Checking Up on Your Holiday Inventory

Friends and neighbors may be preparing their next barbecue and finalizing Labor Day plans, but for operations managers at consumer merchants, midsummer means time for a holiday inventory checkup. Keeping a few pointers in mind can make this seasonal headache a little less overwhelming. George Mollo, principal of Nanuet, NY-based GJM Associates, a consulting firm specializing in merchandising operations for direct marketers, offers some suggestions:

  • Hone your merchandising selection process. Consider how stock availability and earlier-than-planned introduction of “spring merchandise” has affected your inventory levels. Also be sure to have coverage of key price points. “Look and plan for alternative items — what items can be offered if the customer’s first choice is sold out,” Mollo says. “Have those lists reviewed, updated, and ready to go, and discuss them with merchandising, inventory control, telemarketing, the distribution center, etc.” Mollo recommends that key departments start talking about inventory status as soon as possible. Be sure to consult with even departments that you may not directly link such as catalog production. For example, the production department needs to coordinate with operations the timing of photo shoots and positioning of photos in the catalog to reflect inventory levels.

    Also be sure to facilitate communications between the DC and corporate headquarters to address any last-minute questions or crises that arise mid-season, with DC contact people and corporate contact peole assigned ahead of time. In addition, plan meetings within the operations department, focusing on making sure problems from holidays past have been addressed. And don’t forget to consult with your vendors. “Work with them, review your strategies and projections with them,” says Mollo. “Make them part of the team.”

  • Set purchase order (PO) and backorder (BO) deadlines for the holiday season. “Establish purchase order cancellation ‘trigger’ dates for orders from vendors or dates for possible expediting,” says Mollo. Guidelines should be set for expedited shipments including deadlines, dollar cut-offs, and authorizations, and ops managers need to make sure correct PO/BO dates are maintained in the company’s database. If you have stores or outlets, keep a review of their inventory on hand “to possibly support mail order/Internet sales for BO and ‘not available’ items,” he says. If you have telemarketers, provide them with items they can use for alternative selling, keeping the list updated by product category. “Provide updates, at least weekly, but possibly more often, of ‘top 20 backorder’ items,” Mollo suggests. Arrange for “corporate representation in the DC during peak weeks to assist with PO problems,” he says. “This person should know who to contact to expedite answers and make decisions.”

  • Ensure quality control during your peak season by deciding this summer whether you’ll need additional staffing for adequate quality checks and whether additional field inspections of domestic and imported merchandise (if possible) are needed. Mollo says to advise the distribution center staff of the standards you’ve set for the quality each of the garments should be arriving in. “Highlight new vendors that may have potential problems or need special review,” he says. “Production/merchandising should have a dialogue with these vendors reiterating your requirements.”

  • Make sure your receiving department is ready for the holiday onslaught by planning for additional staffing and additional shifts during peak weeks. Double-check the hours your distribution center will be available for delivery, including, for example, available times on Saturdays.

  • Double-check the company’s systems upgrade schedule to make sure it doesn’t interfere with your busiest period. Limit hardware upgrades during the holiday season, and establish installation cut-off dates. Take note of any processing issues, such as peak capacity for recording BO data.

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