3 Reports to Optimize Your Procurement Strategy

- TradeGecko

Are you buying too much stock, stuck with deadstock, purchasing the wrong products, or pricing products ineffectively? In order to refine your procurement strategy, you should be tracking all of these aspects.

TradeGecko recommends these three reports (Yield Management, Inventory Turnover, and Merchandising Strategies) to help you increase efficiency and profitability, whilst allowing you to optimize your procurement strategy:

1. Yield management

This variable pricing strategy attempts to help an organization understand, anticipate and react to consumer behavior in order to maximize revenue. It’s about selling products and services at the right price, at the right time, to the right people, and making the most of limited resources to maximize yield or profits.

To successfully implement yield management strategies, there needs to be effective visibility into customer demand, which fluctuates over time depending on a multitude of factors.

Merchants using yield management pricing strategies typically need to review information such as:

  • Product supply and demand
  • Statistics of past/future events that may affect sales
  • Competitive pricing
  • Seasonal patterns
  • Other factors that affect sales

Reviewing this data allows an organization to accurately predict changes in demand over time or over consumer groups, and produce a profit-maximizing pricing strategy that allows them to target different consumer segments with varying prices at appropriate times.

Using TradeGecko, businesses that wish to make the most of yield management can gain access to real-time inventory reports, to accurately and effectively analyze stock movement and forecast precise stock levels for their products. This will allow them to optimize product output and set dynamic prices to help maximize revenue.

2. Inventory turnover

The inventory turnover ratio measures how many times a company’s inventory is sold and replaced over a period of time (usually a year). It’s important for measuring the inventory management efficiency of a business and is calculated as the cost of goods sold (total cost of inventory) divided by average inventory.

The cost of goods sold can usually be obtained from a business’ income statement, while average inventory is calculated as: (beginning inventory+ending inventory)/2.

Inventory turnover varies greatly by industry. Generally, the higher the ratio, the more efficient and profitable your business is. A low turnover implies weak sales, and consequently excess inventory.

Using these numbers will help you analyze inventory trends and adjust your purchasing strategy correspondingly to optimize inventory levels. It’ll also help you plan when to restock, understand how seasonality affects sales and avoid overselling/underselling.

3. Merchandising strategies

Merchandising strategies cover a variety of components: pricing, promotion, product placement, and support, etc. These strategies should vary by category, and be customized to target a specific objective (like inviting new customers to try your brand, increasing product sales and so on).

The development and implementation of merchandising strategies should ideally be a collaborative process between retailers and suppliers. Suppliers often have a deep understanding of their market and brands. Retailers can leverage this knowledge and expertise, working together with suppliers to satisfy a greater number of consumers, grow the category, combat category threats, and beat the competition.

To properly plan and establish effective merchandising strategies, businesses need to track their sales metrics (like “most popular product” or “most effective sales channels”). These numbers will help you track your progress towards merchandising goals, and then adjust your strategies accordingly to ensure you achieve them.

With the help of technology and effective inventory management, it’s now significantly easier for organizations to optimize and implement their procurement strategy than ever before.

Interested in learning how inventory management software can help simplify your inventory and order operations for your growing business? Put it to the test and sign up for a free trial with TradeGecko today.


TradeGecko is a cloud-based inventory management platform and B2B eCommerce Store for small and medium sized wholesale, distributor and eCommerce businesses. For more information, please visit www.tradegecko.com

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