Friday, July 5, 2013

Pin Interest on JIT Inventory Management

Nordstrom uses Pinterest in a way that might stimulate ideas for your profitability. Bloomberg Businessweek reports that the retailer is employing the pinboard-style photo-sharing website to facilitate Just-In-Time (JIT) inventory management.
     The beginnings of JIT were in manufacturing, where the objective was to have raw materials arrive no earlier or later than when the materials would enter the production process. The manufacturer thereby saved on cash outlays to pay for the materials, storage expenses, and spoilage or damage. The advantages for a retail business are similar. Plus with JIT, you reduce the chances you’ll be stuck with last season’s fashions.
     Nordstrom staff monitor which items are pinned most often on Pinterest, check that there’s sufficient depth in inventory of those items, and order more when necessary to be there just in time for the shoppers. This works for Nordstrom because of its compelling presence on Pinterest. The retailer has 4.5 million followers. By comparison, Macy’s has 47,000, and your store probably has fewer yet.
     Still, the idea of monitoring social media sites to inform merchandising decisions could work even more cleanly for you than for Nordstrom. As the Bloomberg Businessweek article points out, a most-pinned dress near one Nordstrom might not be so popular at another store. The locally-based small to midsize retailer should have more consistency in preferences.
     The whole idea of JIT is working in retailing because that’s how consumers are buying. The number of items American shoppers keep in their pantries has dropped. Households are getting smaller as more people choose to remain single or are living alone in their senior citizen years. And an aversion to preserved foods and yesterday’s technology leads our customers to wait until the need must be met. Because of the prolonged economic recession, consumers have taken on the habit of purchasing clothes in season rather than ahead of time.
     Much of successful inventory management depends on cycles. Annual weather cycles are somewhat predictable and they affect large segments of your target customers the same way. In early January, you can pretty much count on everybody being cold if they go outside when your store is in Buffalo, New York and quite warm when outside a store in Adelaide, South Australia. So you’ll stock more stay-at-home and go-out-protected items at one time of year than at the others.
     Nordstrom’s Pinterest-style method can add to the precision, bringing you closer to JIT.

Click below for more: 
Be In-Stock for the Just-In-Time Shopper 
Sell to Fit Story Product Placement 
Merchandise to Fit Purchasing Cycles 
Downsize for Elderly Shoppers 
Filter Information to Create Your Future

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