inventory management - the four keys

Transcription

1 inventory management - the four keys unlock your potential

2 WHY INVENTORY MANAGEMENT? Purchasing frames can be a time-consuming, frustrating and expensive endeavor - both in staff time and product cost. In an effort to streamline this process, Marchon Eyewear has developed an Inventory Management System, which many offices are utilizing with great success. The purpose of the Marchon Eyewear Inventory Management System is to implement guidelines that should increase your profits and stabilize your cash flow by increasing inventory turns, and putting an end to those roller coaster frame bills. Our Inventory Management System is cost effective and profit producing. How is this accomplished? First, we recommend you evaluate the number of frames and product mix that is currently in your dispensary. Next, we recommend that you determine the ideal number of frames and product mix, based on your demographic information. (Our representatives can assist you in these processes.) Once this is done, we can then help you set some goals to get from where you are to where you want to be. One of the greatest benefits of our Inventory Management System is consistent accounts payable. When sales increase, the costs of goods increase. When sales decrease, the costs of goods decrease. Frames are only ordered to replace those that are sold. You should never have a large frame bill at the end of a slow month. Other advantages are: No need for excessive back stock. Your best selling styles are always in stock. You ll have fewer returns and exchanges. Purchasing is systematic, based on what actually sells. Instead of spending hours showing frames, your vendors can spend their time doing in-house training, merchandising and keeping their product clean and adjusted - ready for your patients Our Inventory Management System ensures that you have the right product mix for your patients, allows you to track your inventory turns, saves you valuable time and helps you increase your profits. This booklet provides some guidelines to get you started; your Marchon representative would be happy to meet with you to discuss your unique inventory management needs.

3 MA.07.fourkeys.inside 11/3/09 10:09 AM Page 1 VENDOR SELECTION continued Select Four To Ten Vendors With Whom You d Like To Do Business Based On The Following: PRODUCT SELECTION Consider quality, diversity, price range, name brands, size & color range, materials used in manufacturing. PRODUCT AVAILABILITY Consider shipping status, backorders and how the company handles them. PRODUCT GUARANTEES Consider replacement, exchange and return policies. POINT OF PURCHASE AND MARKETING MATERIALS Find out what is available, and if there is any cost to you. EDUCATION Will they add value to your practice, by providing education for your staff? CO-OP PROGRAMS Determine whether or not you can benefit from the program, or if the guidelines are too prohibitive. In order to maximize your purchasing power, choose one or two primary vendors to provide 60-80% of your product. These vendors should have a vast selection of product in a wide price range. They should have a good co-op program as well as all the benefits listed above, because this is where the majority of your inventory dollars will be, and you want to realize the maximum return on your investment. Before purchasing from any vendor, schedule a meeting with the sales representative and go through a list of questions to find out about their products, policies and services. You may want to use the attached vendor evaluation form or create one of your own. Ask for their policies in writing and keep a file for future reference.

4 MA.07.fourkeys.inside 11/3/09 10:09 AM Page 2 VENDOR EVALUATION FORM page one Vendor Rep What products or collections do you carry? What are your product strengths and weaknesses? Where and how are your frames manufactured and with what materials? What is your price range and your average frame cost? What are your discount policies? What buying groups do you support? Do you have a co-op program? How does it work? What is your exchange or return policy? Is there a time limit or re-stocking fee?

5 MA.07.fourkeys.inside 11/3/09 10:09 AM Page 3 VENDOR EVALUATION FORM page two How long are your frames warranted? What are the conditions? What are your shipping policies? How many days average? What are the charges? Do you have backorders? How do you handle them? What does your company do to prevent and control them? What are your service strengths, and weaknesses? Does your company provide merchandising tools; posters, displays, etc.? Do you have photos? Does your company have a consumer advertising or education program? Do you provide education for Optometrists and Opticians? What professional ophthalmic organizations do you and your company support? Additional Notes:

6 MA.07.fourkeys.inside 11/3/09 10:09 AM Page 4 VENDOR SELECTION HOW TO SELECT THOSE VENDORS WHO WILL BEST MEET YOUR PRODUCT AND SERVICE NEEDS Today s eyeglass wearer is looking for fashion, quality, value and service. The eyewear dispensary needs to stock the right product, in the right quantity, at the right prices, with excellent service, in order to meet these consumer expectations. Selecting a few frame vendors from the more than one hundred vendors seeking to sell you their products can be complicated, but some vendors are equipped to make it easier for you to sort it out and make the right decisions. Selecting the right vendors is a very important decision because the vendors you choose will have a tremendous impact on your ability to manage your inventory, to meet your patient s needs and to achieve the profit margins that you desire. THERE ARE TWO TYPES OF VENDORS YOU WILL BE PURCHASING FROM: PRIMARY VENDORS provide product to meet the needs of 60-80% of your patient needs. These are the vendors from whom the majority of your product should be purchased. SECONDARY OR NICHE VENDORS provide specialty product sports, suns and designer names that you have requests for, etc. The product from these vendors should be purchased only to fill inventory needs that your primary vendors cannot.

7 MA.07.fourkeys.inside 11/3/09 10:09 AM Page 5 DISPENSARY EVALUATION Average number of frames displayed (see recommendations) Average number of frames in back-stock (no more than 10%) INVENTORY MIX %unisex %men s %women s %children s %teen s %sun %sports %monel (metal) %titanium/stainless %plastic SCHEDULE SALES REPS 6 weeks 8 weeks 3 months other RE-ORDER FRAMES SOLD daily weekly occasionally never when sales reps come in SYSTEM FOR RE-ORDERS computer tag box ordermaster other PURCHASE FRAMES individually (one of each style) complete collections in kits (multiple colors and sizes of each style) RETURN RATE % FRAMES DISPLAYED frame boards on shelves locked cases other P.O.P./MERCHANDISING MATERIALS DISPLAYED in windows with frames in reception room not at all CO-OP ADVERTISING DOLLARS USED FOR yellow pages radio t.v. print ads newsletters in office display or promotion VENDOR PARTICIPATION TRUNK SHOWS monthly quarterly annually never PRODUCT AND SALES TRAINING FOR DISPENSERS weekly monthly other never

8 MA.07.fourkeys.inside 11/3/09 10:09 AM Page 6 FOUR KEYS TO INVENTORY MANAGEMENT ENCLOSED YOU WILL FIND: Inventory Management 4 keys or steps Vendor Selection what to look for in a primary and a niche vendor Vendor Evaluation Form a tool for you to use when interviewing vendors that you are considering doing business with Maintaining Your Inventory Through Re-order Systems how to implement, and benefits Dispensary Evaluation to evaluate your current inventory system, and vendor participation Frame Inventory Form to use when taking a physical inventory to determine exactly what you have in stock The forms in this booklet were created for your use. Please feel free to copy them.

9 MA.07.fourkeys.inside 11/3/09 10:09 AM Page 7 INVENTORY MANAGEMENT THE KEY TO SAVING TIME AND INCREASING PROFITS IN YOUR DISPENSARY KEY #1 Determine how many frames you need to stock in order to meet the needs of your patients. Here are some guidelines based on the number of exams you do per year: 1,000 exams frames 2,000 exams frames 3,000 exams frames 4,000 exams 900-1,200 frames KEY #2 Determine the right product mix for your office, based on your demographic information. Consider: Plastic vs. Metal Men s vs. Women s Children s & Teen s Unisex Sports & Sunglasses Designer Names Price Ranges KEY #3 Carefully select vendors who can supply your product and service needs. Determine which collections and styles you will stock from each vendor, and assign a particular frame to each inventory space. KEY #4 Implement a reorder system to reorder frames that are sold on a daily basis. This will ensure that your best selling frames are always in stock, assist you in evaluating your inventory for profitability and balance your cash flow.

10 MA.07.fourkeys.inside 11/3/09 10:09 AM Page 8 MAINTAINING YOUR INVENTORY THROUGH RE-ORDER SYSTEMS In offices that do not have a computerized inventory system, we have found that the simplest and most effective re-order system is using reusable tags with a tag box. Here is how it works: 1) When a frame is placed in your office, a tag is made for it with the frame name, size, color and retail price. 2) When the frame is sold, the tag is removed and put into the drawer of the tag box, labeled, Frames Sold. Then once per week, or more often if your volume demands, these frames are re-ordered and the tag is transferred to the Frames on Order drawer. 3) When the frame arrives, the tag is placed on the new frame and the frame is put back into your inventory. 4) All frame orders are recorded in your Ordermaster for tracking and future evaluation purposes. (If your inventory is in your computer system, and if you are using the UPC bar code, this process would be modified.) The benefits of a consistent reorder system are: You are able to maintain a consistent inventory the amount of frames you carry and the amount of dollars invested in inventory fluctuate only slightly. Your monthly frame bills are determined by the previous month s sales. If you only re-order what you have sold, a high frame bill will only come after a month of high sales. Likewise, if your sales are slow your bills will be low. Your top selling frames, those which generate the most sales, will always be in stock. You can accurately evaluate what is selling and what is not, and design your purchasing according to these figures. You save a tremendous amount of time, both in purchasing frames and in pricing and tagging incoming product.

11 FRAME INVENTORY MEN S WOMEN S UNISEX CHILDREN S HALF SUN & VENDOR METAL ZYL METAL ZYL METAL ZYL METAL ZYL EYES SPORT

12 2009 Marchon Eyewear, Inc.