In the jewelry findings business and in the jewelry business in general, the management of inventory is often the key to success as well as an aspect of the business that is challenging and always changing. As the inventory manager at Nina Designs, I would like to share my current approaches to inventory management that may help you or inspire a dialogue of further discussion on the topic.
Today I would like to discuss the topic of New Items and Opening Orders. We receive an overwhelmingly positive response to our new styles and we keep this in mind when placing our opening orders. We do our very best to keep consistent inventory on all of our items and especially our new items.
New item we accurately forecast from initial order to re-order
There is a trend in new styles in which there is a burst of activity when they arrive on the website for the first time. After the initial burst, the activity will level off for most styles, and for some, it will continue (these often become our best sellers). We have chosen to respond to this initial burst of activity by ordering a large volume in our opening order. This volume is often determined by reviewing the sales of other similar items that we have had for an extended amount of time. We will gradually sell through this large volume over time and we anticipate no loss in sales because we will be sufficiently stocked to not only have the items available for our customers, but to have a large enough time span for reviewing sales for accurate re-ordering.
To continue reading about “panic re-orders,” click here.
Past experience has shown us that being conservative with an opening order can lead to what I call “panic re-ordering” down the line. When you order conservatively in an opening order of new styles there is a potential that these items will fly off the shelf so quickly that you sell out of inventory before you have a re-order in progress. Now you are in a position of creating a “panic re-order”. This panic has the potential to result in over ordering in your re-order because you are focused on never running out again. This is a recipe for disaster because not enough time has passed to determine how the sales will look in the future – your re-order is based on the initial peak interest and projecting this into the future. You are re-ordering from an emotional response rather than thinking clearly. Eventually, ordering from the position of panic will lead to being overstocked on these items in the future. The management of overstocked items is not only time consuming but the inventory itself is holding up valuable dollars that you could be spending on developing fresh and new styles and design ideas.
Aladdin's Lamp: Overstock item due to panic re-order
I hope this blog series will help you with your next order or re-order. In my future blogs for this Inventory Management: The Shifting Target series, I will be writing about “Reviewing Past Sales and Projecting into the Future” and “Being Careful of the Outliers”
I look forward to your responses or further questions on this topic.
