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Identifying the Sources of Supply

1.Domestic Sourcing

2.Global Sourcing

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Identifying the Sources of Supply

The prime reasons for looking an

International Sourcing could be theuniqueness of the merchandise, or the

unavailability of the merchandise in

the domestic market.Low cost and good quality are also

factors which could affect this

decision.

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Costs and Managerial Issues

Associated with Global Sourcing

1. Country of Origin

2. Foreign Currency Fluctuations3. Tariffs

4. Foreign Trade Zones

5. Transportation Costs

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Evaluating Sources of Supply

Following things should be considered:

The target market for whom the merchandise is

being purchased.

The image of the retail organization and the fitbetween the product and the image of the retail

organization.

The merchandise and prices offered.

Terms and services offered by the vendor. The vendors reputation and reliability.

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Evaluating Sources of Supply

Vendor Selection:

The merchandise offered by the vendor should be

compatible with the needs and wants of the

customer.Factors to be considered while selecting a vendor:

Ability to meet the delivery schedules.

Adherence to quality procedures.

Cooperative advertising. Return or exchange privileges.

Participation in store promotions.

Willingness to use the relevant technology.

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Evaluating Sources of SupplyTypes of discounts that could be available to the

buyer:

Trade Discounts: these are reductions in the

manufacturers suggested retail price, granted

to wholesalers or retailers. Chain Discounts: this is the traditional manner

of discounting, where a number of different

discounts are taken sequentially, from the

suggested retail price. Quantity Discounts: These can be cumulative

and non cumulative. Retailers earn quantity

discounts by purchasing certain quantities over

a specified period of time.

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Establishing Relationships with

Vendors

To maintain strategic partnerships with

vendors, the buyer needs to build on:

1. Mutual Trust.

2. Open Communication

3. Common Goals

4. Credible Commitments.

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Analyzing Vendor

PerformanceA factual evaluation of the vendors

performance can be concluded by listing

the following:

1. The total orders placed on the vendor in ayear.

2. The total returns to the vendor, the

quality of the merchandise.3. The initial markup on the products.

4. The markdown, if any.

5. Participation of the vendor in various

schemes and promotions.

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Analyzing Vendor

Performance6. Transportation Expenses, if borne by the

Retailer.

7. Cash Discounts offered by the vendor.

8. The sales performance of themerchandise.