Step 1: Does a managed merchandise program make sense for your business?
Arguably the most important step in the process, before asking for approval from the CFO, consider whether or not this is something that makes sense for your organization. You can do this by asking yourself the following questions:
Does it fit with my overall business goals? (ex. Build Brand Awareness, Customer Relations, etc.)
Do I have plans to scale my merchandise program?
Will it provide enough value to justify any initial investment?
Do I have enough time to manage my inventory currently?
Does managing merchandise take more than 2 hours of my week - every week?
Do I have more time to spare as my merchandise program grows?
Is my current inventory tracking system up-to-date? (Your inventory tracking system could be an excel spreadsheet.)
Does my current inventory tracking system allow me to see what products are selling and which ones aren't?
Do I know if my products are priced correctly?
Would an automated pricing strategy help align my prices with demand?
If your answers to those questions support your need for a managed merchandise program, it's time to start educating yourself with the information you will need to answer your CFO's impending questions.
Pro Tip: Remember, in order to get approval, focus on how this program will help your company achieve its specific goals. Showing how a managed merchandise program can improve revenue and save money is the best way to illustrate why this project is worth investing time and money in.
Step 2: Research & document how a merchandise management program will help your company reach its short, mid-term, and long-term goals.
In order to get your leadership team's approval for a merchandise program, you must first educate yourself on how managed merchandise programs work. Then, you'll need to be able to relay this information to your key decision-makers in a way that makes sense for your business.
What is the definition of a managed merchandise program?
A managed merchandise program uses algorithms and software to predict when products will sell out and reorder items accordingly so that there isn't too much stock left over at any given time and no item goes out of stock unexpectedly.
These algorithms consider factors such as weather patterns, seasonality trends, etc., making them more accurate than traditional methods like cycle counts or manual inventory tracking methods that businesses have used in the past. The system also allows for better forecasting and planning by showing what products sell faster than expected, allowing companies to adjust their strategies accordingly.
For example, suppose sales of certain products are outpacing expectations. In that case, a company can decide whether to increase production or promote those items more heavily via advertising or social media campaigns.
Here are a few additional key areas you can focus on:
Reduction of Inventory Waste: A managed merchandise program helps reduce inventory by reducing the number of SKUs (Stock-Keeping Units) you carry and maximizing space by rotating products based on sales velocity and seasonality. It also helps ensure you have the right amount of inventory at any time.
Reduced Costs: A managed merchandise program can help reduce costs by decreasing end-of-season markdowns, reducing the number of human hours needed to manage inventory, and improving inventory management as a whole.
Faster Turnaround Times: With an automated system in place, you can decrease your order fulfillment lead time, which is the amount of time between receiving an order and getting the product out the door. This can help speed up product delivery times and get customers what they want before they even know they need it!
Improved Customer Service: With less back-and-forth between buyers and suppliers as well as faster shipping times, customers are happier because they receive their orders faster than ever before. Plus, they'll likely come back again and again for future purchases.
Improved Sales: A managed merchandise program can also help improve sales because it helps build customer loyalty and increase the amount of time customers spend in the store.
Increased Profit Margin: A managed merchandise program will help you increase your profit margin by increasing sales, reducing markdowns, and increasing customer satisfaction.
Pro Tip: Make sure the points you focus on during your pitch align with your current business objectives.
Step 3: Be able to explain how a managed merchandise program will help your CFO.
The key: Make sure you do your homework.
Ensure you understand your company's financial situation and future needs. Don't assume that the CFO knows everything about your business. The more facts you have, the better off you'll be when it comes time to make your case.
Next, take all of those facts and put them into a presentation that explains why implementing a managed merchandise program is essential for the future success of your company. Include supporting data like customer feedback and industry statistics, if possible. The more information you can give them, the better your chance of getting their buy-in on this project.
Your presentation should clearly convey the following:
How much cost savings, brand recognition, and revenue will the program bring to the organization?
The costs associated with starting a program.
Time management benefits of automated inventory and sales reporting.
Whether or not they are willing to invest in your initiative depends on whether or not they believe it will deliver results for the company as a whole—and whether those results are significant enough to motivate them to make an investment decision.
Remember that your CFO may be skeptical of the managed merchandise program. By familiarizing yourself with their personality and interests, you can frame the conversation in a way that resonates with them emotionally.
Step 4: Learn how your competition is managing its merchandise.
Suppose you're in a highly competitive industry and merchandise is a key component of your brand awareness strategy. In that case, learning how your competition manages its merch will be worth your time.
Try finding the answers to the following questions:
Are my competitors using in-house staff to manage their merchandise, or are they outsourcing?
If they outsource, what kind of vendors do they use?
What kind of services do those vendors provide?
How much does each vendor cost?
How much does each vendor charge for specific services?
Pro Tip: If you're having trouble finding the answers to these vendor-specific questions, you could ask them as part of a proposal. Just pretend that you're searching for new suppliers for your branded merch.
Your competition is likely using a variety of different vendors to help manage their merchandise. By understanding each vendor's services, you can tailor your program to be more competitive. Additionally, by understanding how much each vendor charges, you can find ways to reduce costs and pass those savings on to your customers.
Step 5: Have a plan ready to champion the program adoption across your company.
A successful merchandise program requires buy-in from multiple stakeholders — not just your CFO. Convincing other stakeholders, such as the CEO, sales, and field marketing teams, to get on board with the program is just as vital.
Start by highlighting the benefits a merchandise management program can bring to each department in your company. For example, if you show that the program will help your Sales Team reach their goals by increasing customer sentiment, they'll be more likely to support it.
Next, be prepared to answer any questions or concerns that they may have:
Is there a merch budget for my department already set?
Where can I submit branded merchandise ideas?
How often will new merchandise be added?
Anticipating and addressing these objections head-on will help smooth the way for the adoption of the program.
Finally, plan to host a few Zoom meetings where you train each department on how to utilize your merchandise program. (Along with any Dos and Don'ts that you need to highlight.)
By outlining your adoption process, you're ensuring it gets maximum buy-in and support from all stakeholders involved and proving your dedication to its success to your Leadership Team.
Step 6: Have a backup plan prepared in case your program fails.
One of the most important steps in getting your CFO’s approval is being able to answer the question: What happens if this doesn’t work? If you’re going to ask your Leadership Team for money, they will want assurances that there is a 'Plan B' should things go wrong.
For example, you may have to account for any extra inventory required if you misjudge demand and order too much. The risk of overstocking is greater than understocking because it can lead to loss of sales, damaged or expired products, and lost profits.
Knowing the risks associated with not purchasing enough inventory is also important.
Customer Experience: When an item runs out of stock, there will be a delay in getting the product shipped. Or even worse, you won’t be able to get more inventory of the product your customer ordered.
Cost Per Item Increases: (Shipping costs + cost per item is higher)
The best way to address these risks is by developing contingency plans and clearly understanding how they might negatively impact your business – so that you can identify them early on and take corrective action before they become an issue.
Step 7: Find a merchandising solution company you can trust.
If you're having trouble getting approval on a merchandise management program, consider outsourcing your vendor management services. Outsourcing will allow you to focus more on growing your business by taking away some of the responsibilities that come with managing vendors, managing stock, and warehousing and shipping.
Plus, now that you know the kind of services you need (and want) from a managed merchandise program, you’ll be able to find a merchandising solution company that can handle everything you want and more.
Using a 3rd party merchandise fulfillment company may make it easier for you to get approval from your Leadership Team because they know that it's being taken care of by a team with more experience than them.
Pro Tip: The right merchandising solution company can even help you pitch to get approval.