN) made when the prepared merchandise is supplied at the retail store. This is ITN IN. ITN OUT is prepared when the goods are sent back to the warehouse by the store. Efficient Customer Response (ECR) automatic replenishment of merchandise depending on data from the Point Of Sale (POS). This requires all the parties in the system to be linked to an integrated supply chain.
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Supplier

PO

PPO

Goods Returned

A/Cs

GRN

ITN-OUT

Bar coding

Sales Goods returned

ITN-IN

R E T A I L
SS/ MB 301/ S & D M/ 09

S T O R E
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