Sourcing, sometimes also referred to as merchandising and buying, is an area which encompasses buying products from vendor/supplier/manufacturer and then selling. Merchandising also includes displaying of products in an effective way, making it attractive for the customers and promoting buying.
The sourcing strategy is an important area. How much to buy and when to buy are some of the factors which influence the negotiations. The customers' interests and demands also influence the sourcing in a big way.
The aim of merchandising is to improve margins, thereby increasing profitability. Product pricing across channels is another area which needs to be looked at. Let us look at some of the KPIs and use cases:
KPIs
- Merchant/Vendor performance (Understanding how each vendor is performing. Useful to rate vendor and negotiate rate contracts)
- Historical buying trends
- SKU (Stock keeping unit)wise performance analysis (which products are doing well and which arent)
- Revenue analysis over time/brand/channel (performance analysis across various dimensions)
- Forecasting and what-if analysis (Understand impact of price revisions via what-if and forecasting helps keep stake holders updated on future performance estimates)
Use Cases
- SKU detail analysis
- Merchandising buying effectiveness
- Discount analysis
- Vendor/Manufacturer performance
- Margin across products/brands
- Assortment planning
- Category analysis
- Increasing shopping basket size