Page 163 - DMGT554_RETAIL_BUYING

Retail Buying

Notes This duplication of effort resulted in increased costs as workers had to work overtime to
meet their quotas. These extra costs for the extra work performed had not been considered
in the manufacturing budget. The manager of this subassembly line did not want be
charged with these overhead expenses because he felt it was not their responsibility.
Likewise, the manager who was the overseer of the final assembly department also refused
to accept the increased costs to his budget. He argued that the extra costs were a direct
result of the poor work of the personnel in the subassembly department as this was where
the problem originated.

The subassembly department manager countered this argument by claiming that the
parts were in good condition before they left his department and that the damage must
have occurred in the final assembly manager’s department instead. Both parties had reached
am impasse.

Some time passed before a resolution to the matter was worked out that was agreeable to
both parties. What both parties were really seeking was to find a long term solution to this
dilemma? It was only when they truly understood the nature of the problem they were
able to negotiate a reasonable solution that was acceptable to both of them.
It was ascertained that the subassembly workers had some slack time available during
every working month. The damaged parts were returned in small batches form the final
assembly plant so that the subassembly personnel could work on them during these slack
periods. Also, when they examined the problem in more minute detail, the managers
learned that some of the personnel in the final assembly plant may not have been adequately
trained and may have also been partially responsible for the damaged incurred. These
personnel were identified and were sent to the subassembly plant to further their training
and to learn more about what transpired in that department.
The resulting solution addressed the increased cost concerns of both departments on the
one hand. On the other hand, overtime was reduced by allocating the personnel where
and when they most needed and finally, because of the enhanced training, the number of
damaged parts was considerably reduced.
Source: http://www.negotiations.com/case/negotiation-problem/

Self Assessment

State whether the following statements are true or false:
1. Wholesale purchasing deals with the purchasing of inventory to resell at a loss margin to
retail establishments or businesses.
2. Wholesale purchasing involves several distinct business models.
3. The online wholesale store has less products/a bigger selection to offer.

11.2 Meeting with Vendors

Once a merchandise order has been planned, the retailer must identify potential vendors to
supply merchandise to the retail operation. Many variables need to be assessed during the
vendor identification process. The retail buyer should compare the types of merchandise offered
by various vendors with the types of products the retail outlet carries. Does the vendor’s
merchandise align with the retailer’s mission statement? Does the merchandise fit with the
overall image that will be communicated to customers? The buyer then compares the retailer’s
current products with potential products offered by vendors, in terms of price points, brand

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