Thought to the Floor- VI- Fiscal Planning and Inventories

INVENTORY
 

When starting a business, it is very important to consider your inventory. Many small start-ups begin with very little inventory. Especially if you are the only employee. However once you invest in a market or storefront the inventory needs more depth to allow for growth.  This post I will provide examples of size ratios, however this is for only small companies and maybe different based on fit, anthropomorphic index, and esthetic.

XS-XL – KNITS

I suggest that as a small start up you create some signature basics. This allows you to have a deeper inventory and you can sell the items year round. You will also begin to see what is to much or to little for unit production. Plan two or three year round basics. Manufacturers in many cases have a minimum of what they will produce.

Small Volumes – great for first attempt start-up. This selection allows  for a manufacture to break even on the cost vs labor to make your goods. Quick Fact: Garmentos of  the 1920’s-1980’s always purchased goods in 12 unit ratios. The practice in some cases is still used.  The example below is a 12 unit ratio

 

XS

S

M

L

XL

2

2

4

2

2

 

The ratio below is a good increase for a growing business, A good rule of thumb is to use this ratio for basics and the small ratio above for more seasonal styles you maybe introducing.  Example below is 18 units.

XS

S

M

L

XL

2

4

6

4

2

0-18- WOVENS- PANTS, DRESSES, BLAZERS, TAILORED GOODS

 

Below is a example of the full misses size range. Notice that some sizes may not be produced. This can change based on your customer and region. This ratio is good for items that maybe easily tailored.  Keep in mind that bottoms can be a risky investment, whereas skirts and dresses can sell a bit better for a initial increase in your inventory. Also, your pants really need to fit amazing for consumers to purchase over and over.

0

2

4

6

8

10

12

14

16

18

2

2

4

4

6

4

2

Another aspect of inventory will be a matter of ROI. You want to talk with various manufactures about what they are willing to produce and at what price. I suggest trying to find a manufacturer that will cut , bundle, sew, and finish your goods.  You also need to keep in mind any send outs and dye methods that may also be price or unit issues during production.

If you are a wholesale brand then you want to consider what your target B2B buyer will purchase and then produce to those ratios. In many cases this is better and easier. However you want the customer to already be committed to the product.  For example a wholesale brand may create several samples and take them to market. During market the wholesaler may receive several orders on goods. Once you tabulate order and work with a manufacturer on price, you may find that some styles are not fiscally worth producing.  However you may be able to work with clients and see if they will buy into the more successful styles at a lower rate. This will allow you to increase units and lower production cost. Inventory is very much a key player in your fiscal success and future growth. Always be judicious about how you spend the money in this area.

 

If you would like assistance with figuring out what a good inventory mix for your brand might be, please visit http://www.katherineschildmeyer.comand leave a message in the comment board. I also have a cost sheet inventory program that I have written specifically for small organizations. This will allow you to figure out a cost and unit mix that will benefit you.

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