Open-To-Buy (OTB) is merchandise budgeted for purchase by a retail store during a certain time period

that has not yet been ordered. In other words, how much inventory can I buy without getting myself in
trouble. It is also the process of planning merchandise sales and purchases.
Purchasing refers to a business or organization attempting to acquire goods or services to accomplish its
goals. Typically the word “purchasing” is not used interchangeably with the word “procurement”, since
procurement typically includes expediting, supplier quality, and transportation and logistics (T&L) in
addition to purchasing.
Procurement is the process of finding, agreeing terms and acquiring goods, services or works from an
external source, often via a tendering or competitive bidding process. The process is used to ensure the
buyer receives goods, services or works at the best possible price, when aspects such as quality, quantity,
time, and location are compared.
At a retail in-store level, merchandising refers to the variety of products available for sale and the display
of those products in such a way that it stimulates interest and entices customers to make a purchase.
Fashion retail Merchandising, refers specifically to the stock planning, management, and control process.
This position requires well-developed quantitative skills, and natural ability to discover trends, meaning
relationships and interrelationships among standard sales and stock figure.
A company that utilizes a deep assortment to compete in a market does so by carrying a vast array of
colors, sizes and other options of a particular category.
A wide assortment strategy is one that aims to have at least one of every product category.
A scrambled assortment strategy is used to attract customers outside of a company’s main target audience
by offering products outside of its core offering. An example of this might be an ice cream shop that
chooses to also offer frozen yogurt or Italian ice in order to attract people who are not looking for ice
cream.
A localized assortment strategy is one that optimizes inventory based on a particular store’s location.
Companies that utilize these types of assortments also typically will use predictive analytics to assist in
their decisions.
Stores that want to offer an assortment that appeals to the mass market, in that there is a large assortment
of products available in a wide variety of options, aims to cover all bases so that anyone looking for
something could come in find what they need.
In the retail industry, a buyer is an individual who selects what items will be stocked. Buyers usually
work closely with designers and their designated sales representatives and attend trade fairs, wholesale
showrooms and fashion shows to observe trends.
Category management is a retailing and purchasing concept in which the range of products purchased by
a business organization or sold by a retailer is broken down into discrete groups of similar or related
products, known as product categories.
Drop shipping is a supply chain management method in which the retailer does not keep goods in stock
but instead transfers customer orders and shipment details to either the manufacturer, another retailer, or
a wholesaler, who then ships the goods directly to the customer.
Retailers cooperative is a type of cooperative which employs economies of scale on behalf of
its retailer members. Retailer's co-operatives use their purchasing power to acquire discounts
from manufacturers and often share marketing expenses.
A vendor management system (VMS), is an Internet-enabled, often Web-based application that acts as a
mechanism for business to manage and procure staffing services temporary, and, in some cases,
permanent placement services as well as outside contract or contingent labor.
Vendor relationship management (VRM), is a category of business activity made possible by software
tools that aim to provide customers with both independence from vendors and better means for engaging
with vendors.
An Order Management System, or OMS, is a computer software system used in a number of industries
for order entry and processing.
Large retail companies use OMS to keep track of orders from customers, stock level maintenance,
packaging and shipping and to synchronize orders across various channels such as e.g. If customer order
online and pick up in stores.
Available-to-promise (ATP), is a business function that provides a response to customer order enquiries,
based on resource availability.
Push-based ATP is based on forecasts regarding future demand - based on anticipation of demand, ATP
quantities and availability dates are computed.

Pull-based models, on the other hand, dynamically allocate resources in response to actual customer
orders. This means that pull-based ATP is able to balance forecast-driven resource replenishment with
order-triggered resource utilization, but because resources are allocated with each coming order, the
process will yield myopic results.
Stock management is the function of understanding the stock mix of a company and the
different demands on that stock.
Steps in receiving goods.
Shipping Process.
Bill of lading.
A bill of lading is a legal document between the shipper and carrier detailing the type, quantity and
destination of the goods being carried. The bill of lading also serves as a receipt of shipment when the
goods are delivered at the predetermined destination.
What is FOB - Free On Board?
Sales Forecasting for Fashion Retailing Service Industry: A Review
How to Choose the Right Forecasting Technique?
Planograms, also known as plano-grams, plan-o-grams, schematics and POGs, are visual representations
of a store's products or services.
Planogram a diagram or model that indicates the placement of retail products on shelves in order to
maximize sales.
What Is a Planogram in Merchandising?
A resident buying office is one that does the buying activities for many big producers and/or retailers in
the same line of business.
The resident buying offices are used by many firms as they have resources that are better suited for
making the purchase as they have long term relations with the sellers and can negotiate much more with
them because they have several orders from several clients.
Sell through rate is a calculation, commonly represented as a percentage, comparing the amount
of inventory a retailer receives from a manufacturer or supplier against what is actually sold to the
customer.
Multi‐attribute model for estimation of retail centres influence on the city structure.
Specialised property valuation: Multiple criteria decision analysis
Destination category is a category with which the retailer wants to profile himself towards his target
consumers and differentiate himself from competition.
Routine category: Category that aims to provide consistent and competitive value for the consumer’s
everyday needs and place the retailer as one of the preferred category providers.
Seasonal category: This category refers to products which are not purchased on a regular basis but
occasionally.
Convenience category: A convenience category completes the retailer's assortment of products that are
not usually found on a routine shopping list. This category aims to guarantee a one-stop-shopping and
plays an important role in margin enhancement.
Importance of Retail Store Segmentation:
Retail store segmentation for target marketing:
Types of Retail Outlets:
Everyday low price (also abbreviated as EDLP), is a pricing strategy promising consumers a low price
without the need to wait for sale price events or comparison shopping.
It was noted in 1994 that the Walmart retail chain in the United States, which follows an EDLP strategy,
would buy "feature advertisements" in newspapers on a monthly basis, while its competitors would
advertise weekly.
Price skimming is a pricing strategy in which a marketer sets a relatively high initial price for
a product or service at first, then lowers the price over time.
Retail with a purpose: Retailers are in the middle of an existential crisis. A whirlwind of industry shifts is
forcing retailers to look in the mirror and ask: WHO ARE WE? WHY ARE WE HERE? WHAT IS OUR
PURPOSE?
Businesses use discount pricing to sell low-priced products in high quantities. With this strategy, it is
important to cut costs and stay competitive.
High–low pricing is a type of pricing strategy adopted by companies, usually small and medium-sized
retail firms, where a firm charges a high price for an item and later when the item's popularity has passed,
sell it to customers by giving discounts or through clearance sales.
Promotional pricing is an informed decision by the company to give price discount on particular product
or brand & calculations are done in order to assess the feasibility of discount & the time period for which
it could be given.
Retail positioning aims to provide Competitive Advantage by differentiating the retailer from its
competitors through a retail Offering that appeals to and is readily identifiable by its specific target
markets.
According to the Shoppercentric's research, 50% of Generation Z use Instagram, compared with 17% of
older shoppers. 41% of these Generation Z Instagrammers also regularly use the network to contact
retailers.
Bullwhip effect happens distorted information from one end of a supply chain to the other can lead to
tremendous inefficiencies excessive inventory investment, poor customer service, lost revenues,
misguided capacity plans, ineffective transportation, and missed production schedules.
An anchor store is one of the largest, if not the largest, store in a mall or shopping center. It’s usually a
well-known department store or retail chain. Anchor stores are great neighbors to have if you’re a small
or medium retailer. These stores bring in a ton of foot traffic into your vicinity, which opens up more
opportunities for your business to get discovered.
The future of AI marketing applications in retail: Personalization is a key word when it comes to
improving the shopping experience, and marketers are becoming much more savvy about using AI to
collect data to create a more complete view of each customer.
Cashwrap is the main checkout area of a retail store. In other words, this is where shoppers head to when
they’re ready to pay for their items. It’s where merchants set up their POS system and ring up sales. Most
cashwraps even have shelves containing merchandise that shoppers can pick up on their way out.
Clienteling is a technique used by retail associates to deepen their relationship with each customer.
Clienteling involves relationship-building activities such as using CRM software to collect and track
customer data, providing personalized shopping experiences, and following up with shoppers in a relevant
and timely way.
Deadstock is sometimes called dead inventory, this is one thing no retailer wants to have, ever. Dead
stock pertains to merchandise that has never been sold or has been in stock for a while. Sometimes this is
because a particular item is just seasonal, but other times it’s because the product simply isn’t in demand.
Drop shipping refers to an arrangement between a retailer and a manufacturer/distributor in which the
former transfers customer orders to the latter, who then ships the merchandise directly to the consumer. In
other words, the retailer doesn’t keep products in stock. Instead, it sends orders and shipment information
to the manufacturer/distributor and they will be the ones who will ship to the consumer.
This article focuses on key value categories (KVCs) and key value items (KVIs) as a core part of price
strategy in today’s digital retail environment.
Lay-by is an agreement between the retailer and the customer in which the retailer puts an item on hold
for the shopper until it is paid for in full. The consumer pays for the product in installments (interest-free),
and will only receive the item once the payments are complete. The arrangement is a win for both parties.
Layaway programs make it easier for the consumer to afford the products that they want, while
minimizing risk on the retailer’s side.
Mystery shopping is an activity practiced by market research companies, watchdog groups, or even
retailers themselves to evaluate product or service quality or compliance. The mystery shopper acts like a
regular consumer and performs tasks like asking questions, submitting complaints, or simply completing
a purchase like they normally would. They would then provide feedback or write reports detailing their
experience with the retailer.
Shrinkage pertains to the difference between the amount of stock that you have on paper and the actual
stock you have available. In other words, it’s a reduction in inventory that isn’t caused by legit sales. The
common causes of shrinkage include employee theft, shoplifting, administrative errors, and supplier
fraud.
Showrooming is the consumer practice of examining products in a store, only to buy them for a lower
price online. Shopping and price check apps perpetuate showrooming because they allow shoppers to
compare prices and products using their phone as they browse the store.
Webrooming is the practice of looking at products online before buying them in actual brick-and-mortar
stores. It’s the opposite of showrooming, where customers look at products in physical stores only to buy
them online. Image-based websites and social networks such as Pinterest or Instagram help perpetuate
webrooming. Users see items that they like while browsing these sites and then go out in the real world to
test or try them on.
Black Friday: The name given to the shopping day after Thanksgiving in the US, which is typically the
last Thursday in November. On Black Friday, many retailers run special deals to entice shoppers. It is
often seen as a kick starter for people to start their Christmas shopping. It has now become popular in the
UK, with the 2014 Black Friday being the most popular yet.
Open-to-Buy: This is derived from the WSSI. The merchandiser adds in forecasted sales and how much
stock they have agreed to take in with the supplier; where the sales outstrip the stock intake there is an
open to buy created in which the merchandiser can make the decision at a later date what product they
want to purchase more of from the supplier. The use of Open To Buy enables the Merchandiser to work
with a certain amount of flexibility. They are committed to little stock and then able to buy into the better
selling lines.
Bullwhip effect happens distorted information from one end of a supply chain to the other can lead to
tremendous inefficiencies excessive inventory investment, poor customer service, lost revenues,
misguided capacity plans, ineffective transportation, and missed production schedules.
An anchor store is one of the largest, if not the largest, store in a mall or shopping center. It’s usually a
well-known department store or retail chain. Anchor stores are great neighbors to have if you’re a small
or medium retailer. These stores bring in a ton of foot traffic into your vicinity, which opens up more
opportunities for your business to get discovered.
A big box store is a large establishment (often in a square or rectangular-shaped building), that’s usually
part of a major retail chain. Examples of such stores include Target, Home Depot, and Best Buy.
Cashwrap is the main checkout area of a retail store. In other words, this is where shoppers head to when
they’re ready to pay for their items. It’s where merchants set up their POS system and ring up sales. Most
cashwraps even have shelves containing merchandise that shoppers can pick up on their way out.
Clienteling is a technique used by retail associates to deepen their relationship with each customer.
Clienteling involves relationship-building activities such as using CRM software to collect and track
customer data, providing personalized shopping experiences, and following up with shoppers in a relevant
and timely way.
Deadstock is sometimes called dead inventory, this is one thing no retailer wants to have, ever. Dead
stock pertains to merchandise that has never been sold or has been in stock for a while. Sometimes this is
because a particular item is just seasonal, but other times it’s because the product simply isn’t in demand.
Drop shipping refers to an arrangement between a retailer and a manufacturer/distributor in which the
former transfers customer orders to the latter, who then ships the merchandise directly to the consumer. In
other words, the retailer doesn’t keep products in stock. Instead, it sends orders and shipment information
to the manufacturer/distributor and they will be the ones who will ship to the consumer.
Keystone pricing is the practice of selling merchandise at a rate that’s double its wholesale price.
Retailers use the keystone pricing formula because it’s simple and it usually covers costs while providing
a sound profit margin.
Lay-by is an agreement between the retailer and the customer in which the retailer puts an item on hold
for the shopper until it is paid for in full. The consumer pays for the product in installments (interest-free),
and will only receive the item once the payments are complete. The arrangement is a win for both parties.
Layaway programs make it easier for the consumer to afford the products that they want, while
minimizing risk on the retailer’s side.
Mystery shopping is an activity practiced by market research companies, watchdog groups, or even
retailers themselves to evaluate product or service quality or compliance. The mystery shopper acts like a
regular consumer and performs tasks like asking questions, submitting complaints, or simply completing
a purchase like they normally would. They would then provide feedback or write reports detailing their
experience with the retailer.
Shrinkage pertains to the difference between the amount of stock that you have on paper and the actual
stock you have available. In other words, it’s a reduction in inventory that isn’t caused by legit sales. The
common causes of shrinkage include employee theft, shoplifting, administrative errors, and supplier
fraud.
Showrooming is the consumer practice of examining products in a store, only to buy them for a lower
price online. Shopping and price check apps perpetuate showrooming because they allow shoppers to
compare prices and products using their phone as they browse the store.
Webrooming is the practice of looking at products online before buying them in actual brick-and-mortar
stores. It’s the opposite of showrooming, where customers look at products in physical stores only to buy
them online. Image-based websites and social networks such as Pinterest or Instagram help perpetuate
webrooming. Users see items that they like while browsing these sites and then go out in the real world to
test or try them on.
Black Friday: The name given to the shopping day after Thanksgiving in the US, which is typically the
last Thursday in November. On Black Friday, many retailers run special deals to entice shoppers. It is
often seen as a kick starter for people to start their Christmas shopping. It has now become popular in the
UK, with the 2014 Black Friday being the most popular yet.
Open-to-Buy: This is derived from the WSSI. The merchandiser adds in forecasted sales and how much
stock they have agreed to take in with the supplier; where the sales outstrip the stock intake there is an
open to buy created in which the merchandiser can make the decision at a later date what product they
want to purchase more of from the supplier. The use of Open To Buy enables the Merchandiser to work
with a certain amount of flexibility. They are committed to little stock and then able to buy into the better
selling lines.
The sell through rate is often referred to as STR or Sell Through Analysis. It is a calculation that
compares the amount of stock a retailer receives from a manufacturer or supplier against what is actually
sold to the consumer. The rate is often represented as a percentage.
A gross margin return on investment (GMROI), is an inventory profitability evaluation ratio that analyzes
a firm's ability to turn inventory into cash above the cost of the inventory. It is calculated by dividing the
gross margin by the average inventory cost and is used often in the retail industry.
Personalization, broadly known as customization, consists of tailoring a service or a product to
accommodate specific individuals, sometimes tied to groups or segments of individuals.
Gross merchandise value is the total value of merchandise sold over a given period of time through a
customer to customer exchange site. It is a measure of the growth of the business, or use of the site to sell
merchandise owned by others.
7 Under the radar retail trends for 2017:
In 2017, the trends are not good for store-based retailers.
What the latest retail sales trends reveal about american shoppers?
The perfect storm of cost pressures, rising inflation and slowing wage growth is impacting consumer
confidence and dampening demand.
How winter weather impacts holiday retail sales?
Scott galloway predicts the future of retail.
Let it snow! How retailers prep for the weather?
BJ's Chris Baldwain on what keeps this CEO up at night.
Quick serve: How target and west elm meet the demands of instant gratification.

Emerging trends in urban shopping experiences.

Retail store openings increase in 2017.

How the stores top 100 retailers stay on top?
The future of the retail store:

Seven digital trends driving transformation in retail.

How retailers can keep up with consumers?
Machine learning helps retailers achieve their ambitions.
Nearly half of retailers have adopted IoT tech.
Louis Vuitton joins luxury brand chatbot trend.
More users are outsourcing shopping to voice tech.

Retail Therapy: May the force be with Columbia's outerwear.

10 surprising retail predictions for 2018:
Amazon, Home Depot, Walmart boast top-notch digital experiences.
Target rolls out much-anticipated mobile wallet feature.
Gap lost 54% of its shoppers in one year.
Poor personalization cost retail businesses $756B last year
Disruptor of the Year: Brandless
In-store experiences lag due to poor IT infrastructure.
Study: 39% of marketers will increase influencer marketing budgets in 2018.
Macy's boosts holiday hiring by 7K, thanks to strong traffic.
Small business saturday sales shrink.
Gen Z is late to holiday shopping.
Swimming with the Piranhas and Reinventing the Mass Consumer Model.
US E-Commerce trends and the impact on logistics:
To save retail, let it die.

Personal brand – Otherwise known as individual brand. The brand a person builds around
themselves, normally to enhance their career opportunities. Often associated with how people
portray and market themselves via media. The jury’s out on whether this should be called a form
of brand because whilst it may be a way to add value, it often lacks a business model to
commercialize the strategy.

Corporate brand – Otherwise known as the organizational brand. David Aaker puts it very well:
“The corporate brand defines the firm that will deliver and stand behind the offering that the
customer will buy and use.” The reassurance that provides for customers comes from the fact
that “a corporate brand will potentially have a rich heritage, assets and capabilities, people,
values and priorities, a local or global frame of reference, citizenship programs, and a
performance record”.

Luxury brand – Prestige brands that deliver social status and endorsement to the consumer.
Luxury brands must negotiate the fine line between exclusivity and reality. They do this through
quality, association and story. These brands have perfected the delivery of image and aspiration
to their markets, yet they remain vulnerable to shifts in perception and consumer confidence and
they are under increasing pressure from “affordable luxury” brands.

Data Mining: The process of systemically searching large volumes of data to identify patterns or
trends. In this context, retailers search transactional data that records which customers bought
what products and which products were often bought in combination with another (i.e., in the
same basket) .
Customer Segmentation: Customer segmentation refers to the process of analyzing the customer
base of a retailer and dividing it up into segments with similar characteristics in order to
understand different types of customers in more detail. These segments may be based on wealth,
age, profession, etc. This allows the retailer to more effectively plan and market its products to
different customer segments, or to offer different services to different segments.

Inbound Fill Rates: This is an example of a service level KPI. Usually expressed as a percentage
that is calculated by dividing the amount of stock that was delivered by the supplier by the
amount of stock that was ordered by the retailer. Outbound fill rates are another example of a
service level KPI. This is usually expressed as a percentage that is calculated by dividing the
amount of stock delivered to the store by the amount of stock that was ordered.

Inventory: Retailers manage their inventory by analyzing and balancing: · Their current stock
levels · Historical sales data · Forecasted demand (i.e., estimated future sales) · Product shelf life
· Business rules that they develop based on their strategy (i.e., priorities of sales channels,
specific products, etc.) Retailers use these factors to determine how to get products from the
supplier to their stores and warehouses so that they are available to sell. Two main processes are
used to enable this, Allocation and Replenishment.

Loyalty Program: Loyalty programs are designed by retailers in order to reward customers who
shop regularly at their stores/sales channels. These rewards are generally based on the amounts
customers spend. They offer the retailer the opportunity to track the spending of individual
customers. As a result, the retailer is able to offer customers different services/products/offers
based on the volume, value, or type of goods they have previously purchased.

Planogram: A diagram that shows how and where specific retail products should be placed on
retail shelves, in displays, and on the shop floor, in order to increase customer purchases and/or
enhance the shopping experience. A planogram sometimes includes pictures of products. Most
often used by retailers such as grocers, who sell high volumes of a wide variety of products
where the space available for each product is limited.

Portfolio Strategy: The portfolio strategy addresses the processes necessary to establish the
strategic intent and role of each retail offer (retail categories) as it relates to the overall business.
This includes process activities that allow for defining the retail offer's expected life cycle,
priority of investment, commonality or diversity, and financial targets relative to sales, margin,
and costs. Also included in the portfolio strategy are the resource allocations to support the retail
offers, and the performance management of the composition of retail offers for continuous
improvement and adjustment.

Rebate Processing: Rebate processing refers to activities undertaken by a retailer to structure and
to collect retrospective payments or discounts from their suppliers. For example, a retailer may
agree with a supplier that once the retailer buys 1,000 cases of product, they are entitled to a
rebate from the supplier in the form of a cash payment or other compensation. Such rebates are
commonly used by wholesale retailers who will seek to prioritize how they buy products from
their suppliers to maximize the benefits they can get from rebates (i.e., they may buy 1,000 cases
to secure the rebate, rather than say, the 500 that current demand indicates are required). Rebates
are also commonly used in some countries in mainland Europe where regulatory constraints may
prevent suppliers from offering up-front discounts to retailers.

Sales Channel: Sales channels are examples of the different ways retailers enable a customer to
shop with them (e.g., traditional brick-and-mortar stores, Web sites, catalogs, etc.). Retailers
develop and maintain a channel strategy by assessing channel opportunities, selecting channels,
defining channel roles and expectations, establishing channel guidelines and operating models,
and evaluating channel performance.

Service Level: Service levels act like targets within the supply chain, helping retailers understand
how to balance the cost of holding their products in stock versus their ability to have products
conveniently available for customers to purchase. Hence, they can be thought of as a way of
controlling availability levels or controlling how much money a retailer spends on buying,
transporting, or storing stock.

Stock Management System: Some retailers use a dedicated system to manage their stock levels.
Alternatively, some retailers are now moving toward ERP (enterprise resource planning)
systems. The high-level purpose of an ERP system is to integrate all data and processes of an
organization into a unified system. Hence, many retailers use such systems to help empower
various processes within their business, including (but not limited to) Supply Chain, HR,
Finance, Customer Relationship Management, etc.

Upselling and Cross-selling:

Having a retail sales event: 4 Types of retail promotions.

Supply Chain Management: Is the efficient and effective flow of materials/products, services,
information, and finances from suppliers.

Activity Based Budgeting (ABB): An approach to budgeting where a company uses an

understanding of its activities and driver relationships to quantitatively estimate workload and
resource requirements as part of an ongoing business plan. Budgets show the types, number of
and cost of resources that activities are expected to consume based on forecasted workloads. The
budget is part of an organization’s activity-based planning process and can be used in evaluating
its success in setting and pursuing strategic goals.

Activity-Based Management (ABM): A discipline focusing on the management of activities

within business processes as the route to continuously improve both the value received by
customers and the profit earned in providing that value. ABM uses activity-based cost
information and performance measurements to influence management action.

After-Sale Service: Services provided to the customer after products have been delivered. This
can include repairs, maintenance and/or telephone support.
Aggregate Inventory Management: A method of managing inventory through the use of levels
set against overall inventory or class value.

Agile Manufacturing: Tools, techniques, and initiatives that enable a plant or company to thrive
under conditions of unpredictable change. Agile manufacturing not only enables a plant to
achieve rapid response to customer needs, but also includes the ability to quickly reconfigure
operations-and strategic alliances-to respond rapidly to unforeseen shifts in the marketplace. In
some instances, it also incorporates "mass customization" concepts to satisfy unique customer
requirements. In broad terms, it includes the ability to react quickly to technical or environmental
surprises.

Air Waybill (AWB): A bill of lading for air transport that serves as a receipt for the shipper
indicates that the carrier has accepted the goods listed. Acceptance obligates the carrier to carry
the consignment to the airport of destination according to specified conditions.

Alternate Routing: In a production environment this is an optional process for manufacturing or

assembly of a product, which may be employed due to unavailability of a primary work center,
or choice of non-standard components. May also refer to a transportation route which is different
than what would normally be taken, perhaps due to weather.

Approved Vendor List (AVL): List of the suppliers approved for doing business. The AVL is
usually created by procurement or sourcing and engineering personnel using a variety of criteria
such as technology, functional fit of the product, financial stability, and past performance of the
supplier.

Appointment Freight: Shipments which are held at the carrier’s terminal to be delivered at a
specific date and time. Typically this occurs when a shipment is received by the carrier facility 1
or more days prior to the agreed upon delivery schedule. The shipment cannot immediately be
delivered and must be held at the facility.

Assembly Line: A manufacturing process where products are completed from components as a
result of a series of continuous activities. Henry Ford is widely recognized as the father of the
assembly line.

Assumed Receipt: The principle of assuming that the contents of a shipment are the same as
those presented on a shipping or delivery note. Shipping and receiving personnel do not check
the delivery quantity. This practice is used in conjunction with bar codes and an EDI-delivered
ASN to eliminate invoices and facilitate rapid receiving.

Audit Trail: Manual or computerized tracing of the transactions affecting the contents or origin
of a record.

Automated Manifest System (AMS): A multi-modular cargo inventory control and release
notification system through which carriers submit their electronic cargo declaration 24 hours
before loading.
Average Payment Period (for materials): The average time from receipt of production-related
materials and payment for those materials. Production-related materials are those items classified
as material purchases and included in the Cost of Goods Sold (COGS) as raw material purchases.
(An element of Cash-to-Cash Cycle Time).

Average Inventory: The average inventory level over a period of time. Implicit in this definition
is a "sampling period" which is the amount of time between inventory measurements. For
example, daily inventory levels over a two-week period of time, hourly inventory levels over one
day, etc. The average inventory for the same total period of time can fluctuate widely depending
upon the sampling period used.

Average Cost per Unit: The average cost of stock of any given item based on having incurred
different costs for each time a receipt was processed. Usually calculated at the time of a new
receipt by multiplying old inventory quantity by old avg. cost, then adding the received count
and total cost, and then dividing the new total cost by the new inventory quantity. [Five point
annual average production-related material accounts payable] / [Annual production-related
material receipts/365].

Back Scheduling: A technique used to calculating activities based on a series of known activities,
the time required to complete them, and the desired end date for completing the series.

Backlog Customer: Customer orders received but not yet shipped; also includes backorders and
future orders.

Backorder: 1) The act of retaining a quantity to ship against an order when other order lines have
already been shipped. Backorders are usually caused by stock shortages. 2) The quantity
remaining to be shipped if an initial shipment(s) has been processed. Note: In some cases
backorders are not allowed, this results in a lost sale when sufficient quantities are not available
to completely ship and order or order line.

Backsourcing: The process of recapturing and taking responsibility internally for processes that
were previously outsourced to a contract manufacturer, fulfillment or other service provider.
Backsourcing typically involves the cancellation or expiration of an outsourcing contract and can
be nearly as complex as the original outsourcing process.

Balance of Trade: The surplus or deficit which results from comparing a country's exports and
imports of merchandise only.

Barge: The cargo-carrying vehicle used primarily by inland water carriers. The basic barges have
open tops, but there are covered barges for both dry and liquid cargoes.

Benefit-cost ratio: An analytical tool used in public planning; a ratio of total measurable benefits
divided by the initial capital cost.
Bill of Material (BOM): A structured list of all the materials or parts and quantities needed to
produce a particular finished product, assembly, subassembly, or manufactured part, whether
purchased or not.

Bill of Material Accuracy: Conformity of the list of specified items to administrative

specifications, with all quantities correct.

Blanket Purchase Order: A blanket order is defined as an order the customer makes with its
supplier which contains multiple delivery dates scheduled over a period of time, sometimes at
predetermined prices. It is normally used when there is a recurring need for expendable goods.
Hence, items are purchased under a single purchase order (P.O) rather than processing a separate
P.O. each time supplies are needed.

Branding: The act of assigning a name or image to a product in such a way that consumers will
associate one with the other. Branding typically includes doing background research to ensure
that the name can be trademarked and is not currently in use by another company for a similar
product.

Break-Even Chart: A graphical tool used to chart the “break-even point”, the point where the
total sales revenue axis line intersects with total cost axis line. Sales revenue, variable and fixed
costs are plotted on the vertical axis while volume is plotted on the horizontal axis.

Break-Even Point: A chart which graphically represents the point at which cost or expenses and
revenue are equal: There is no net loss or gain, and one has "broken even".

Bricks and Mortar: The act of selling through a physical location. The flip side of clicks and
mortar, where selling is conducted via the Internet. An informal term for representing the old
economy versus new economy or the Industrial economy versus information economy.

Bundling: An occurrence where two or more products are combined into one transaction for a
single price.

Business Logistics: The systematic and coordinated set of activities required to provide the
physical movement and storage of goods (raw materials, parts, finished goods) from
vendor/supply services through company facilities to the customer (market) and the associated
activities-packaging, order processing, etc.-in an efficient manner necessary to enable the
organization to contribute to the explicit goals of the company.

Materials Requirements Planning (MRP): A decision-making methodology used to determine the

timing and quantities of materials to purchase.

Materials Management: Inbound logistics from suppliers through the production process. The
movement and management of materials and products from procurement through production.

Material Acquisition Costs: One of the elements comprising a company's total supply-chain
management costs. These costs consist of the following: Materials (Commodity) Management
and Planning : All costs associated with supplier sourcing, contract negotiation and qualification,
and the preparation, placement, and tracking of a purchase order, including all costs related to
buyer/planners. Supplier Quality Engineering: The costs associated with the determination,
development/certification, and monitoring of suppliers' capabilities to fully satisfy the applicable
quality and regulatory requirements. Inbound Freight and Duties: Freight costs associated with
the movement of material from a vendor to the buyer and the associated administrative tasks.
Duties are those fees and taxes levied by government for moving purchased material across
international borders. Customs broker fees should also be considered in this category. Receiving
and Put Away: All costs associated with taking possession of material and storing it. Note that
carrying costs are not a part of acquisition, and inspection is handled separately. Inbound Freight
and Duties: Freight costs associated with the movement of material from a vendor to the buyer
and the associated administrative tasks. Duties are those fees and taxes levied by government for
moving purchased material across international borders. Customs broker fees should also be
considered in this category. Supplier Quality Engineering: The costs associated with the
determination, development/certification, and monitoring of suppliers capabilities to fully satisfy
the applicable quality and regulatory requirements. Material Process and Component
Engineering: Those tasks required to document and communicate component specifications, as
well as reviews to improve the manufacturability of the purchased item. Incoming Inspection:
All costs associated with the inspection and testing of received materials to verify compliance
with specifications. Receiving and Put Away: All costs associated with taking possession of
material and storing it. Note that carrying costs are not a part of acquisition, and inspection is
handled separately. Inbound Freight and Duties: Freight costs associated with the movement of
material from a vendor to the buyer and the associated administrative tasks. Duties are those fees
and taxes levied by government for moving purchased material across international borders.
Customs broker fees should also be considered in this category. Supplier Quality Engineering:
The costs associated with the determination, development/certification, and monitoring of
suppliers' capabilities to fully satisfy the applicable quality and regulatory requirements.
Materials (Commodity) Management and Planning: All costs associated with supplier sourcing,
contract negotiation and qualification, and the preparation, placement, and tracking of a purchase
order, including all costs related to buyer/planners. Material Acquisition Costs: One of the
elements comprising a company's total supply-chain management costs. These costs consist of
the following: Master Production Schedule (MPS): The master level or top level schedule used to
set the production plan.

Strategy:This process includes devising the strategy for various aspects of the organization
including corporate policies (mission, vision, core values, etc.), customer strategy, brand
strategy, strategy related to portfolio, channels and formats.

Corporate Strategy: This process includes the retailers ability to establish mission, vision, core
values, culture; determine scope of business; develop business plan; identify growth strategy
(organic and/ or inorganic); define strategic change programs; and develop corporate
responsibility plan.

Customer Strategy: This capability includes the processes for identifying target customers and
their value based on strategic attributes and clusters, aligning customers to retail offerings and
determining the expected customer experience, what services to provide to customers, and the
measurement priorities of an entity’s customers.

Brand Strategy: This capability addresses the processes necessary to establish one to many brand
images and logos, along with their target customers, market positioning relative to competitors,
marketplace introduction and communication of the brand, and brand performance for
continuous improvement and adjustment.

Portfolio Strategy: This capability addresses the processes necessary to establish the strategic
intent and role of each retail offer (categories) as it relates to the overall business, and the process
activities that allow for defining the retail offer’s expected lifecycle, priority of investment,
commonality or diversity, financial targets relative to sales, margin, and costs, the resource
allocation to support the retail offers, and the performance management of the composition of
retail offers for continuous improvement and adjustment.

Channel Strategy: This capability includes the processes for assessing channel opportunities,
selecting channels, defining channel roles and expectations, establishing channel guidelines and
operating models, and evaluating channel performance. Category management: This process
includes the selection and management of various types of categories as a part of overall
merchadise planning.

Plan & Buy: This process includes activities related to strategic management of categories,
merchandise planning and management, managing key supplier relationships, marketing, and
enterprise analytics.

Category management: This process includes the selection and management of various types of
categories as a part of overall merchadise planning.

Merchandise Financial Planning: Merchandise financial planning for the retailer includes
processes for Category Plan Management, Location Plan Management, Key Item Plan
Management, and Merchandise and Financial Plan Approval.

Manage assortment execution and product lifecycle: This process manages new items/assortment
introduction, actions to correct items performance and item retirement.

Incorporate strategic goals (Clusters/ Roles, Private Label Mix), financial plan and supplier
strategy: This process incorporates strategic decisions/goals to assortment management process.

Plan assortment approach and calendar: The scope of this process includes all major assortment
planning activities and the approach to executing these plans.

Evaluate, build and optimize assortment (core and local): In this process core and local
assortment is evaluated, built and optimized; first by group of stores/clusters and then adjusted to
local market. Once optimized the assortment is compared against category/financial plan to
verify feasibility.

Periodic assortment reviews and updates (include lifecycle management): In this process
periodic reviews and updates are conducted, considering for example overlapping attributes,
suppliers offers, store requirements and products performance. Periodic reviews are triggered by
external events (e.g. new products launch) or performance.

Assortment Planning & Optimization: This process includes an analysis of the various
assortments for different categories and optimising their quantities based on overall strategic
parameters.

Location Planning: This process includes the selection of proper locations for the stores based on
different parameters.

Review category plan: This process involves analysing the category financial plans developed as
they will be a key input to the location financial plan.

Conduct location analysis: This process involves analysing the retailers sales locations, including
different channels/brands if applicable. It may include reviewing historical financial data and
reviewing store clusters developed in the assortment plan

Develop location merchandise and financial plans across time hierarchy: This process involves
using the analysis completed in processes as well as the category financial plan to develop a set
of plans at location level. These plans would be at the same level in the merchandise hierarchy as
the category plan, and would be time phased (usually by week).

Communicate location plan to locations: This process involves communicating the location plan
to locations and incorporating their feedback where necessary. Note that in this case a location
could be a store, region or other sales channel grouping.

Vendor Management: This process includes managing the various aspects of pricing,
promotions, distribution and general agreements with vendors as a part of overall merchandise
management.

Assortment Execution: This process includes determining the various kinds of assortments and
their sourcing and distribution plans.

Manage Costing & Rebates: This process includes determining the plans related to merchandise
cost and any discount/rebates that may be provided.

Price & Promotion Management: This process includes ascertaining the pricing strategy for
various categories and items, determining the impact on overall financials (store level and
corporate) and arranging promotions of specific items in line with the overall promotion plan.
Tiered / Customer List Pricing: This process includes determining the timelines, objectives,
goals, special payment conditions for various categories of customers taking into consideration
store segments and seasons and also coming up with a marketing plan.

Marketing: This process includes all the activities related to marketing as a part of the overall
planning and buying process.

Public Relations / Communications: This process includes determining the plans for public
relations, communications, etc as a part of the overall marketing plan.

Brand Marketing: As part of Customer marketing, this process includes the Brand Marketing
strategy and processes to create enhanced engagement with the customer.

Private Label Marketing: This process includes formulating details for marketing private label
merchandise within overall marketing plan.

Marketing Program Management & Workflow: This process includes determining the details for
overall marketing program including identification of stakeholders for coming up with the
marketing plan, identifying workflow of various activites and investments planned for the
activities.

Ad Budgeting & Planning: This process includes identifying needs for ads for different formats
and concepts, planning the communication media, identifying ad agencies (if needed) and
coming up with overall budget for this exercise.

Enterprise Analytics: This process includes the activities related to application and usage of
analytics for arriving at decisions based on past data.

Market Insights: This process includes developing market insights through long Term Trend
Analysis, Financial Forecasting and Brand Analysis.

Customer Analytics: This process includes performing customer analytics through analysis of
Lifecycle segmentation of customers (increasing, decreasing - spends, frequency of shop); and
Analyse member segments, promotion effectiveness.
Channel Analytics: This process includes performing channel analytics for the retailer through
Workforce Analytics, Labour Analytics, Store Analytics / Floor Performance Management, Loss
Prevention Analytics, Digital Optimization, Conversion Analytics, Customer Service Analytics,
and Shopping Analytics.

Merchandise Analytics: This process includes the capability to analyze and forecast product
demand, to optimize the product assortment, product categories and shelf space to meet future
customer demand and increase profitability.

Product Sourcing: This process includes the sourcing of various products for different categories
as a part of overall merchandise planning.
Key Item Planning: This process includes the planning for key items which may be sourced as a
part of merchandise planning.

Private Label Design and Development: This process includes planning for private labels as a
part of overall merchandise and its design and development.

Regular Price Optimization: This process includes the optimization of the regular prices for
various items as a part of overall merchandise planning.

Markdown Optimization: This process includes the determination of the markdowns for different
items considering the overall financial metrics.

Promotion Planning & Optimization: This process includes the planning for various promotional
activities including optimizing the returns on them, as a part of overall merchandise planning.

Vendor Funds Planning: This process includes the financial arrangements with vendors and the
quantum of funds allocated/budgeted for the same.

Promotion Forecasting: This process includes forecasting of promotional requirements based on

historical sales data during and proceeding any promotional activity and also considering the
impact of events, other macro situations, etc.

Macro Space: This process includes determining the store layout and format, defining
adjacencies, allocating and optimizing space between categories, managing in-store display
implementations, etc.

Visual Merchandising: This process includes defining graphics, fixtures, displays, signage and
in-store media for each channel, defining plan-o-gram, layouts and wireframe guidelines for each
channel and specifying alternative location displays, cross-merchandising.

Creative Execution: This process includes the formulation of ad content, planning for the
message and media to be used, designing the exact message with a clear alignment to the overall
marketing objective, getting ratification from relevant stakeholders and executing the campaign
in the media decided upon previously.

Marketing Analytics: This process includes marketing analytics through Media Mix Analysis,
Marketing ROI, Paid Search Optimization, Social Analytics, and Campaign Analytics.

Supply Chain Analytics: This process includes identification of metrics associated with
transportation costs, times, fill-rates, days out-of-stock, and days of inventory.

Finance Analytics: This process includes application of tools to increase a companys financial
productivity, assess granular aspects of a business opportunity and ability to combine all relevant
information so that an informed decision can be made.
HR Analytics: This process includes analysis of information to identify characteristics of
successful employees. A disciplined and methodical approach to analyzing, forecasting,
predicting and optimizing global HR processes, capabilities and outcomes will improve the
impact of talent, and of the HR function, on the business.

Real Estate Analytics: This process includes the use of large data sets to find patterns and
correlations in store construction, store maintenance, and site selection (competitive landscape,
market economics, etc.).

Big Data Analytics: This process includes examining large sets of data to uncover hidden
patterns, unknown correlations, and other useful information. Primary goal of big data analytics
is to help companies make better business decisions by enabling data scientists and other users to
analyze huge volumes of transaction data as well as other data sources that may be left untapped
by conventional business intelligence (BI) programs. These other data sources may include Web
server logs and Internet clickstream data, social media activity reports, mobile-phone call detail
records and information captured by sensors.

Merchandising Planning: This process includes planning for the various categories of
merchandise that will be aligned to the margin and inventory objectives of the firm.

Reconcile and approve location plan: This process involves gathering location level performance
metrics. Note that the definition of a location may vary per retailer. A location can be a store,
channel or a location/store cluster (i.e. group of stores / region etc.) depending on the retailers
individual characteristics. The location level data is compared to figures in the plan, variances
are identified and action plans are developed to resolve any issues resulting from these variances
and mitigate a
y risks.

Supply Chain Collaboration: This process includes the collaboration of the various entities (like
vendors, suppliers, partners, distributors, sales agents etc.) and activities of the overall supply
chain in order to have a joinly managed set of activities to maximize overall process efficiency in
a collaborated environment.

Move: This process includes the critical activities of inventory management, distribution
management, manufacturing, fulfillment management, supply chain collaboration and network
management.

Asset and Fleet Management: This process includes the management of assets and fleets for
transportation and optimizing their selection based on material handling requirements including
route optimization to minimize overall cost.

Network Management: This involves performing detailed design work associated with a
proposed network in order to optimize product flows within the network.

Inventory Management: This process includes enhancing the efficiency of activities related to
inventory management including demand forecasting, inventory planning, inventory
optimization, PO management, Import management, Allocation management, and enterprise
inventory visibility.

Distribution Management: This process includes optimization of the various activities related to
distribution including optimizing the DC labor plan and schedule, DC slotting, DC task
management/directed work, DC operations, yard management, DC loss prevention and DC
automation.

Manufacturing: This process includes optimizing the efficiency of various activities related to
manufacturing like capacity/production planning, goods receiving, manufacturing and dispatch
and plant maintenance.

Fulfillment Management: This process includes analyzing and enhancing efficiency of activities
related to fulfillment operations like transport sourcing and carrier management, transportation
planning and management, transportation settlement, parcel fulfillment and reverse logistics.

Network & Flow Strategy: This process includes development and maintenance of network
strategy by optimizing warehouse and transport hub geographical locations. It includes selection
of distribution.

Network Monitoring: This process includes monitoring, forecasting, and managing inventory
flow through all distribution facilities by developing tools and processes to support timely
product delivery including event and exception management. It also involves capabilities to
provide real-time visibility, in-transit updates, and generating exception alerts with event status
throughout supply chain (i.e. at delivery location, unloaded, departing delivery location, etc.) and
managing and forecasting capacity of distribution facilities and transport lanes.

Demand Forecasting: As part of the forecasting and replenishment analytics, this process
includes demand forecasting analysis.

Inventory Planning: This process includes creation, development and implementation of

inventory fulfillment strategies across all stores and supply nodes within the corporate network.
It includes planning the inventory strategy and flow to support merchandising assortment plan
for resets, seasonal inventory entry/exits, promotions and other initiatives, managing inventory
constraints such as presentation stock, display stock, pack size, etc.

Inventory Optimization: This process includes developing optimal inventory levels and flow
strategies that balance capital constraints / objectives and service level goals while taking
demand and supply volatility into account, developing and implementing system settings to
optimize inventory investment while driving sales and in stock improvements.

PO Management: This process includes creation, review, approval, amendment, audit, and
closure of purchase orders to suppliers. It also includes PO costing, scaling, splitting, investment
buys, and electronic communication with vendors, managing ordering constraints such as order
frequency, lead time, vendor minimums.
Import Management: This process includes management of import purchase orders including
duty calculations, import purchase order attributes, letters of credit, estimated landed cost
calculation. It also includes import logistics tracking to provide visibility to import movements
(e.g. booking, bill of lading, etc.), monitoring production, and managing production timing and
actions for private label products.

Allocation Management: This capability covers all processes associated with the allocation
method of managing inventory in the supply chain (i.e. at stores or DCs). Allocation is a “push”
method of supply, where pre-determined quantities of stock are sent to stores on a regular or one-
off basis which may not regard recent demand trends. It is most appropriate for products where
demand and supply are less predictable, hence the allocations can be made as appropriate
depending on latest information. It may often be used in conjunction with replenishment to
manage stock levels. Also included here are processes to manage allocation changes as a result
of seasonal or planning calendar events, which could influence demand. *Allocation is much
more prevalent in fashion, fertilizer, holiday and garden centre industry segments, plus other
segments where seasonality is a factor, or for one-off product buys or special edition products
etc. These examples require more personal “intuition / business intelligence”, management
information, and manual scrutiny to plan, set up and execute than in the case of typical
replenishment.

Enterprise Inventory Visibility: This process includes the ability to view inventory positions at
all supply chain nodes and channels, updated real time based on receipts, POS transactions,
customer orders, transfers, etc., ability to provide a response to customer order enquiries, based
on product availability determined by available quantities of the requested product, order
fulfillment timelines, shipping options, and requested delivery due dates.

Distribution Management: This process includes optimization of the various activities related to
distribution including optimizing the DC labor plan and schedule, DC slotting, DC task
management/directed work, DC operations, yard management, DC loss prevention and DC
automation.

DC Labor Plan & Schedule: This process includes planning for future labor needs of the
distribution center based on upcoming labor needs and required labor skill sets. It also includes
setting the necessary labor level by scheduling of employee time.

DC Slotting: This process includes planning product positioning in DC considering planned and
actual product velocity.

DC Task Management / Directed Work: This process includes management of tasks to support
automation of warehouse tasks such as stocking, picking, quality control, packing, palletizing,
etc. It also includes optimization of warehouse tasks to interleave tasks with warehouse activity
and shipping schedules and optimize DC labor utilization, prioritization tasks in alignment with
inventory needs to meet business needs.
Yard Management: The process of coordinating and tracking truck movements within the yard,
before, during and after loading/unloading.

DC Loss Prevention: This process includes policies and procedures for loss prevention.

DC Automation: This process includes control of warehouse automated picking systems such as
pick to light, tilt tray, conveyor, etc.

Fulfillment Management: This process includes analyzing and enhancing efficiency of activities
related to fulfillment operations like transport sourcing and carrier management, transportation
planning and management, transportation settlement, parcel fulfillment and reverse logistics.

Transportation Planning: This process includes the ability to develop transportation plans and
building inbound and outbound loads, consolidating orders based on business rules/constraints,
selecting routes and rates, planning shipment schedule, and mode selection. It also includes
implementing operational and business constraints to transportation plans, optimization for load
building and containerization, rate management, and cost allocation, and it takes into account
both domestic and international transportation.

Transportation Management: This process includes tendering loads to carriers, recording a

vendors response to a tendered shipment and taking all other necessary actions. It also includes
processes to manage transportation activities such as tracking and visibility of inbound and
outbound transportation, monitoring, exception management, and visibility to key milestones,
collaboration with suppliers and carriers with ASN, EDI, and other electronic communications.

Transportation Settlement: This process includes allowing freight invoices to be audited,

matched, and paid in a timely and automated fashion, managing freight payment by preparing
financial information pertaining to a freight shipment in order to facilitate an accurate payment
and allocation of costs, freight invoice reconciliation by determining whether or not the invoice
for a freight shipment is accurate in relation to previously agreed upon terms, allocating costs
appropriately to various business areas based on the contents of the freight shipment.

Parcel Fulfillment: This process includes fulfillment of orders by individual and separate parcels.

Store of the community (SOTC): Wal-Mart's store planogram localization system in which store
level traits, demographics, and historical sales rates are used to identify clusters of stores.

Reverse Logistics: This process includes the ability to move products backwards through the
supply chain to original vendor or for disposal (destroy, salvage, donate), returns processes
includes the ability to deal with products that came from Direct Ship Vendors and Drop to
Marketplace, and it includes establishing product return and disposal rules, and designating a
product for return to vendor or disposal.

Network & Flow Strategy: This process includes development and maintenance of network
strategy by optimizing warehouse and transport hub geographical locations. It includes selection
of distribution centers utilization in order to optimize efficiency and flexibility, development of
flow strategy by selection and optimization of transport mode utilization, inventory holding
nodes, and flow path optimization.

Define Network Objectives: This process involves identifying the needs that must be served by
the network and the extent to which those needs will be met. This includes both customer/store
needs, as well as the retailers own cost objectives.

Transportation Strategy: This is the process by which high-level decisions are set regarding
transportation mode and the use of cross-docks. Where a decision has been made to fully
outsource transportation, this will be undertaken by the transportation provider.

Network Monitoring: This process includes monitoring, forecasting, and managing inventory
flow through all distribution facilities by developing tools and processes to support timely
product delivery including event and exception management. It also involves capabilities to
provide real-time visibility, in-transit updates, and generating exception alerts with event status
throughout supply chain (i.e. at delivery location, unloaded, departing delivery location, etc.) and
managing and forecasting capacity of distribution facilities and transport lanes.

Manage Locations: The capability of locating, designing and building a new DC/warehouse
based on the network strategy and detailed requirements. The objective is to locate and design
warehouses and facilities in order to optimize network costs and service levels.

Manage & Optimize Product Flow: Manage & Optimize Product Flow. The process determining
the optimal flow path through the distribution network to accommodate new products, or
products whose characteristics have changed since the network was last reviewed.

Manage Network and Location data:This process involves managing all Master Reference Data
associated with the retailer’s locations. This would include stores, distribution centres,
warehouses and other locations within the supply chain.

Market Share: The portion of the overall market demand for a specific product or service which
is provided by any single provider.

Market Segment: A group of people or organizations sharing one or more characteristics causing
them to have similar product and/or service needs. A true market segment meets all of the
following criteria: it is distinct from other segments (different segments have different needs), it
is homogeneous within the segment (exhibits common needs); it responds similarly to a market
stimulus, and it can be reached by a market intervention. The term is also used when consumers
with identical product and/or service needs are divided up into groups so they can be charged
different amounts. These can broadly be viewed as 'positive' and 'negative' applications of the
same idea, splitting up the market into smaller groups.

Market-Positioned Warehouse: A Warehouse located in a geographic area containing a high

population of customers, used to provide a ready source of products available the same day or
next day to ordering customers in a manner more economical than overnight package shipments.
Marginal Cost: The cost to produce one additional unit of output. The change in total variable
cost resulting from a one-unit change in output.

Lot Size: Set quantity of goods to be purchased or produced at one time in anticipation of use or
sale in the future.

Lot Control: A method of tracking production lots used primarily to manage potential recalls.
Typically unique lot or batch numbers are assigned to each group of products manufactured and
tracking systems are established to monitor the destination of the products when sold.

Logistics Management: As defined by the Council of Supply Chain Management Professionals

(CSCMP): "Logistics management is that part of supply chain management that plans,
implements, and controls the efficient, effective forward and reverse flow and storage of goods,
services, and related information between the point of origin and the point of consumption in
order to meet customers requirements. Logistics management activities typically include inbound
and outbound transportation management, fleet management, warehousing, materials handling,
order fulfillment, logistics network design, inventory management, supply/demand planning, and
management of third party logistics services providers. To varying degrees, the logistics function
also includes sourcing and procurement, production planning and scheduling, packaging and
assembly, and customer service. It is involved in all levels of planning and execution-strategic,
operational, and tactical. Logistics management is an integrating function which coordinates and
optimizes all logistics activities, as well as integrates logistics activities with other functions,
including marketing, sales, manufacturing, finance, and information technology."

Lost Sale: The simple definition is a potential sale (usually a customer order) which was not
completed (usually due to availability). However this is a grey area and very dependent on how
the individual enterprise defines it. Many refer to abandoned website shopping cart quantities as
lost sales, even though the customer may only have been browsing. This highlights the difficulty
in defining the term – if the customer shows a desire for a product but does not purchase it
immediately, was the sale really “lost”. Did the customer satisfy their desire elsewhere or with a
different product from your own store, or did they simply postpone a decision? Were they
perhaps simply “kicking tires”? The answer is quite elusive. In an ideal world we would like to
see more regarding the reason for the lost sale – product did not meet requirement, price too
high, not available when needed, etc. – but this information is generally not available. A lost sale
is not a backorder because the backorder will ship.

Loading Port: The port where the cargo is loaded onto the exporting vessel. This port must be
reported on the Shipper's Export Declaration, Schedule D and is used by U.S. companies to
determine which tariff is used to freight rate the cargo for carriers with more than one tariff.

Line Functions: The decision-making areas associated with daily operations. Logistics line
functions include traffic management, inventory control, order processing, warehousing, and
packaging.
Line: 1) An area within a production or assembly facility where manufacturing occurs in a linear
fashion, passing products through one level of completion on to the next process. 2) A unique
item order line on a customer or purchase order.

Lift-On Lift-Off: In ocean shipping, LO-LO refers to a vessel of which the loading and
discharging operations are carried out by cranes and derricks.

Key Performance Indicator (KPI): A measure which is of strategic importance to a company or

department. For example, a supply chain flexibility metric is Supplier On-time Delivery
Performance which indicates the percentage of orders that are fulfilled on or before the original
requested date.

Inventory Turns: This ratio measures how many times a company's inventory has been sold
(turned over) during a period of time. The cost of goods sold divided by the average level of
inventory on hand. Operationally, inventory turns are measured as total throughput divided by
average level of inventory for a given period; How many times a year the average inventory for a
firm changes over, or is sold.

Inventory: Components, raw materials, work in process, finished goods and supplies required for
the creation of goods and services. It can also refer to the number of units and/or value of the
stock of goods held by a company.

General Agreement on Tariffs and Trade (GATT): The General Agreement on Tariffs and Trade
started as an international trade organization in 1947, and has been superseded by the World
Trade Organization (WTO). GATT (the agreement) covers international trade in goods. An
updated General Agreement is now the WTO agreement governing trade in goods. The 1986-
1994 “Uruguay Round” of GATT member discussions gave birth to the WTO and also created
new rules for dealing with trade in services, relevant aspects of intellectual property, dispute
settlement, and trade policy reviews. GATT 1947: The official legal term for the old (pre-1994)
version of the GATT. GATT 1994: The official legal term for new version of the General
Agreement, incorporated into the WTO, and including GATT 1947.

General-merchandise Warehouse: A warehouse that is used to store goods that are readily
handled, are packaged, and do not require a controlled environment.

Freight Charge: The rate established for transporting freight.

Freight Consolidation: The act of combining individual shipments into a single lot in order to
reduce costs or improve transport equipment utilization. Consolidation can take a variety forms
by customer, geography, shipping land or schedule. Consolidation may occur at the shipping
facility or may be a service of a third party.

GMROI (Gross margin return on investment): A financial measure that indicates the annual
return on each dollar invested in inventory. Inventory $ stated in retail dollars [as opposed to
vendors cost]. It is expressed in dollars and calculated as: gross margin ($) / average inventory
investment at retail ($). The alternative formula is Gross Margin % times Inventory Turns.
Alexa: Amazon's voice assistant.

Multichannel Marketing: Describes marketing using multiple channels to reach a customer. In

this sense, a channel might be a retail store, a web site, a mail order catalogue, or direct personal
communications by letter, email or text message. The objective of the company doing the
marketing is to make it easy for a consumer to research or make purchases in whatever way is
most appropriate.

ROE: Percentage amount earned on a company’s common stock investment for a given period.
Calculates how much profit a company generates with the money shareholders have invested.
ROE = (Net Income/Shareholders Equity)

ROI: A performance measure that evaluates the efficiency of an investment. Calculated as net
profit divided by cost of investment.

Hypermarket: Large-format stores that include a full selection of grocery items and general
merchandise (hardlines and softlines), as well as shopper services such as auto service, photo
development, and food service. Stores typically range from 80,000 sqft to 280,000 sqft (8,000
sqm to 28,000 sqm). Format Types include: Hypermarket: Large stores that range from 100,000
sqft to 200,000 sqft (10,000 sqm to 20,000 sqm). Food sales account for more than 50% of total
revenue. Predominantly single-level stores, though some multi-level locations do exist.
Hypermarkets are most common in Europe, Asia, and Latin America (e.g., Carrefour, Auchan,
Jumbo). Supercenters: Generally single-level stores ranging from 80,000 sqft to 280,000 sqft
(8,000 sqm to 28,000 sqm) and operated primarily by US retailers. Food generally accounts for
40% of total sales, while general merchandise and service departments represent the balance of
sales (e.g., Wal-Mart SuperCenter, SuperTarget, Meijer). Japanese Superstores: Large multi-
level stores unique to Japanese retailers. Food represents 45%-50% of sales, and general
merchandise (both hardlines and softlines) accounts for the rest (e.g., Ito-Yokado, Daiei, Jusco).

mCommerce: Buying and selling of goods and services through wireless-enabled devices like
mobile phones and tablets.

Kiosk: A small leased area, booth, or cart inside a mall or store. Or, an interactive display or
terminal giving access to an Intranet or to the Internet from inside a store for ordering or
checking on merchandise.

Operating margin: Operating profit expressed as a percentage of net sales.

Mail Order: Retailers selling merchandise though mail order catalogs. The mail order business
may be a part of a store-based retailer's business or an independent home catalog business.

Reserve stock: Merchandise that is stored in an area inaccessible by customers.

RACI (Responsible, approver, consulted, informed): A framework used to map where decisions
are made within an organization.
SG&A (Selling, general and administrative): Expenses associated with selling, such as
salespersons salaries and commissions, advertising and promotion, travel and entertainment, as
well as office/headquarters payroll and expenses, and executives salaries.

All Risk Insurance - A clause included in marine insurance policies to cover loss and damage
from external causes, such as fire, collision, pilferage, etc. but not against innate flaws in the
goods, such as decay, germination, nor against faulty packaging, improper packing/ loading or
loss of market, nor against war, strikes, riots and civil commotions.

Daily active users (DAU) is the total number of users that engage in some way with a web or
mobile product on a given day. In most cases, to be considered “active,” users simply have to
view or open the product. Web and mobile app businesses typically consider DAU as their
primary measure of growth.

Creating a retail channel navigation category hierarchy to set up a category structure for products that you
offer through an online store. You define the category hierarchy and assign products, product attribute
groups, and attribute values to the categories. Then assign the category hierarchy to an online store.

Breaking bulk is another function performed by retailing. The word retailing is derived from the French
word retailer, meaning ‘to cut a piece off’. To reduce transportation costs, manufacturers and wholesalers
typically ship large cartons of the product, which are then tailored by the retailers into smaller quantities
to meet individual consumption needs.

The goals of Inventory Management are to: Maintain optimum inventory levels to reduce
inventory carrying costs Employ statistical techniques to either pre-empt running out of stock or
plan replenishment activities Count the merchandise on a regular basis to check pilferage and
shrinkage, and to maintain an accurate inventory data Integrate with other applications such as
Transportation Management to ensure the rapid movement of inventory across the warehouses
thereby increasing availability

“Branding is endowing products and services with the power of a brand” (Kotler & Keller, 2015).
Branding is the process of giving a meaning to specific products by creating and shaping a brand in
consumers’ minds. It is a strategy designed by companies to help people to quickly identify their products
and organization, and give them a reason to choose their products over the competition’s, by clarifying
what this particular brand is and is not.
Shelf talkers: Form of signage used in a store to announce the offers/prices/product features etc. Usually
placed on shelves or fixtures near the products for which it is applicable.
A retailer's cost of goods sold is equal to the cost of its beginning inventory plus the cost of its net
purchases (the combination of these is the cost of goods available) minus the cost of its ending inventory.
Inventory control systems help you track inventory and provide you with the data you need to control and
manage it. The types of inventory control systems are:i)Perpetual Inventory System ii)Periodic Inventory
System iii)Barcode Inventory Systems iv)Radio Frequency Identification (RFID) Inventory Systems
Mobile web payments (WAP) - Mobile payment generally refer to payment services operated under
financial regulation and performed from or via a mobile device. Instead of paying with cash, cheque, or
credit cards, a consumer can use a mobile to pay for a wide range of services and digital or hard goods.
Basic Stock = Average stock for the season – Average monthly sales for the season, Beginning of Month
( BOM) Stock = Planned Monthly Sales + Basic Stock

Stock-Keeping Unit: More commonly known as SKU, this term pertains to the unique identification of a
particular product. It’s used in inventory management and enables retailers to track and distinguish
products from one another.

Cross channel integration is the provision of a unified shopping experience to the customer. This
integration results in: Unified billing and promotional information Unified customer tracking system to
capture customer shopping data across multiple channels A synchronized products list and data on
inventory availability

Replenishment is the movement of inventory from upstream -- or reserve -- product storage locations to
downstream -- or primary – storage, picking and shipment locations. The purpose of replenishment is to
keep inventory flowing through the supply chain by maintaining efficient order and line item fill rates.
Retail merchandising management process involves analysis, planning, acquisition, handling and control
of merchandise investments of a retail operation. It involves marketing the right merchandise at right
place at right price in right quantities at right time.
The calculation of inventory cost is an important part of filing your business tax return. Like other
legitimate business costs, the cost of the products you buy to resell can be deducted from your business
income to reduce your taxes.

Pricing intelligence tools have quickly become essential to rapidly access and act on data on pricing,
product availability, shipping charges, promotions, and the like. Pricing analysis helps online retailers be
more savvy, competitive, informational and timely, resulting in positive purchasing decisions by
consumers.

Distribution Network Costs Inventory: Carrying cost, purchasing cost Transportation: Inbound and
outbound transportation Facilities and Handling: maintenance cost, equipment cost Information: Cost of
documentation and system
Comparable store sales, also known as same store sales, compare sales for a company's stores for one year
to those of the same period for prior years, typically on a quarterly or monthly basis.

The profit margin is a ratio of a company's profit divided by its revenue. It's always expressed as a
percentage. It tells you how well a company uses its income. A high ratio means the company generates a
lot of profit for every dollar of revenue.

When a customer elects to go Customer Pick up (CPU), it assumes responsibility for appointing its own
freight carriers and coordinating of all costs and management associated with its shipments from Amcor
facilities. Coordination includes scheduling and arranging pick-up of all loads.

A transportation management system (TMS) is a subset of supply chain management concerning

transportation operations and may be part of an enterprise resource planning system.
Place Decisions involve decisions that affect : How you will get the product where it belongs ?
Distribution Decisions include Location , Market Coverage and Channel member Selection.

Customer relationship management (CRM) is an approach to manage a company's interaction with

current and potential customers. It uses data analysis about customers' history with a company to improve
business relationships with customers, specifically focusing on customer retention and ultimately driving
sales growth.

Reverse logistics is the process of planning, implementing and controlling the efficient and effective
inbound flow and storage of secondary goods and related information for the purpose of recovering value
or proper disposal.
Channel relations tend to be most volatile with intensive distribution, whereby suppliers sell through as
many retailers as possible. Channel relations tend to be smoothest with exclusive distribution, whereby
suppliers make agreements with one or a few retailers to be the only ones in specified geographic areas to
carry certain brands or products.
Allocation is the process of assigning individual item quantities to specific stores based on analytical
approaches that recognize the performance of those items and their history or potential at different stores.

Third-party logistics (abbreviated 3PL, or sometimes TPL) in logistics and supply chain management is a
company's use of third-party businesses to outsource elements of the company's distribution and
fulfillment services.
A metric fundamental to managing the retail supply chain is weeks of supply (WOS). Weeks of supply
tells the inventory manager how long the current on hand will last based on current sales demand. By
keeping your eye on weeks of supply, you can avoid inventory stock outs and lost sales. The basic
calculation for weeks of supply is pretty simple: on hand inventory / average weekly units sold.
New old stock (abbreviated NOS) is merchandise being offered for sale which was manufactured long
ago but that has never been used. The items may not be produced anymore, and the new old stock may
represent the only market source of a particular item.
A stockout, or out-of-stock (OOS) event is an event that causes inventory to be exhausted. While out-of-
stocks can occur along the entire supply chain, the most visible kind are retail out-of-stocks in the fast-
moving consumer goods industry.
Store front: The total physical exterior of a store. It includes the marquee, entrances , windows , lighting
and construction materials.
When consumers use mobile payment, the merchant and the mobile payment service provider share
responsibilities for protecting the consumer's data. The exact division of responsibility between the
merchant and payment processing service provider will vary depending upon the specifics of the device
types, software and services in use.
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for today's retail landscape. Products. From big data and user-centered design to modern cloud
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Balance Sheet: A statement of the assets, liabilities and capital of a business or other organization at a
particular point in time, detailing the balance of income and expenditure over the preceding period.

Mobile web payments (WAP) - Mobile payment generally refer to payment services operated under
financial regulation and performed from or via a mobile device. Instead of paying with cash, cheque, or
credit cards, a consumer can use a mobile to pay for a wide range of services and digital or hard goods.

Price bracket is a notional range of prices which consumers are prepared to pay for a good
Basic Stock = Average stock for the season – Average monthly sales for the season, Beginning of Month
( BOM) Stock = Planned Monthly Sales + Basic Stock
Fast fashion is a contemporary term used by fashion retailers to express that designs move from catwalk
quickly to capture current fashion trends

In the Inventory Management system, when a goods movement is posted, a material document is
generated that serves as proof of the movement and as a source of information for any applications that
follow. A material document consists of a header and at least one item.

Lot control itself is a rather simple concept that ensures every piece of inventory that flows through a
warehouse can be tracked to its group of origin. A “lot” is a specific batch of an item that was received, is
currently stored, or was shipped from your warehouse.
Compound Annual Growth Rate (CAGR) is the rate, or the ratio, which defines the growth of a
investment/business for a given time period.CAGR uses the compounding formula to know the rate of
growth in coming few years. CAGR=(End Investment Value/Start Investment Value)1/(Number of
Years) – 1

The use and manipulation of attractive sales displays and retail floor plans to engage customers and boost
sales activity. In visual merchandising, the products being sold are typically displayed in such as way as
to attract consumers from the intended market by drawing attention to the product's best features and
benefits.

Generic brands are often found in supermarkets or drug stores and include items such as packaged
macaroni and cheese and pain relievers. Generic brands do not have a significant identity attached to
them. Most often, generic products are plainly packaged and list minimal information on labels. These
items are generally priced lower than name brands. Therefore, generic items are often targeted to price-
conscious shoppers. People who are interested in high-quality or status-oriented items tend to buy
designer or brand-name items. These items tend to be more expensive and appeal to customers who have
more discretionary income.

SMAC (social, mobile, analytics and cloud) is the concept that the convergence of four technologies is
currently driving business innovation.SMAC is the basis for an ecosystem that enables a business to
transition from e-business to digital business. The four technologies improve business operations and help
companies get closer to the customer with minimal overhead and maximum reach.

 e-Commerce knowledge
 Single channel vs Omni-channel
 Omni-channel levers
 Order Orchestration
 key Trends
 Contextual Commerce