AM 270 Week 13
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This 4 page Class Notes was uploaded by luke koppa on Monday April 25, 2016. The Class Notes belongs to AM 270 at Colorado State University taught by Ruoh-Nan Yan in Winter 2016. Since its upload, it has received 21 views. For similar materials see Merchandising processes in General at Colorado State University.
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Date Created: 04/25/16
Week 13 AM 270 Chapter 9 Merchandise Assortment Assortment Diversity o To examine relationship between assortment volume and assortment depth o Measured by Volume Per SKU for the assortment (VSA) Total # of units / # of SKUS in the same assortment o Based on VSA, merchandisers can determine how diverse or focused an assortment is o Given the same assortment volume: Smaller the VSA, the more diverse the assortment More SKUs, more depth, fewer units per SKU Larger VSA, more focused Less SKUs, less depth, more units per SKU Example: 150 tshirts w/ 2 options for set of SKUs Volume= 150 Depth 1 = (2x2x4)= 16 SKUs o VSA= 150/16= 9.38 focused Depth 2 = (3x3x4)= 36 SKUs o VSA= 150/36= 4.17 diverse o Diverse Assortments Fewer units per SKU VSA usually 5 or less on average o Focused Assortments More units per SKU VSA usually 10 or larger on average Chapter 11 Global Sourcing Chapter 11 Global Sourcing Apparel Imports by Country o China 33.5% o Vietnam – 12.5% o Then Bangladesh, Indonesia, India, Mexico o Share from China is decreasing,, Bangladesh is increasing due to China’s increasing wages and Bangladesh’s low wages Sourcing o Process of procuring products to meet a company’s objectives Products include raw materials, labor, findings/trims, finished goods o To determine who, where, what, when, how, and for how much $$$ Domestic or foreign In the past it was almost always the most cost efficient way Currently quality, services, other aspects of production are important Entities involved o Sourcing company (who is seeking products) Manufacturer or retailer o Contracting company (Who is providing/producing the products) Factory o Export trading company Intermediary between the sourcing company and potential contractors o The Agent Hired by export trading company Native to contracting company country 3 options for sourcing o Internal manufacturing Better quality control Much more expensive up front Most suitable for stable product lines o External manufacturing Less investment Less quality/flexibility Oversees sourcing cultural/communication differences create challenges o Combination of both External Sourcing o Full Package Sourcing (FPS) Contractor provides everything required to make the garments Product design, development, raw material sourcing, production, etc… Li & Fung Advantages: Limited technical knowledge required Limited investment o Cut, Make, Trim (CMT) Sourcing company provides design, product specs, and materials Contractor provides labor only Common in the Caribbean Basin (Costa Rica, Jamaica, etc…) Advantages: Control over design and raw materials o Flexibility o Less threat of knockoff Contract provides greater security Factors to consider o Cost Direct labor/materials and manufacturing overhead Setup for communication Buy computers, set up internet for factories in order to communicate Courier service – moving samples back and forth between factory and headquarters Buying office, agent, or staff for quality inspection Custom brokers – people licensed for international trade Help with exports of raw materials, cut parts, and finished goods Minimum wage Bangladesh $39/month India $71/month China $138 $262 /month depending on province Korea $800/month Consulting Legal consultants – help deal with international regulations Manufacturing technical specialists – monitor manufacturing capabilities and quality of factories Banking specialists Freight specialists Currency exchange rate $1 = 6.5 Chinese yuan Imports to US from China have become more expensive o Capacity Financial does factory have $$ to grow if necessary? Plant Space do they have the space to add equipment/laborers if need be? Workforce are workers sufficiently skilled/ can they find new workers if necessary? o Minimums Important factor for fashion goods Sometimes sellability is uncertain wouldn’t want to buy a large quantity o Labor skills/productivity o Equipment assessment o Quality evaluation Look at products that the factory has made before Also look at sample, but be aware that samples are sometimes not a true example of mass production level quality o Throughput time Time it takes for an order to be processed from authorization to shipping merchandise for sale Basic goods vs. fashion goods Timing is very important for fashion goods (be in line with current trends) o Shorter the better
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