Michael Klein, president and CEO of IDQ, has been involved with category management solutions since his days as CEO of Murray's Discount Auto Stores. As a member of the Automotive Aftermarket Industry Association's category management committee, he was one of a key group of retailers that helped develop the Aftermarket Industry Monitor.
How does category management take bias out of the inventory process?
A particular buyer might have a bias toward a vendor. For instance, you might not like a particular air freshener that comes in, but had you been armed with category management data, you might have realized that the scent of that air freshener sold strongly with some particular group of customers. But otherwise, you wouldn't have known that.
Those biases used to occur all of the time. There were no analytics involved that allowed collaboration between the vendors and the buyers. We needed that data.
Retailers got smart fast and shifted the bulk of that analysis onto the manufacturers' shoulders. We're given a recipe that tells us how to do the data analysis. This has helped with the collaboration piece because each partner has a slightly different perspective. They have to translate that for us so we can provide that data in the form they want it.
What changes or advancements would you like to see occur in inventory/category management?
This may be a little “pie in the sky,” but I think everyone along the value chain recognizes that there's too much inventory in the system. If we could somehow continue this collaboration without lifting up the kimono, so to speak, and be able to understand where all the parts are in the system, we could take a lot of inventory out of the system and become more efficient. We might have a slow moving part, you warehouse 10 of them in an area and everyone carries two, and maybe the whole marketplace only needs two. We've talked about this notion of how we could get there, and there could be a tremendous upside. But there's a lot of work to be done.
Another area would be defects. We're just beginning to investigate some reasons for returns, but it's a very expensive process for a retailer to return something back through the chain. Sharing the reasons for a return amongst ourselves might help us be more efficient.
Michael Klein, president and CEO of IDQ, has been involved with category management solutions since his days as CEO of Murray's Discount Auto Stores. As a member of the Automotive Aftermarket Industry Association's category management committee, he was one of a key group of retailers that helped develop the Aftermarket Industry Monitor.
How does category management take bias out of the inventory process?
A particular buyer might have a bias toward a vendor. For instance, you might not like a particular air freshener that comes in, but had you been armed with category management data, you might have realized that the scent of that air freshener sold strongly with some particular group of customers. But otherwise, you wouldn't have known that.
Those biases used to occur all of the time. There were no analytics involved that allowed collaboration between the vendors and the buyers. We needed that data.
Retailers got smart fast and shifted the bulk of that analysis onto the manufacturers' shoulders. We're given a recipe that tells us how to do the data analysis. This has helped with the collaboration piece because each partner has a slightly different perspective. They have to translate that for us so we can provide that data in the form they want it.
{C}What changes or advancements would you like to see occur in inventory/category management?
This may be a little “pie in the sky,” but I think everyone along the value chain recognizes that there's too much inventory in the system. If we could somehow continue this collaboration without lifting up the kimono, so to speak, and be able to understand where all the parts are in the system, we could take a lot of inventory out of the system and become more efficient. We might have a slow moving part, you warehouse 10 of them in an area and everyone carries two, and maybe the whole marketplace only needs two. We've talked about this notion of how we could get there, and there could be a tremendous upside. But there's a lot of work to be done.
Another area would be defects. We're just beginning to investigate some reasons for returns, but it's a very expensive process for a retailer to return something back through the chain. Sharing the reasons for a return amongst ourselves might help us be more efficient.
