kpi\'s of inventory management and 5 smart steps
DESCRIPTION
Key performance indicators of inventory management in the home goods industryTRANSCRIPT
Inventory Management
Key Performance Indicators and the
5 SMART Steps
Intro – The 80/20 Principle
Introduction
The Model of Dynamic Inventory Management
The Key Performance
Indicators of Inventory
Management
Gross Margin
Gross Margin
Sales – Landed cost of sales = GM$
GM$ / Sales = GM%
Turns
Annualized COGS / Inventory
Average days to sell = 365 days / Turns
122 days ↑
GMROI
GMROI = $GM annualized / Inventory or,
GM% x (Turns/COGS%)
A 10¢ improvement is worth $100,000 per year per $1,000,000 in inventory
High Point Average
Inventory to Sales
Inventory / Annualized Sales
Dictates your open to buy for new merchandise
Best Seller on Stock Days
% of time best sellers are in stock in relation to their total time in stock
The % of time that you have those items that make up 80% of GM$
Sales and GM Per Square Feet
Average stores produce only 2% net income
$200 minimum!
Many performing client operations are doing above $500 sales / square ft!
Average
The 5 SMART Steps
Step 1: Spot Your Winners - Vendors
$- $1.00 $2.00 $3.00 $4.00 $5.00 $6.00
Samsung
Lane
Century
Lazboy
GMROI overall
American Leather
Thomasville
Ashley
Flexsteel
Baest Cair
Bedding - Private Brand
$0.50
$1.70
$1.80
$1.85
$2.00
$2.03
$2.20
$2.53
$2.70
$3.00
$5.40
GMROI
Best Chair
La-Z-Boy
Step 1: Spot Your Winners - Categories
$- $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00
Upholstered
Leather
Motion
Recliners
Bedroom
Dining Room
Kitchen/Dinette
Occasional
Home Office
Entertainment
Bedding
Lamps
Accessories
Curios
Juvenile
Total GMROI
$3.10
$2.53
$3.90
$3.07
$2.49
$1.77
$2.57
$1.70
$1.88
$2.60
$3.77
$0.86
$0.62
$1.24
$2.54
$2.47
GMROI
Step 1: Spot Your Winners - Items
Step 1: Spot Your Winners - Salespeople
Step 2: Maintain Your Winners - Purchase Advice
Step 2: Maintain Your Winners - Display
Step 2: Maintain Your Winners - Price Points
Step 3: Auto Identify Dogs and Take Action
% current inventory vs marked down?
Should be a tapered schedule
1st period? Under 60 days?
Step 3: Auto Identify Dogs and Take Action
Step 3: Auto Identify Dogs and Take Action
Step 4: Reward High GM Sales - Variable Commission
Step 4: Reward High GM Sales - Fabric Protection and Warranty Sales
Team and individual sales metrics on CCC
Daily Sales Report:
Warranty close rate ?
Fabric protection close rate ?
Step 5: Target Contact - Opportunities
Step 5: Target Contact - Quotes
Step 5: Target Mail and Email New and Existing Customers
Next Purchase
Step 5: Target Mail and Email New and Existing Customers
Past purchase
Step 5: Target Mail and Email New and Existing Customers
VIP Club
Your next steps?
Determine where you are now –
figure your Key Performance
Indicators.
Where do want to improve?
What improvements will be the
easiest and have the greatest
impact on your profitability?
Implement the 5 SMART steps.
Your next steps?
Thank you!
Questions?
For additional help, contact:
David McMahon