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Merchandise Procurement

Merchandise Procurement. By Dr.U.Srinivasaraghavan. Merchandise Sourcing. Sourcing means finding or seeking out products from different places, manufacturers and suppliers Sourcing influences a) availability of stock b)margins earned by retailers and c)stock- turns achieved It -

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Merchandise Procurement

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  1. Merchandise Procurement By Dr.U.Srinivasaraghavan

  2. Merchandise Sourcing • Sourcing means finding or seeking out products from different places, manufacturers and suppliers • Sourcing influences a) availability of stock b)margins earned by retailers and c)stock- turns achieved • It - A) improves service B)product offer and C) overall profitability

  3. Sourcing – A five step process • Identifying the sources of supply • Contacting and evaluating the sources of supply • Negotiating with the sources of supply • Establishing vendor relationships • Analysing vendor performance

  4. Domestic sources of supply • With whom we are already working • Central Markets • Trade shows

  5. Sourcing from international Market • Reasons – • Uniqueness of merchandise • Unavailability in the domestic market • Low cost • Sometimes, good quality

  6. Costs associated with global sourcing • Country of origin effects • Foreign currency fluctuations • Tariffs • Foreign trade zones • Cost of carrying inventory • Transportation costs

  7. Legal Issues- in sourcing in India - • Taxes – Central, state and Municipal • Sales Tax • Excise duties • Octroi • OGL list, Restricted list and negative list and special import license

  8. Common Methods of gathering information • Talk – sales persons, experienced people,.. • Trade magazines and yellow pages • Trade exhibitions • E-sites, blogs …

  9. Criteria in deciding on potential vendors • Target market for whom the merchandise is purchased • Fit between the product and the image of the organisation • Merchandise and the price offered • Terms and services offered by the vendor • The vendor’s reliability and reputation

  10. Issue 1- compatibility • Is the merchandise offered is compatible with the needs and the wants of our customers?

  11. Issue 2 – Vendor dependability • Ability to meet delivery schedules • Adherence to quality procedures and terms offered • Technological capabilities • Services rendered like cooperative advertising, returns, exchanges,store promotions …

  12. Evaluating the sources of supply • Merchandise itself • Price • Adaptability of suppliers to the requirements of the retailer. Example: spacing of deliveries, quantity discounts, recycling and repackaging of products, participating in schemes,… • Delivery requirements to be met

  13. Points for negotiating • Price • Delivery dates • Discounts • Shipping terms • Returns • Payment terms • Warranties and guarantees

  14. What to keep in mind while negotiating • Buyer’s deadlines, outlay, special needs • Vendor’s goals and constrains

  15. Discounts that could be negotiated • Trade Discounts – these are the reductions or a series of reductions from the total purchase value • Chain discounts • Quantity discounts-cumulative or non-cumulative • Seasonal additional discounts • Cash discounts – reductions from invoice price for paying ahead of the stipulated period

  16. Establishing Vendor Relations • Mutual Trust • Open communications • Common goals • Credible commitments

  17. Decision Support Matrix- Bern’s weighted rating Method -

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