Quantifying the benefit of sourcing on shorter lead times
Local sourcing on shorter lead times can be a key contributor to a product’s commercial success in the market, particularly if the product in question is highly fashionable and trend sensitive. The shorter the lead time, the greater the insight a buyer will have in understanding the latest customer trends before a buying decision is made. As a result, the right buying decisions can be made more often, with more full price sales, fewer markdowns and less capital tied up in unsold stock at the end of the season.
However, predicting the commercial success of a product is using non-price factors such as shorter lead times is difficult to do, with the challenge being the ability to reliably quantify the impact of these factors on sales performance. As a result, buying decisions tend to be largely based on cost price, as this is the most tangible and known factor available when trying to predict the profitability of a product in the market.
BMA has been working to overcome this challenge by developing and piloting a tool with industry that simulates the commercial performance of a product, factoring in the impact of shorter lead times and other non-price factors. The objective is to quantify the financial benefit of these factors, in addition to price, so that buyers can effectively trade lower prices for local sourcing on shorter lead times when deciding on where to purchase a product. Beyond price and speed, the tool also factors in delivery reliability, quality, and the costs of having of having money tied up in unsold stock.
To find our more about our sourcing tool and how it can help in your buying decisions, contact us on support@bmanalysts.com