You need to look at these two items as future business opportunities: Promotional Products with short-term lower prices and future prices increase. Why? Promotions and Vendor Price Notifications happen regularly and when analyzed and executed as Forward Buy opportunities result in additional profits! Forward buying can DOUBLE OR TRIPLE your gross margin on short-term purchases, making significant contributions to bottom-line profitability.
With inflation averaging 1.8 percent over the last 3 years, based on Bureau of Labor statistics, the inventory profits generated by higher general inflation rates have disappeared! In other words, the economy has all but eliminated the margin gains from inventory appreciation.
This makes Investment or Forward Buying a significant tool for wholesale and retail businesses to increase profitability!
HIMPACT takes the guesswork out of Forward Buying execution. With all deal information entered, the Forward Buy module automatically generates economic order quantities based upon the terms of the deal and the financial factors associated with your product acquisition and holding costs, which are defined for each of your locations. This daily analysis ensures that you receive the full benefit from each forward buying opportunity and not miss out on any deals. This will also eliminate the need for Post-it® note reminders, running Excel® macros, and the potential for renegade buying.
The terms of each deal and the financial policies set by your management team for Inventory Investing are automatically combined to drive smarter replenishment decisions, daily. Your forward buy order quantities are integrated into regular replenishment orders along with the regular order quantities.
HIMPACT’s Forward Buy Module leverages each profit opportunity, no matter how complicated the structure of the supplier’s offer: Short term Discounts, Extended Dating on Cash Terms, and Price Increases, or any combination of these.
To help your team streamline your vendor negotiations, we developed a new “on the fly” simulation tool. You can input Forward Buying scenarios into the system for any set of deal conditions, on any item, see the results and/or develop your own alternatives to present to your suppliers.
For each deal, HIMPACT calculates the most profitable purchase order quantity, and integrates those quantities with the regular replenishment orders. By proactively managing your product cost changes in HIMPACT, you can generate additional margin dollars and increase your overall profitability.