Retail Terminology

-Sanjeev Kumar Pandit11/30/2014

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Supply Chain Management (SCM)

Supplier Retailer Customer

Parties

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Supply Chain Management (SCM)

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Supplier and Retailer Relationship - System

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Supplier and Retailer Relationship - Buyer

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Stores

• Departmental Store• Wide range of goods• E.g. Macy’s

• Supermarket• Wide selling of food and beverage products• E.g. 7-Eleven

• Special Store• Specific products• E.g. Toys “R” Us

• Dollar Store• Single price store• E.g. 99 Rupee Store

• Discount Store• Sells goods at lower price than market value• E.g. Aldi11/30/2014

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Stores – cont.

• General/Kirana Store• Small store that stocks a range of everyday items• E.g. Luci General Store

• Brick & Mortar (B&M)• Companies that have physical presence and offer face-to-face customer

experience• E.g. Bhatbhateni

• Online Store• Sell goods and service over the internet• E.g. amazon.com

• Mall• Range of retail shops at a single outlet• E.g. City Mall11/30/2014

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Store Terms

• Assortment Planning• Determination of placing of goods

• Promotion• Attempt to increase the sale of any particular product

• Types:• Threshold Promotion

• Provide 5% discount on purchase of item(s) having cost greater than Rs. 2000/-

• Multi Buy Promotion• Buy 2 Get 1 Free

• Mix and Match Promotion• A comb free on purchase of a shampoo and a oil

• Simple Promotion• Festival Offer

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Store Terms – contd.

• Markdowns• Reductions from original selling price

• Markups• Extra amount charged for an item above what the retailer paid the supplier

• Clearance• Final sale of an item or items to zero inventory

• Employee Discount• Discount on purchase of item(s) to the company’s employees

• Intercompany Transaction• Transaction between two companies

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Purchase Terms

• Purchase Order• Commercial document and official offer issued by a retailer to a supplier, indicating

types, quantities, and agreed prices for products/services

• Contract• Acceptance of a purchase order(requested by a retailer) by a supplier

• Invoice• Commercial document issued by the supplier to the retailer regarding the sale

transaction and indication of products, quantities, and agreed prices of the products/services

• Replenishment• Process of filling up the stock whenever the inventory goes below the minimum

level, in order to avoid stock-out

• PO Breakdown• Delivery of goods directly to the stores rather than warehouse/distribution center,

even if the PO was requested from warehouse

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Cost – Types

• Base Cost• Initial cost without any charges, tax, discount on item• E.g. Supplier says Rs. 100/- to the buyer

• Net Cost• Initial base cost after deducting discount for item• Base Cost – Discount (100 – 10 = Rs. 90/-)

• Net Net Cost• The cost after inclusion of taxes• Net Cost + Tax (90 + 1 = Rs. 91/-)

• Dead Net Cost• Final cost after adding all expenses and charges• Net Net Cost + Charges/Expenses (91 + 5 = Rs. 96/-)

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Cost – contd.

• Estimated Landed Cost (ELC)• Cost calculated by the buyer based on the estimated amounts of the item

price, taxes, and the charge amounts

• Actual Landed Cost (ALC)• Cost calculated based on the actual amounts of the item price, the taxes, and

the charge amounts

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Inventory Position Grouping

• Stock on Hand (SOH)• Goods owned by the retailer

• In Transit• Goods arrived at discharge point

• On Order• Goods on approved PO, but not yet been received

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Inventory Terms

• Inventory Transfer• Process by which inventory is physically tracked from location to location

• E.g. From warehouse to shop floor

• Inventory Adjustment• Correction of inventory or stock records to bring them into agreement with

the findings of the actual(physical) inventory

• Return to Vendor• Return of goods to the original vendor

• Weighted Average Cost• Method of calculating Ending Inventory Cost

• WAC =Total cost of goods available for sale

𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑔𝑜𝑜𝑑𝑠 𝑓𝑟𝑜𝑚 𝑏𝑒𝑔𝑖𝑛𝑛𝑖𝑛𝑔 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦+𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑠/𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛11/30/201414

Sales – Types

• Regular• Normal Sales

• Promotional• Provide offer/discount on sales

• Clearance• Reduction to zero inventory

• Intercompany• Sales for the company’s employees

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Memo

• Credit Memo• Document issued by the supplier to the buyer reducing the amount that the

buyer owes to the supplier under terms of an earlier invoice

• Debit Memo• Notification from buyer to the supplier that tells the supplier that a

debit/payment was made in the supplier’s account

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THANK YOU!

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