ART OF "LEAN" AND HIGH-PERFORMING ASSORTMENT CREATION

How to create a “Lean” and high-performing assortment? 

This month, I am covering a couple of essential factors to consider while developing the next season’s collection to help you and your team build a more robust collection that drives higher revenue with fewer variations and lean manufacturing in mind. 

Interested to learn more about how to get this done? Drop a comment below! 

I have covered the first two steps necessary in building an assortment for the next season in the past few weeks. To review, we discussed:   

STEP 1: IDENTIFY WHAT HAS WORKED AND IDENTIFY WHAT TO CARRY OVER, EXPAND ON, AND ONLY THEN DESIGN NEW 

Tools to consider 

•   80:20 rule  
• Vendor scorecards 
• 60:40 ratio for a new assortment 

STEP 2:  DEFINE WHAT WAS WORKING WELL AND WHAT HAS FAILED TO WORK IN THE PAST SEASONS TO FIND THE OPPORTUNITY TO IMPROVE IN THE NEXT SEASON 

• 5 Why’s
• Fishbone Diagram 
•  Process Value Analysis 

Today I want to discuss the next step in efforts to build a high-performing and profitable for your business assortment, which brings me to the third step set up a process for effective sourcing and shift the focus toward high-performing products for your business. 

Let’s begin and define what I mean by effective sourcing. Effective sourcing means not only finding the right product for your brand with style, quality, and speed to market that matches customers’ requirements or finding the vendors that can deliver. It is also essential to consider the time your team is spending to meet with each vendor, the time it takes to get product information, the cost from the vendor, and how much back and forth you spend to negotiate and confirm selected styles and cost. Effective sourcing also considers how the information is communicated between buying or sourcing teams to the vendor and back. Effective sourcing also means how prepared your team was before it started to meet with the vendors. Let’s take a look at each factor together. 

Now that you identified which product and vendors have been driving 80% of your revenue, sourcing becomes a much simpler task to find the right product and vendors that match the winning parameters for your brand. You can now steer the conversation with the existing and new vendors about the styles that have been performing, the quality that your customer responds to, how much you are projecting to sell, and how often you are planning to flow your inventory. Even though today it is hard to find the vendors that can deliver on time, we discussed strategies in previous posts that you can adopt in the inventory planning that will help you stay in stock and have a consistent product flow throughout the season. 

The biggest pitfall that most of us face is trying to manage and source too many vendors. Large vendor lists are challenging to manage and often consume unnecessary resources and time for your team. Or, if you do not have a backup vendor for the essential product that drives 80% of your sales, you are always at risk of not getting the product on time and losing the opportunity to sell more. The number of vendors for each brand will vary significantly depending on the size of the assortment and the variation of the retailer's product categories. However, it is essential to note that for 20% of your product offering that drives 80% of your sales, you must have one primary default vendor and one backup vendor that can pick up the orders in case of unexpected delays, shortages, or cancelations. 

Most of us in the industry focus on the first prominent factor of sourcing to get the right product that we often forget to look at the time and processes it takes to source, meet, and review the line of a new vendor, following with how long it takes to confirm the product information and cost. This is an essential factor in optimizing sourcing and eliminating the waste of valuable time. Some questions below to consider when evaluating your current sourcing process:

• Do you meet with every vendor in person or through a virtual meeting? – Instead, can you batch them so that your team can meet multiple vendors at once? Consider batching vendors by product category and inviting multiple vendors at once to your showroom to present their lines. First, this creates healthy competition for each vendor to wow you and your team with a superior product offering to the other vendors in the same pod. It also helps in later negotiation of the product cost. But most importantly, it reduces the number of meetings and saves valuable time. 
• Do you have a clear plan and placeholders for the product you are looking for before starting sourcing? When you scout for products without a clear plan, it is more time-consuming and less effective for your team. 
•  Do you use a standardized form to collect information from the vendors before taking the time to meet them? – an electronic form with all standard questions like MOQ, Lead times, Company information, and more can be a helpful tool to reduce time during the vendor meeting and then later adopt the vendor into your ERP, PLM or Vendor Portal. 
• Once your team selects the product from the vendor, how do the product information and costs collected from the vendor? – a standardized form sent to the vendor to fill out as a follow-up of the meeting can be an easy optimal solution instead of taking notes and then manually keying in the PLM systems. If your product management system can accept the load sheet with populated information from the standardized form, consider creating the form matching the load requirement to save time for reformatting. 
• Do you have a vendor portal where vendors can access and fill in product information and costs and update status throughout product development and sourcing processes? – vendor portals are the ultimate step to automation and eliminating waiting times and loss of information. 
• If you do a physical line review or style out, how does your team collect the vendors’ samples and return them? Be sure to require all samples to have a prepopulated information tag filled in and attached by the vendor before sending the samples. This will save time for your team to prepare samples for the style out. You may give each vendor the standard blank information tags or have them download and print from the vendor portal.  Consider adopting the strategy of ordering samples in fit model size to allow your team to look at the style and address the fit simultaneously as the style out. This often reduces the number of samples, time, and cost, allowing you to get the fit right from the first time after the style is adopted. Also, for the samples return, instead of shipping each vendor proto samples after the style out, consider creating bins for each vendor that your team will fill up with unwanted samples and ship in balk at the end of each season planning. This can save up to 30% of your existing sample shipping costs and the time it takes to prepare individual packages. 
• How much back and forth do you spend to negotiate and confirm selected styles and costs? – consider adopting the principles of the vendor portal with automation for cost negotiations and product information collection. In addition, have a standardized cost sheet calculator with projected retail range for each product category and type. The buyer can use it at the meeting to quickly determine the acceptable cost and margin to negotiate on the spot. 
• How is the information communicated between buying or sourcing teams to the vendor and back? – consider automating and eliminating long meetings and dreading the volume of emails. If you can batch information flow, it will save your team time. 
• LEAN Was your team prepared and had a plan with placeholders by fabrication or product category and projected number of SKUs or graphic variations before it started to meet with the vendors? – planning for your sourcing initiatives will help your team stay focused and concentrate on the essential products for the next season instead of looking at everything and then trying to sort through to find what is needed. Also, note that the trend and vision boards must be completed and included in the packet for each buyer to help them stay on course while sourcing to ensure filling in the voids and finding the product variety needed to make solid selections for each trend story your brand is planning to make in the upcoming season. 

I love to hear what strategies work for your team to ensure effective sourcing.