Cash Flow and Inventory Management - NAMM：现金流和库存管理-纳姆.pptx

How to Manage Inventory For Maximum Profit By George Hines – President of George’s Music;“No Retailer ever filed bankruptcy because their turns were too high” -Michael Gould Chairman of Bloomingdales; Question;Problem: Too Much Inventory;PROFITS;We need to turn the; Solution:;Universal Laws: “Law of Expectation” Make a decision ;$10,000;Step 1 – Understanding GMROI ; Example 1 Store Sales for the year are 1 million Gross margin % is 30% Gross Margin $ for the year is $300,000 Avg. Annual BOH Inventory is $300,000 $300,000 (GM$) ÷ $300,000 (Avg. BOH$) = 1 (GMROI);Two Ways to Increase GMROI: ;1% increase in Gross Margin on 1 million dollars in sales = ;Example 2 – Increase Margin Store Sales for the year are 1 million Gross margin % is 40% Gross Margin $ for the year is $400,000 Avg. Annual BOH Inventory is $300,000 $400,000 (GM$) ÷ $300,000 (Avg. BOH$) = 1.33 (GMROI);The NEW Norm: More from Less Embrace the 80/20 Rule;Example 3 – Increase Turn Store Sales for the year are 1 million Gross margin % is 40% - Increase Turn Gross Margin $ for the year is $400,000 Avg. Annual BOH Inventory is $200,000 $400,000 (GM$) ÷ $200,000 (Avg. BOH$) = 2 (GMROI); REVIEW Example 1: GMROI is: $300,000 (GM$) ÷ $300,000 (Avg. BOH$) = 1 Example 2: Increase Gross Margin $ GMROI is: $400,000 (GM$) ÷ $300,000 (Avg. BOH$) = 1.33 Example 3: Increase Gross Margin and Turn GMROI is: $400,000 (GM$) ÷ $200,000 (Avg. BOH$) = 2.0;Step 2: Invest Wisely – Focus On Profits; Cleansing the Inventory;Budgeting; Purchase Inventory by GMROI;It’s all about the;Funnel Down;What is your Mix of Goods?;Large Goods vs Small Goods;35% Margin 3 Turns ;Vendor vs Vendor;Guitars – Dept A;Department vs Department;What is your Item Mix?;Item vs Item;Measure: Key Indicators Chart;Review;Make Inventory an ASSET Not a Liability;Retail Owners Institute/;