Forward Buy Sync is a feature that synchronizes your forward buys to future deal start dates.
Stepping back for context – The Negotiating Window:
Forward buying offers a unique opportunity to wholesalers, and many retailers can also benefit. When vendors offer discounts, these organizations can take advantage of discounts by buying more than usual. Essentially, they can get a better profit margin from forward buying. At times, vendors may need to get a certain dollar amount in order to make their quarter. So, they offer a discount to make that happen. At Herlitz, we have tools to help the buyer not only see what the most profitable forward buy is, but also how far beyond the peak of the profit curve they can go and still not lose money.
In the case below, the most profitable buy for 1 free with 11 or 8.33% off, is 80 days for this item and the company would make an extra $324.91 profit. Should the vendor rep need an order that represents 140 days extra, then the profit would only be $133.62. As you can see, the profit curve is quite flat. Because of this, if you have to negotiate to buy more than is profitable, in this case 75% more, you still achieve 41% of the maximum profit.
Using this idea, we can help all our customers, especially those who are Cost Plus, to manage their deal buying. Forward Buy Sync will not only synchronize the forward buy from one deal to the next, but it will also cut the last regular purchase before the upcoming deal starts. One food customer called this, “Anti Forward Buy”. Take the following example.
The deal starts in 11 days. The current vendor order cycle is for 15 days. HIMPACT can automatically synchronize this last, non-deal buy, so that your inventory level is at its lowest as your deal starts. It will automatically reduce this vendor order cycle by four days. Users can manage this feature via a forward buy sync policy, which provides options allowing the system to buy short, long, or both. In other words, our customers can instruct HIMPACT to not always buy the most profitable forward buy quantity, but to automatically adjust the overall order to more efficiently manage both margin and inventory levels.