Sourcing Simulator Licenses

Nike Kmart
Liz Claiborne Nantucket Industries Aztec Trading
Woolrich Private Label Concepts Charles Gilbert Assoc
Glen Oaks Federated Merchandise GIDC
Lebanon Apparel Levi Strauss UNITE
Val D’Or Garan WL Gore & Assoc
Whisper Knits
Edison Brothers Van Huesen
Brooks Brothers
Context Group Patagonia
Tropical Sportswear
Fruit of the Loom Tanner Danube Knitwear
S&S Distribution Cuddle Time Capital- Mercury Shirt
Se
Chic by HIS Lord Olord’s Inc
Virginia Apparel
Red Well Eagles Eye Nat Inst Fashion Tech
Dayton Hudson QA Claudel Lingerie Limited Dist Services
Vertical Threads Starter Corp Wolverine Worldwide
Kellwood Company Kikomo Cajah Mountain Hosiery
Ackermans Ltd. Goldman Sachs Bain & Co. HED 460
 Sourcing Simulator Licenses
Texas A&M University
University of Missouri.
Colorado State University
Western Kentucky University
Texas Christian University
Murray State University
Michigan State University
University of Kentucky
Oregon State University
University of Nebraska
Se Sam Houston University
Southern Illinois University
Indiana State University
Iowa State University
UNC Chapel Hill
UNC Greensboro
Kansas State University
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
Ohio State University
Southwest Texas State University
U of Massachusetts
N Illinois University
U of California - Irvine HED 460
 Sourcing Simulator Licenses
American Identity Bios Group
Auburn University Andersen Consulting Burlington Chemical Co
Ball State University Adexa CFT Consulting
Clemson App. Res. Burlington Industries PricewaterhouseCoopers
Delta State University Cone Mills T-MNA Inc.
Oklahoma State U. Dillards Timberland
East Carolina U DuPont Nylon NHK International
Tampere University Twin Star Int’l
EDS
North Carolina State U Nordstrom
Galey & Lord
Integrated Consulting
Glen Raven Mills Bergdorf Goodman
Stonefield Josephson
Hologix Inc LL Bean
Prime Tanning Co
Bayer Clothing Group IBM Se Wal-Mart
May Merchandising Milliken & Co. Lands End
Logistics Training Int’l Russell-Cross Creek The Gap
Exterior Wood, Inc. Sara Lee Casualwear Wigwam Mills
Firmin House VF Corp JBA International
Glen Oaks Industries Wellman Inc. 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/  Transaction building

preferred  Profit generating
 Turf protection

HED 460
 Roles/Implied Strategies

 Convenience  Transaction building

 Profit generating
 Image enhancing

HED 460
 Roles/Implied Strategies

 Occasional/  Traffic building

seasonal  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
HED 460