How To Get Rid Of "High Inventory" Entanglement In Garment Enterprises

Over the past year, whether it is a fast fashion brand for light assets, or a heavy asset production and processing industry, including a foreign trade sales enterprise, the clothing enterprises adopting different marketing modes can not get around a topic.

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After the emergence of high inventory, everyone tried to digest inventory and try to keep inventory back to a reasonable level.

However, reasonable control and prevention of inventory is far more strategic than how to digest inventory. Inventory problems should be prepared without worry.

The essence of inventory

According to the formula "inventory = production and sales", it is easy to see that the production of stock is not much production or less sales.

Further, the inventory reflects the business efficiency of the enterprise. On the one hand, it embodies the efficiency of capital turnover. On the one hand, it embodies the rate of return on assets.

Further analysis shows that the essence of inventory is the degree of enterprises meeting the needs of consumers.

Inventory is the cost. Enterprises usually use the way of maintaining the gross profit level of the product to share the inventory cost. This will reduce the demand of consumers in terms of "low price".

Drucker said: "business is to create and meet the needs of consumers."

To some extent, the formation of inventory can be said that enterprises fail to correctly create or satisfy consumer demand, which has a gap in meeting consumers' demand for "material beauty".

Therefore, the essence of inventory reflects the ability of enterprises to satisfy consumers' needs.

Stock formation and control

Adopting different marketing modes

The causes, prevention and control methods of inventory are different.

B2C mode

Although customers are a successful example of B2C mode, they have not been able to bypass the "inventory" entanglement. Whether they are rumors of huge losses or uncertainty of IPO, we all love to speculate on high inventory.

Let's take all customers as an example to see the cause and control of B2C's clothing enterprise inventory.

All customers occupy the two innate advantages of inventory control, the Internet and fast fashion.

E-commerce is an end to end way, which directly crosses the distribution and retail links at all levels, and evade the impact of each link on the inaccuracy of demand forecasting.

At the same time, as a fast fashion brand, its relatively short production and marketing cycle is also a product feature to avoid high inventory.

Under such conditions, the high inventory of customers in the previous section was mostly caused by the optimistic estimation of sales in rapid expansion and rapid expansion.

The annual growth rate of more than 100% (more than 300% in 2010) has prompted van guest to propose a target of "10 billion sales in 2011".

In addition, in order to achieve continuous growth and billions of goals, customers accelerated the pace of category expansion, product terminals easily crossed the past, but consumers' mental cognition of "fan" brand did not keep up with the new category expansion.

Another point is that all Internet apparel enterprises will encounter difficulties: as they have lost their inventory buffer pools across all distribution and retail links, all inventories are reflected in the enterprise itself, which will also magnify the effect of "high inventory".

Whether it is the cost of supply chain or the assurance of consumer demand,

The advantages of clothing enterprises are obvious.

For example, through page analysis technology, based on click, browse, collection, purchase and other actions, analyze the popularity of different products and future demand plan.

Fast response supply chain technology can also achieve a "small number of" production mode.

Combined with the characteristics of B2C mode, enterprises of this kind can avoid high inventory by means of "speed against scale and profit by turnover".

Although small scale production will lose the cost advantage, it can raise the rate of return on investment through high capital turnover.

In addition to the technical level, clothing enterprises in the B2C mode should pay special attention to "rational judgement and peace of mind". Only when we accept the reality and grasp the future from the mind can we grasp the development rhythm of enterprises.

Fast fashion mode

Fast fashion is "fast, small, many times". Although the fast fashion brands such as American Apparel, Semir clothing and other fast fashion brands have become the pride of the garment industry with the speed and volume of development, they can not avoid the problem of high inventory.

In contrast, clothing enterprises such as ZARA, H&M and UNIQLO rarely have inventory problems.

From the point of view of channels, ZARA, UNIQLO and other fast fashion mature enterprises are direct stores, while domestic fast fashion enterprises such as Smith Barney, Semir and so on are all "direct + Affiliate" mode, and even agent links, which form the difference between the two party inventory management.

Franchisees or agents have increased information communication and feedback links, and the demand plan has been magnified step by step because of the redundant links, and the bullwhip effect is remarkable.

This "exaggeration" is tolerated by enterprises. On the one hand, it is the practice of industry. On the other hand, it shows that there is no mechanism for controlling inventory between franchisees, agents and enterprises. The return rate and replacement rate of 15%. 20% make franchisees and agents do not have the power to store and control.

According to incomplete statistics, in China's fast fashion apparel industry, production and sales ratio is maintained at 60%? 70%, which is a good level, while ZARA's production and sales ratio is over 85%.

In recent years, the United States and costumes have been consciously increasing the proportion of Direct stores and gradually reclaiming franchise franchise from franchised stores.

China's local fast fashion brands should use more information from direct stores to capture consumers' needs and market trends as much as possible, so as to improve product design and product integration capabilities.

At the same time, based on the management of more direct stores, the supply chain and process management are further refined.

Chinese local fast fashion brands only learn "fashion", and the "fast" based on the speed of the supply chain needs to be improved in practice.

In the process of learning "fast" to benchmarking enterprises, local fast fashion enterprises should pay attention to their actual situation.

Although the franchise system increases the "bullwhip effect" in the demand planning link, the franchisee is also an indicator of inventory barometer. When the franchisee's inventory is large, the order of the next order season will generally decrease; and when the inventory is realized, the order will increase generally, which forms a negative feedback mechanism of franchisee.

Therefore, in the process of "strengthening direct and weakening alliance", we should pay special attention to how to estimate this change smoothly when we lose the negative feedback mechanism.

In addition, with the increase of the proportion of Direct stores, the fine management and supply chain reaction speed of Direct stores should be further upgraded to adapt to this change, so that the inventory under fast fashion mode will be scientifically controlled.

The marketing mode of sportswear is similar to that of fast fashion. The key is to quantitatively predict the impact of franchised stores and direct stores on the inventory of enterprises and franchisees, and the smooth estimation of negative feedback mechanism in the adjustment of franchises and franchises.

Leisure and business models

Brand casual wear and business clothing are generally direct, affiliate and agency modes, but their product characteristics are very different from "slow" fashion or "unhappy" fashion.

Because target consumers are not very sensitive to such clothing products, they are products.

It has a slower pace, a longer life cycle, and a stronger buffering ability of fashion elements. Even if inventories are built, the sales and popularity of their products will last longer.

In addition to paying close attention to the impact of direct placement, franchise and agency on inventory problems, we should pay special attention to the grasp of the trend and the interpretation of consumer demand.

For products with long life cycle, once there is a misreading of the fashion trend, they should stop immediately or turn over the bill. The market should not be hungry, not to support or compensate for the losses, so as to ensure the healthy turnover of funds.

For apparel companies with high inventories, concerns should not be focused on how to deal with inventory.

Promotion and other inventory handling methods are only temporary solutions, and the prevention and control of inventory is fundamental.