How to Make Half A Million Decisions a Week
Using Minimums with No Sales History
Minimums Are Still Useful Even Without Recurring Purchases
Using Maximums to Control Your Supply Chain
Centralize Purchasing for Greater Accuracy
Optimizing Inventory with XpertMartTM
Setting the Right ParametersYou should take great care in setting these parameters. Much of the precision of Minimums depends on the human factor. When choosing a historic sales period to use as a parameter, make sure it is not atypical, such as Christmas or Mother’s Day when sales are unusually high. Using December’s sales to set January’s Minimums is sure to lead to overstocking. If your business is highly seasonal, for example, selling T-shirts and swim-wear to tourists, it might be more appropriate to use the same sales period from the prior year (i.e. June – August) than the three previous months (i.e. March – May) which are part of the low season. Use real data whenever possible. If your goal is to have 60 days of sales in inventory, it is far better to take a two month sales period and multiply by a factor of one, than to take one month of sales and multiply by a factor of two. The resulting Minimums will be far more accurate the more you rely on actual sales data.
Minimums will be most effective if you try to differentiate parameters rather than use a uniform set of parameters for your entire stock. You may want 15 days of sales of stock in your stores, but 25 days of sales for a particularly popular style if you anticipate that sales will continue to grow. Using our XpertQueryTM tool you can filter the parameters such that they are assigned only to certain brands, styles, stores, vendors or even sizes and colors. Finally, be sure to periodically re-calibrate your Minimums. As you start using Minimums to optimize your inventory, your sales will undoubtedly rise--in which case your Minimums should increase as well.
Copyright © 2002 XpertMart