HED 460

Sourcing Simulator Licenses

Liz ClaiborneWoolrichGlen OaksLebanon ApparelVal D’OrWhisper KnitsBrooks BrothersTropical SportswearFruit of the LoomS&S DistributionVirginia ApparelRed WellDayton Hudson QAVertical ThreadsKellwood CompanyAckermans Ltd.

Se

Nike

Nantucket Industries

Private Label Concepts

Federated Merchandise

Levi Strauss

Garan

Edison Brothers

Context Group

Tanner

Cuddle Time

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 Olord’s Inc

Nat Inst Fashion Tech

Limited Dist Services

Wolverine Worldwide

Cajah Mountain Hosiery

Bain & Co.

HED 460

Sourcing Simulator Licenses

Texas A&M UniversityUniversity of Missouri.Colorado State UniversityWestern Kentucky UniversityTexas Christian UniversityMurray State UniversityMichigan State UniversityUniversity of KentuckyOregon State UniversityUniversity of NebraskaSouthern Illinois UniversityIndiana State UniversityIowa State UniversityUNC Chapel HillUNC GreensboroKansas State University

Se

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

Sam Houston University

Ohio State University

Southwest Texas State University

U of Massachusetts

N Illinois University

U of California - Irvine

HED 460

Sourcing Simulator Licenses

Auburn UniversityBall State UniversityClemson App. Res.Delta State UniversityOklahoma State U.East Carolina UTampere UniversityNorth Carolina State UIntegrated ConsultingStonefield JosephsonPrime Tanning CoBayer Clothing GroupMay MerchandisingLogistics Training Int’lExterior Wood, Inc.Firmin HouseGlen Oaks Industries

Se

American Identity

Andersen Consulting

Adexa

Burlington Industries

Cone Mills

Dillards

DuPont Nylon

EDS

Galey & Lord

Glen Raven Mills

Hologix Inc

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 Int’l

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 SBU’s 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 SKU’s 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 Examples

Traffic builder Std. Packs of dried spaghetti

Transaction builder

Parmesan, fresh herbs, pasta sauces

Cash generator Lge. economy packs of dried pasta

Image creator Filled pastas: ravioli, tortellini….

Excitement creator

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 Previous Current % Diff.

Sales 12.3m 12.64m 2.8%

Gross Profit

1.66m 1.52m (8.4%)

GP Margin 13.5% 12% (11%)

Turns 12.2 14.5 19%

Days supply

30 25.2 (16%)

GMROI 1.9 1.98 4.2%

HED 460

Leading Manufacturers – CM

P & G Kraft General Mills Unilever…Ralston Purina…Pillsbury Quaker…Kellogg’s…Coke

HED 460

Leading Retailers – CM

HEB Safeway Wal-mart Ahold Kroger Wegman’s