FDA Fashion Buying and Merchandising - Essay Example

FDA fashion buying and merchandising The main Key Performance indicators that were used by the B&M to monitorperformance on a weekly basis were: forecasting; weeks cover; and sell through.Forecasting accuracy helps in comparing the actual to the planned weekly sales by shipping location and by stock keeping unit. In forecasting, the first step usually involves making a decision about the accuracy metric of the forecast. After this step the team was expected to determine the level of aggregation. Then they are supposed to make a decision on which attributes of the forecasting process should be stored and which one should not. They are afterwards expected to decide which attributes of the forecasting process should be stored and which one should not. The accuracy error is always between 0% and 100% (Jackson and Shaw 201). If actual quantity is the same as the forecast then the forecast accuracy is said to be 100%. The error is calculated by subtracting the actual quantity from the forecast. As for Weeks cover the calculation, was made for EVERY LINE/SKU on the department. The cover depended on: the length of period, type of product, PLC, lead times, and the type of business. In this case they 5 weeks cover, which is considered to be the most appropriate period for fast fashion. The first step involves researching for the sales figures for the 5 weeks (Posner 152). After getting the total sales for the 5 weeks, the group determined the average weekly sales for the 5 weeks. This step should be followed by calculation of the week’s inventory on hand by dividing the total value of inventory by the value that resulted from the calculation of the average weekly sales (Elliott and Rider 123). Therefore, if for example a company has $8000 in the inventory items present, with an average weekly sales of $4000, they will have two weeks of inventory on hand. Sell through can be very important because of its ability to provide a composite measure of sales and inventory. The most common formula for calculating sell through is: Sell Through % = Units Sold / (Units On-Hand + Units Sold) (Donnellan 156). For fast moving products, sell through is always evaluated on a daily basis while for the slow moving products they evaluation can take place on a weekly basis. The higher the value of a product sell through the batter. This would be an indication that a business’ sales velocity is appropriate and their inventory is well forecasted. In a case where the sell through is low, it can be said that the sales are very poor and there is too much inventory. In most cases, the sale through of a product is usually compared with other periods. For instance, the sale through for a product this week would be compared to the sale through last week (Goworek 107). There can also be compared in aggregates across months or even sometimes years. When calculating sell through, it is advisable to group together products that have been selling for the same period and those that are store in the same types of stores. There are certain scenarios` that obviously affect the performance of a business organization in either positive or negative ways. As for B&M, these scenarios are: colour trend, fabric trend, and style trend. Looking at colour trend someone will easily notice that there are some colours which easily trend during some seasons while the other trend in the other. The colour which trends in a certain season will depend on a number of factors, including the adoptability of the colour to the temperatures during the season. It will also depend on the environment. For instance, people usually tend to wear dull colours during winter season. The choice of dull colours is due to the fact that dull colours have the ability to keep people warm because they make good conductors of heat as opposed to bright colours which tend to reflect the heat away. Given the fact that most people would like to keep warm during winter seasons, they will always prefer having dull coloured cloths. Therefore, if a store happens to have an inventory with allot of bright coloured during such a season they are likely to stay with the stock longer. The vice-versa will be the scenario for summer seasons. The fabric will also have a huge influence on whether or not an item will do well in the market at a given time. The fabric usually influences the attractiveness of an item towards a certain target market. Most people will also choose fabric according to the season or occasion (Clark 111). For instance, heavier fabric such as sheep wool and leader would be the most preferred during the winter season because of their ability to keep people warm. Others, such as silk might perform better during the summer season. It is also important to note that some fabric is more suited for certain seasons. For instance, a person going to a sporting event is less likely to wear attire made from wool. This specifically applies to sports that require light clothing such as athletics, soccer, basketball, volleyball, and many others. Therefore, when stocking a fashion store should always consider their target market and the season in which they are in. In the fashion industry, style is always of high essence. The style in which a product is made determine whether or not they will do well in the market. One thing about fashion, is that the style and design of a product can make a very big difference. This is because style usually determines what different segments of the market want to buy. Some people may prefer some style given the occasion or the purpose for which they dress while others might want some style because of the season in which they are in. For instance, clothes that are highly revealing are less likely to do well during the winter season. The same would apply to open shoes during the winter season. Sometimes a person’s lifestyle and profession might determine the kind of style that they prefer. The re-forecasting of the grading list for the products will be as follows: P1 P2 P3 P4 P5 Opening stock 110 130 85 110 105 Forecast sales 200 500 135 200 350 Period’s forward cover 200 400 250 110 255 Closing stock required 110 30 200 200 10 Intake period 1 week 1 week 1 week 1 week 1 week On order 250 475 125 124. 350 Closing stock 60 55 190 96 10 Looking at B&M’s performance, it is easily notable that they have some strengths that can help them in preforming better in the market.The advantage of using local suppliers is that forming long term relationships with them is usually easier as compared to the overseas suppliers. Another advantage is that using suppliers within the UK keeps the revenue within the UK which implies that the revenue will remain within the UK. This means that the revenue has higher chances of having an influence on the environment in which the business organization is operating. There is also higher possibility of the revenue finding its way back to the organization. Using local suppliers can also save the business some money. Given that the business is operating in an environment where consumers are very price sensitive, it will be prudent for the organization to make sure that they get the best quality at the least price possible. This will help them in being price competitive (Ebster andGaraus 112). Offering most affordable prices can enable the business to remain attractive to a certain segment of the market. Another thing that should be noted about using suppliers from within the UK is the fact that is usually easier to make any correction whenever there are any misappropriations in the shipments. For oversea suppliers this might take a little bit longer. What can be seen in a scenario such as this one is that such problems will take longer to sort if in any case a business is relying on overseas suppliers instead of the local ones. However, there are some advantages that might come with the use of overseas suppliers. One of the advantages is that oversea suppliers can sometimes be price competitive. This will specifically apply to a case where a business is imported from a country where there is an abundance of resources required to produce the specific product that they want to buy. In such cases, a business organization can end up spending less money than they would have spent if they bought the products locally. If a business imports from a country where labour is cheaper, raw materials are readily available, and there is minimal taxation, they will end up getting a better deal than they would have gotten by buying the same products in the UK. This implies that buying from overseas suppliers in such a scenario will grant a store a chance to gain a completive advantage over their competitors in terms of the prices that they will charge for their products. Using international suppliers can grant a business organization operating in the fashion industry a chance to have more flexibility. Flexibility in this case applies to price, quality, design, fashion, and many other aspects that might influence consumer decision in the fashion market. For instance, there are some products that are well known to be of certain quality when produced in some countries such as France and Italy. Though a business can be able to get such products from local suppliers, getting them from foreign suppliers might have certain advantages. For instance, there are some foreign based suppliers who specialize in the supply of certain products. Dealing with such suppliers can give a business organization the assurance of quality, originality, and legitimacy. Such suppliers also tend to be cheaper that the suppliers in the UK who deal with various fashion items that are produced from various parts of the world without having to specialize in the supply of any of the products. At the end of the day, a business will feel safer dealing with such suppliers than when they are dealing with the local ones. Using overseas suppliers can also enable a business to have an upper hand in competition if used well. This is because these suppliers can enable them to have emerging products before they get to the other suppliers in the UK. This is specifically important in the fashion industry given the fact that there are always changing trends which makes it important for a business to be aware of them as soon as they emerge. However, there can also be changes in the other countries that make production there more conducive. It should be noted that the same way these changes might be positive is the same way they can be negative. For instance, when one of their suppliers come from a country that has just been hit by a civil strife. This will mean that their normal operation will be interrupted or made harder for a certain period of time. This is something that could not have happened if a business organization relies on local suppliers. It is clearly evident that using other suppliers from within the UK or overseas suppliers can be both advantageous and disadvantageous. However, it all depends on the item that is being supplied. Some are best supplied by UK based suppliers while others are best supplied by suppliers from other parts of the world. Having this in mind, it will be advisable of the purchasing officer to research on the items that are better supplied by suppliers from within the UK and those that are best supplied by overseas. This will help them in benefiting from the advantaged of both sides. At the same time they will be able to limit the risks that are involved in using both sides. This will help the business in being more competitive, profitable, and flexible.With these attributes it is no doubt that the business will manage to do well in the market without having to worry about supplies. There are a number of lessons that can be deduced from this process. For instance, someone can come to the realization that forecasting is of high importance to a business, especially in the fashion industry. Forecasting is important because it helps a business in making an important decision when making purchases. When purchasing items it is not advisable to just go and order product because they are available. This is because a business might make orders of products that will be sold. For a business in the fashion industry the main aim is to buy products that will be sold out as soon as possible. There is no point in buying products that will be lying about for a very long time. Given the nature of fashion items, it is always not advisable to buy items that will remain in the store for a long period of time. This is because tastes in fashion usually change at a very high rate. Another thing that can be deduced from this activity is the fact that forecasts needs to be checked regularly for errors. For instance, in this case the forecasting was done on a weekly basis. From the weekly reviews it was deduced that sometimes forecast can have a very low percentage of accuracy. On other occasions they can have high percentages of accuracy (Neilson 123). This is an indication that the reviews are of importance to purchasers. They are important because they help purchasers in settling for better forecasting methods that suit their situation. The choice of the wrong forecasting method in the fashion industry can lead to either overstocking or under stocking. Overstocking might have negative effects on the profitability of a business while under stocking might lead to the loss of some customers to their competitors. This is because customers might form a negative opinion when they find some items missing from the stores. In order to maximize their profits, there are a number of things that B&M can do. For instance, they should consider avoiding the forecasting methods that have been observed to be inaccurate from their case. They could also avoid buying items that stay longer in the stores. Given the fact that the preferences of customers in this industry usually change at a very high rate, having many of such items will mean that they might end up not selling all of them (Varley 101).For such items they will have run losses because of the fact that they buy these products with their own money. Inability to sell them will simply mean that the estimated profit for these items will not be close to the actual income that the business will get from the sales of these products. They should also consider investing more of those items that seem to be moving because these us the only chance that they have for maximizing their income. Work cited Clark, J. Fashion Merchandising: Principles and Practice. Basingstoke: Palgrave, 2014. Print. Donnellan, John. Merchandise buying and management.Bloomsbury Publishing, 2014. Print. Ebster, Claus, and Marion Garaus. Store Design and Visual Merchandising: Creating Store Space That Encourages Buying. New York, NY: Business Expert Press, 2011. Internet resource. Elliott, F. and Rider, J. Retail Buying Techniques.Cirencester: Management Books, 2003. Print Goworek, Helen.Careers in fashion and textiles.Blackwell, 2006. Print Jackson, T. and Shaw, D. Fashion Buying & Merchandising, Hampshire: Palgrave Macmillan, 2001. Print. Jackson, T. and Shaw, D. Fashion Marketing, Hampshire: Palgrave Macmillan, 2008. Print Neilson, A.C. Consumer-Centric Category Management Techniques: how to increase profits by managing categories based on customer needs New Jersey: John Wilson & Sons, 2006. Print. Posner, H. Marketing Fashion, London: Laurence King, 2011. Print. Varley, R. Retail Product Management: buying and merchandising. 3rd ed. London: Routledge, 2014. Print. Read More