week 10

Sourcing and Supply Chain Management Lecture 9

• Selecting vendors and building partnerships is crucial for retailer success

• Knowing how to locate vendors, understanding different vendor types, and evaluating vendor partnerships are essential skills

• Buyers use criteria like merchandise, prices, vendor distribution policies, reputation, reliability, terms, and services offered to select vendors

• After developing a merchandise plan, locating suppliers who meet customer needs is important

• Selecting the right vendors directly impacts customer satisfaction

Types of Vendors

• Buyers can choose to purchase directly from producers or use intermediaries like wholesalers or manufacturer reps
• Typical vendors include manufacturers, wholesalers, and manufacturer reps

Manufacturers

• Many fashion buyers purchase directly from manufacturers
• Minimum order requirements often exist, potentially requiring intermediaries

Private Label Brands

• Retailers establish private label brands to offer unique merchandise not found elsewhere
• Purchasing directly from manufacturers allows cost reduction by eliminating intermediaries

Wholesalers

• Buyers may use wholesalers when direct purchase from manufacturers isn't possible
• Wholesalers purchase large quantities from manufacturers and resell in smaller amounts to retailers

Manufacturer Representatives

• Manufacturer representatives act as agents for manufacturers
• They don't own the merchandise, instead, they sell it on behalf of the manufacturer
• Fees are typically a percentage of net sales
• Reps facilitate showrooms for vendors

Making Contact with Suppliers/Vendors

• Buyers can initiate contact with vendors through trade shows, appointments, or through buying offices
• Magazines and industry trade journals are good sources for finding new suppliers
• Other buyers' suggestions are invaluable

Supplier and Vendor Initiated Contacts

• Some vendors send representatives to regularly check sales and stock levels
• Smaller independent stores prefer vendors who regularly visit and monitor stocks
• Reliance on rep visits allows keeping up with various vendor merchandise prices and offerings, allowing timely action and market analysis

Criteria for Selecting Vendors

• Key criteria for evaluating vendors include merchandise, prices offered, vendor distribution policies, vendor reputation, reliability, terms, and services offered

Merchandise and Prices Offered

• Ensuring merchandise aligns with customer needs and expectations is important
• Delivering the same quality as shown in samples is a must; vendors should meet quality standards consistently

National Brand/Own Label

• National brands have established recognition and customer trust
• Private label brands can offer unique merchandise not carried by other stores, potentially leading to higher profit margins
• Cost price is an essential factor when selecting a supplier, but other factors should also be considered, like brand compatibility (and their qualities).

Vendor Distribution Policies

• Exclusive distribution grants a vendor the sole right to sell products within a specific area to a certain retailer
• Designers frequently use exclusive distribution to maintain product uniqueness

Vendors

• Price is a key element influencing buyer vendor choice
• Store image and target customer will determine the acceptable price range for specific merchandise
• The vendor's reputation is very important, and buyer feedback is used to gauge quality control and the ability to resolve issues

Vendor Terms Offered

• Some retailers need cash discounts; others might want more time to pay
• Negotiated discounts should be comparable to industry standards

Services Provided

• Comprehensive vendor services, such as advertising cost sharing, return/exchange privileges, are critical for long-term relationships
• Participation in store promotions or clothing item prizes could increase sales and marketing
• Sales training provided by vendors is essential, aiding retailers in effectively selling inventory
• Assistance in effectively managing stock control is critical
• Pre-ticketing of merchandise significantly streamlines stock handling, saving time and resources

"Suppliers and retailers are essential to each other if either is to achieve their business objectives"

Buying Cycle for Fashion Products

• This detailed process outlines buying procedures for fashion products

The Fashion Garment Supply Chain

• The fashion supply chain's steps are graphically displayed from fibre to consumer

Managing the Supply Base

• Different performance levels are used to measure suppliers, which include varied criteria

How Buyers and Suppliers Work Together

• This explains the dynamics of the buyer-supplier relationship

Key Qualities to Look for in a Supplier

• Essential qualities of trustworthy vendors, outlining both professional and interpersonal skills are essential

Working successfully with suppliers requires...

Suppliers May Come to Buyer's Attention via:

• Various means of vendor discovery, like word of mouth, direct contact, trade magazines, management suggestions, or trade embassy involvement

Buyers need to constantly review each supplier's

Qualitative Performance Criteria

• Several factors influence a vendor's qualitative performance, including the level of fashion design innovation investment, general efficiency of the entire trading operation, and ethical trading standards

Quantitative Performance Criteria

• A vendor’s quantitative performance is measured by their investment in fashion, design, and innovative levels, the general efficiency of their operating procedures, and adherence to ethical standards established by the buyer's organization and international laws

Buyers are Under Pressure

• There's constant pressure to reduce vendor quantity to increase economies of scale and streamline transactions

By Rationalising...

• Rationalizing supplier numbers leads to several advantages

One Way to Evaluate Suppliers is to Set Up a Matrix...

• A method for evaluating a supplier's performance using relevant metrics and their weighting

Developing Product Categories and Selecting Lines

• Buyers frequently consider future seasonal merchandise while developing product categories and selecting product lines

Basis for Strong Partnership

• Being prompt in keeping appointments, actively listening to vendor presentations, confirming or canceling orders promptly, providing feedback promptly, and making vendor changes after proper analysis are essential for strong partnerships

What Do Buyers Expect From Vendors

• Buyers require assistance with inventory management, sales training, fixture arrangement, visually appealing displays, on-time delivery of quality merchandise, and efficient order fulfillment

Closer Buyer-Vendor Relationships

• Vendors and buyers communicate to address issues and streamline the ordering process; barcoding and computerized systems help monitor stock levels and identify problems

Choosing Product Categories

• Listing potential fashion product categories; determining the most suitable product category is key.

Selecting Lines

• This is the crucial step in choosing suitable merchandise

Relationship Between Buyer and Supplier

Buyer/Supplier Perceptions of Each Other

• Buyers and suppliers may have differing views on each other's behaviour

Building Partnering Relationship

• This is a key aspect of forming mutually beneficial vendor partnerships

The Key Barriers To Successful Supply Chain Partnerships

• Several factors hinder successful partnerships, including lack of trust, communication breakdowns, inefficiencies, and high investment amounts

Selecting the Right Supplier

Other Factors

• Several factors play a role in selecting the ideal supplier, like product quality, speed of delivery, fashion, and communication skills
• Compatibility between buyer and supplier teams, ethical sourcing and production, and the general ability of the vendor to anticipate fashion and trend needs, should be high on the buyer's list of priorities

Product Quality

• Ensuring products meet established standards of quality and durability is essential (to avoid returns)

Product Delivery

• Timely delivery is critical; the supplier should make planned deliveries within the specified time frame

Product Fashion Level

• The supplier should fully grasp the required fashion level; interpreting fashion requirements accurately is essential

Communication Efficiency

• The supplier should maintain regular and clear communication channels

Compatible Personality

• Ensuring compatibility between buyer and supplier representatives is pivotal for a positive interaction

Ethically managed production

• Sourcing and manufacturing should meet ethical standards

Building Blocks for Strategic Partnerships

• Key elements of building strong vendor partnerships include maintaining trust, having open communication lines, working with a mutual sense of goal accomplishment, and displaying consistency in commitment to the relationship

Strategic (Partnering) Relationships

• Retailers and suppliers who are invested in maintaining long-term relationships are those who see partnerships as providing mutually beneficially opportunities to engage with each other

Dangers of Partnership Approach

• Interdependence and complacency can be harmful to the partnership

A Portfolio of Supplier Relationships

• Categorizing suppliers and their role in the relationship provides an organized overview of relationships

A Continuum of Retailer-Supplier Relationships Development

• This demonstrates the continuum of vendor-buyer relationship development

Questions on Managing the Supply Base