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tory item. Then it can start to identify pricey items that are languishing in stock, as opposed to being sold. From there, the provider can start examining whether or not they can move those items faster, and how they might possibly move them faster, or they should replace those items with something that might sell better.
“If something is sitting there forever, your cash is tied up because
of this item that is sucking up space that you can replace with some- thing that’s going to sell faster,” says Maria Markusen, the director of Operations & Development for the VGM Retail of the VGM Group Inc., adding that the some big box retailers have gotten so sophisticated that they check inventory turns multiple times an hour, because it can let them promote a speci c item that is suddenly moving for whatever reason (which, in turn, leads us to our next metric).
“We look at inventory turn times by vendor,” says Wayne Slavitt, Founder and CEO of retail-only mobility provider business Mobül, the Mobility Store, located in Long Beach, Calif. “It’s a tough road, because we have a large inventory, and when a customer comes in, we have to have what they need, but we also don’t have to have a lot of inventory sitting around waiting for that sale.”
“We have a very good relationship with our key vendors,” Slavitt continues. “... These guys are partners with us, so if some inventory isn’t moving, then it becomes part of the partnership to gure out how we can do a better job.”
Shaping a Purchasing Strategy
Optimizing inventory turn times starts with making the right purchasing decisions, and there are a variety of criteria that go into that process.
“I think both worlds — retail and funded — from an inventory stock stand- point are similar, but there are some differences,” says Rob Baumhover, director of VGM Retail. “I think the similarity comes from you’re always keeping or wanting to keep the amount of stock t what your customers are looking for or what those customer patterns are. ... Everyone’s obviously looking to keep their inventories in line with that piece.
“I think where you get some of the differences though from a retail perspective is when it comes down to seasonal trends or marketing efforts or speci c sales or promotions that you have going on,” he says. “That’s obviously when that inventory number uctuates a little bit in terms of having a little bit more stock than you probably typically would.”
That said, there is another prevailing element besides seasonal uc- tuations, according to Baumhover. From a retail standpoint or an incre- mental product standpoint, providers want to pay close attention to the
top 20 percent items that are really driving the business.
“You always want to keep anywhere from a month to two months’
worth of stock so you always, always have a backup plan if something were to go awry, such as a vendor being out of stock, weather-related shipping issues, or customer response in terms of, ‘Hey, for some partic- ular reason, this week, we had a big increase in customer traf c looking for that product,’” he explains. “You build yourself that cushion to make sure that you provide excellent customer service..”
Of course, stocking two months’ supply can put providers that might be trading in more expensive inventory in a trickier position. But the scenario is a little more nuanced.
“I think that’s where you obviously look at it from a top down view,” Baumhover notes. “Twenty percent of the items are doing 80 percent
of your business. If you look at it that way, in some of these providers’ stores, you might only be looking at one or two items. When you build it that way, you’re not looking at a lot of money because you’re looking at maybe one or two items, depending on what that category is.
“For instance, if it’s bath safety, you might be looking at two or three items that are doing eighty percent of the business, and if you build just those three items, again, you won’t be having this huge array of stock sitting around, because you’re focusing from the top down, that 80/20 rule,” he explains.
Vendor Partners
The manufacturers and distributors that providers select as vendors play a role in smart purchasing. Baumhover says there are various purchasing considerations in that regard.
“When it comes to narrowing down who that vendor partner is, there are four or ve big ones that you can look at,” he says. “What is their
mix from a brand or a quality standpoint? Do they have one particular line, or they have a couple different lines? By that, then you can compare that to, what does your competition have? What’s your current customer base looking for?
You can obviously get a different line that obviously what the vendors have in stock,” he continues. “Do they have a good, better, best? I’m not necessarily saying you should carry a good, better best, but it gives you an option as a provider to take a look at something different than the competition maybe has in your area and be a little different.”
Pricing obviously is another important element in purchasing, but again, the consideration is more nuanced than it is obvious or routine. “A lot of people bring up pricing,” Baumhover say. “But it’s not always
about the cheapest pricing if you’re comparing apples to apples — a hme-business.com | April 2018 | HMEBusiness 23
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“It’s one thing to have a great product mix and great pricing, but what does the vendor offer you, the provider, in terms of training, to learn about the product, and more importantly, to be able to sell the product?”
— Rob Baumhover, VGM Retail
“If something is sitting there forever, your cash is tied up because of this item that is sucking up space that you can replace with something that’s going to sell faster.”
— Maria Markusen, VGM Retail