PROBLEM

High inventory problem is almost universal but causative factors can vary from firm to firm. In a women’s clothing brand, the problem was not only of high inventory but also the brand desired to increase sales of its ‘collection based’ product range over its mix and match products.

CAUSE

On investigation, the problem was found to be split receipt of a collection-based ensemble (two or more co-ordinated items/styles). The vendor would deliver items belonging to a collection over a period of time, not together.

As a result, the full set could not go to the retail shelf at one go to be put on a mannequin for suggestive selling. It resulted into a lost opportunity of higher billing amount per bill. At times the Operations team had to hold on to the first received merchandise for 2-3 weeks before the receipt of its other half (or one third) from the vendor. This straight added to unproductive inventory.

The split delivery problem was further traced to the unmindful issue of purchase orders (PO). The Purchase team would issue garment orders to a vendor combining many clothing items together, across collection themes, different fabrics, colourways, styles and even different product categories on the same PO.

This resulted in the vendor getting a single PO with dozens of items on it, without any indication on (a) their priority – no calendar of delivery dates and (b) what items formed a single combo – items (salwar-kurta-dupatta etc) were required together.

Such a nature of PO resulted in its delivery in no particular order over a period of time. The warehouse team always would check with the Design team whether to despatch a received item or to wait. Inventory would pile.

SOLUTION

The simplest solution to this problem was- (a) Issue a single PO of ensemble items and communicate with the vendor that the bill will not be settled without full delivery of the concerned PO.  (b) Indicate priority of items across different POs through expected delivery date.

OUTCOME

Simple procedural changes on the PO issue – no rocket science- brought about a positive change in the inventory productivity and reduced its high level at the warehouse.

Of course, to be able to give a PO delivery date that’s plausible is not easy. It calls for a thorough understanding of vendor’s capacity (and how much of it is accorded to the brand ) and current load the vendor is already carrying of brand’s PO’s.

Being able to predict a near-accurate delivery date is a Science in itself! But certainly doable.