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White Papers Retail Industry Information


White Papers available for download

Fast Fashion and Speed Sourcing Executive Summary

Retailers can reduce forecasting risks and improve margins by implementing speed sourcing and fast fashion techniques. The cycle times of extended supply chains to the Far East have hidden costs in terms of potential markdowns inventory carrying costs, obsolescence and lost sales.

Both fast fashion and speed sourcing reduce lead times, allow for more accuracy in follow on orders and enable the retailer to forecast need closer to the point of demand. The main ideas are to divorce garment design and production from raw material planning and procurement, postpone some operations in the process to later stages to build in flexibility and to run as many activities in parallel as possible.

Many fashion retailers such as Zara and H&M are exploiting these techniques to gain market share and improve their results. They have seen product lead-times from design to store shelves fall from six months to less than six weeks.

For fashion items with a short demand cycle this reduction in time from concept to store enables these retailers to produce product based on recent trend. Designing and selling garments based on recent trend will lower markdowns, reduce overstocks and provide customers with higher in-stock rates of key items.

Speed sourcing can be implemented with the whole process managed by the retailer, which is how companies such as Zara operate. Equally, some suppliers have taken on many of the techniques for executing speed sourcing, so that they can grow or defend their business against cheaper Asian sources. For example, Marks & Spencer sources some product from suppliers in Turkey that can repeat ship quickly, providing a speed advantage not found from many Asian suppliers.

Click here to request a free full copy of the Fast Fashion and Speed Sourcing White Paper

How to Get the Numbers that Matter in Retail

The objective of this white paper is to review various aspects of retail financial management and to draw important lessons for small and mid-size retailers. The paper addresses a wide range of topics that impact a retailer’s financial
success. Many of these are common to retailers of all sizes, but some are specific to mid to small tier businesses and many cautionary notes are given.

The topics covered include:

  • Key financial metrics and their importance.
  • Budgeting and financial planning.
  • Relationship of financial plans to merchandise and Open-To-Buy plans.
  • Purchasing management.
  • Invoice matching.
  • Vendor management and its relationship to cash flow.
  • Co-op funds and vendor advertising support.
  • Operational monitoring.
  • Monday morning and end of month routines.
  • Financial danger signs and how to avoid pitfalls.
  • Managing the store at the Trading Statement level.
  • Adding new stores and the implications for profitability and cash flow.
  • Dealing with reverse premiums.
  • Balance sheet management.
  • Inventory—an asset or a liability?
  • The role of computer systems in modern financial management.
  • Compliance and the implications of Sarbanes-Oxley.

Click here for your free copy of the How to Get the Numbers that Matter White Paper.

Smarter Supply Chain Utilization for the Retailer

This paper introduces various supply chain concepts and explains their importance. It describes initiatives being undertaken by the largest retailers and reviews what small and mid-size firms need to do to compete. Very few small and mid-size retailers can compete with companies like Wal-Mart on price. However, while some go to the wall, many smaller retailers prosper alongside Wal-Mart exploiting the traffic that they generate and managing their own supply chains and customer propositions well.

There are many definitions of supply chain management. A good one is “The achievement of a pre-determined service level to the customer by the effective management of all of the relationships in the supply chain.”

There are two key phrases in this definition:

“pre-determined service level”

To develop any supply chain improvement program it is necessary to determine the level of service appropriate to give each customer or customer type. Different customer types or groups might get different service levels. It isn’t necessary or economic to give all customer groups the same level of service. Also, different products might get different service levels depending on the role of each product in getting customers to purchase in your store.

“effective management of all of the relationships”

Relationships exist between all parties in the supply chain, whether by design or by accident. They can be planned and managed or they can be ad hoc. Maximum supply chain productivity is achieved when these relationships are managed effectively. The most critical part of management is the accurate and timely flow of information between all the parties in the chain. Using this information to collaborate effectively with the other parties in the chain is an important development.

Retailers today are continuing to develop strategies to increase the efficiency of their supply chains in order to reduce costs and increase profitability.

Aggressive industry consolidation and expansion into new territories by many of the larger operations has reshaped the market for many smaller and midsize retailers. To grow, or even maintain market share, in this environment the focus must be on maximizing customer response, raising service levels and demonstrating value to the consumer, all while minimizing costs.

Smarter supply chain management can enable mid-size retailers to compete and win. Lead times grow shorter as retailers and their suppliers make continuous supply chain improvements such as reducing manufacturing set up and cycle times. Many vendors have become “quick change artists” agile manufacturers ready to respond to any customer order, for any product as quickly as possible.

Why look to the supply chain? The cost of goods represents 45-80% of sales, depending on the retail format. It is the single largest cost of doing business for any retailer. The next highest cost is store labor that typically runs between 8% and 16% of sales depending on format and product group. Hence supply chain costs are typically at least three times larger than the next largest cost.

Executing effective Supply Chain Management (SCM) is a priority for many businesses, and more importantly, is reshaping many traditional business relationships. Driving this is the consumer, who is becoming more informed, more powerful and demanding, and increasingly impatient with retailers who don’t meet their expectations. Choice, for the consumer increasingly involves a viable, low cost, low service, alternative. Small and mid-size retailers need to compete on service and selection rather than price in almost all cases.

Mid-size retailers may not be able to match the economies of scale of some larger retailers, but for most, there is room for improvement. To compete effectively in this environment, retailers need to become smarter. They need to make their inventory investment work harder, maintain appropriate and competitive in-stock service levels, and react faster than the big chains as the market changes.

Improving the supply chain can help the mid-size retailer realize these goals. To achieve the most benefit, retailer’s should impact their vendors supply chains as well as their own. The retailer wants their orders shipped complete, accurate, on time and in the manner they require from their supplier. If the supplier meets these needs, a continuing business relationship will prevail; if not the retailer will look for a new supplier. Noncompliance will result in possible loss of business. In a poorly executed supply chain, all parties lose, the supplier, retailer and the consumer.

Click here for your free copy of the Smarter Supply Chain Utilization for the Retailer White Paper.

 

Retail Performance Management

Retail is at first glance fairly simple, but what with the issues of declining year on year growth, decreased predictability of the marketplace, competition from international retail formats and new distribution channels, such as the Internet with on-line shops.

There are only four efficient ways to improve profitability:
Grow Sales, Lower the Cost of Goods Sold (COGS), Reduce Expenses and Reduce interest charges which in most situations means; focusing on inventory finance costs.
True performance management impacts all four areas.

Click here for your free copy of the Retail Performance Management White Paper and learn about the fundamentals of performance management, get insight in the planning processes that help set objectives and the information needs necessary to monitor and achieve the desired performance.

 

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