Miss. Smiths Stores Open- to- Buy Project - Assignment Example

Miss. Smith’s Stores Open- To- Buy Project Miss. Smith’s store will be located at 21453 6 Wall St, Los Angeles; CA.the store will specialize in apparels. These will be categorized in Clothing; which will include tops, dresses, Sweaters, Pants, Jeans, Jackets& Coats, Suits &Separates, Skirts & Shorts, Jumpsuits, Shoes and Boots, Intimate Apparel, and Sleepwear. The choice of this location has been necessitated by the convenience to the customers in terms of accessibility as well as high individuals’ traffic on the street. The street equally has the history of having a population with a high sense of tastes for the fashion. Additionally, the population at this place has a reputation of not only having good taste of fashion but also with the high purchasing power. This makes it convenient for Miss. Smith’s Store to thrive in the fashion business. The objective that most stores it intend to achieve with this type of inventory is to ensure that there is high level of maintenance of only the inventory that is appropriate for the sales that it generates. (Frey, Robert S, 24) The Stores always focus on making critical assortment of it sales to minimize possible losses, while at the same time, keen to avoid over assortment to the extent that sales flow is drained. (Willingham, Ron, 12) Miss. Smith Store will rely on the concept of the right amount of the right stuff at the right time. The following steps will be critical in the creation of the Open to Buy for Miss. Smith’s Stores: First, Miss. Smith Stores will strive to plan its annual sales and markdowns. This will form the roadmap upon which the Store’s stock level shall be derived. The second step which will be equally important to Miss. Smith Store is the planning of the average turn and stock at the beginning of the business. Though this step is usually difficult, it will form the basis of the determination of the turnover rates and stock levels which will be important for the business. The last step will be the calculation of the monthly open to buy, which will also be demonstrated in table 2 below. The considerations of the above steps will give Miss. Smith’s Stores ability to ascertain that there is enough level of stock that can support the amount of sales the Stores will generate. This will ensure that the Store does not have too much inventory concentrated within a given period. There is a danger of having this predicament since it can always slow down the cash flow and further promote the reduction of profits with a lot of markdowns. (Eliah, 12) Again, the OTB ascertains that there would be no under buying by Miss. Smith’s Stores. Sometimes when sales opportunities are missed, then it follows that potential profits are forgone. Miss. Smith’s Stores is committed in ensuring that it stocks the right amount of the clothing it intends to sell and promote their sales at the most appropriate time with the help of Open- To- Buy Plan Miss. Smith’s Stores is interested in taking the maximum advantage of adding of new products and also availing special buys. In order to do this, Miss. Smith’s Store will tend to hold some of its Open- To Buy dollars. This way, it will enable the stores to identify and react to those products that sell faster and as such would aspire to restock them. The OTB plan that the Store will maintain will be used as the road map to manage the sales to maximize the profits, but will also be backed by serious planning for individual category of the entire products that the store stocks. Miss. Smith’s Stores is determined to ensure that its inventory is kept on a spreadsheet, which can allow people to quickly understand the flow. Miss. Smith Store Stock Keeping Unit Level (SKU) Miss. Smith’s Stores SKU are based on the different category of products that it sells. The categories will be majorly on: Style, color, season, size and the Item Reference Number. These are envisaged to be the most convenient approaches and realistic to both the buyers and the stores. Style in particular will be coded based on the products mentioned, which are; tops, dresses, Sweaters, Pants, Jeans, Jackets& Coats, Suits &Separates, Skirts & Shorts, Jumpsuits, Shoes and Boots, Intimate Apparel, and Sleepwears. Each of these products will be coded as either 1200, 1201. For example: Tops: 1200, dresses: 1201, Sweaters: 1202, Pants: 1203, Jeans: 1204, Jackets and Coats: 1205, Suits & Separates: 1206, Skirts: 1207 etc. This will subsequently be followed by the colour, which will then be the basis of identifying those colors that the customers like most from the styles that have been chosen. The next category will be season. To enable the company plan appropriately with the money and to determine which seasons to stock which product, inclusion of season as a category will be most convenient for the store. The next category that will determine the age of the population which has the highest and the lowest purchase power is the size. This will in a greater way determine whether the product sold should be designed for a given age. The final category should be the IRN number. This will allow the store to undertake proper inventory for the products under sale. The reason behind creating the SKU for Miss. Smith’s Stores is on what the customers say. Following guidelines are what has been created by Miss. Smith’s Stores to ensure that the SKU works for the company. The store has created some hierarchy of numbers. This design is made in this way for the convenient of the user. In the SKU, the store has omitted the fabrics. This is because the fabrics are mostly represented by the color ways. To clarify on the reason for the choice of the style, it would be ok to note that it would not be likely for the store to sell an identical style number of a dress in blue cotton and blue linen. On the practical side, it would be certain that the pattern of the linen and the cotton would be different. This makes it convenient to have them have different style numbers. It is therefore important to place fabrication as classification based on style rather than fabrics. Miss. Smith’s Stores will be using Unique Product Code (UPC) to design its SKU. The idea will be to assign UPC to each of the SKU. The product code will be referred to as the Item reference Number or IRN. Because of the tedious nature of classifying products as they are sold, the IRN is most certainly going to be consequential which is linked to the characteristics of the products in place. Demonstration will be highlighted on the SKU table below. Regardless of the UPC individuals buy, the number of the SKU will fall between 2-5 digits. Table: 1. below demonstrates the intended SKU for Miss. Smith’s Stores. It further demonstrates the significance of each and every category that is envisaged to play along to ensure that Miss. Smith’s Stores maximizes its profits. Table:1 Miss. Smith’s Stores SKU inventory Style Color Season Size SKU IRN 1 01200 001-Blu Spring/ Summer 2 01200-001-ss-2 001 2 01200 001-Blu Spring/ Summer 5 01200-001-ss-5 002 3 01200 001-Blu Spring/ Summer 7 01200-001-ss-7 003 4 01200 001-Red Spring/ Summer 8 01200-001-ss-8 004 5 01200 001-Red Spring/ Summer 8 01200-001-ss-8 005 6 01200 001-Red Spring/ Summer 8 01200-001-ss-8 006                   Date               Turns Goal                                     Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15     Planned Sales 300,000 200,000 300,000 200,000 400,000 250,000     Planned Reduction 125,000 15,000 145,000 35,000 170,000 24,000                       Planned EOM Stock 8,000 12,000 4000 3,000 18,000 25,000     Backorders - - - - - -     BOM Stock 200,000 80,0000 110,000 90,000 210,000 70,000     Merchandise on order 160,000 200,000 80,000 110,000 90,000 210,000                                           Open To Buy $73,000 -53,000 259,000 38,000 228,000 19,000                                                                           Part C: C1: 106.2/ 100 x 1,854,000 = 1,968948 Sales Plan for the next year is: $ 1,968948 C2: 1,854,000- 1,820,000 = 34,000The increase was due to the change of the weather which demanded special purchase of clothing as well as good plan with the OTB Work Cited Eliah, E., ‘Preparing Open- To – Buy , Populi, New York, 1996, pp. 12-16. Frey, Robert S.. Successful proposal strategies for small business using knowledge management to win government, private sector, and international contracts. 3rd ed. Boston: Artech House, 2002. Print. Willingham, Ron. Integrity selling for the 21st century: how to sell the way people want to buy. New York: Currency/Doubleday, 2003. Print. Read More