The Color/Size Conundrum: Part 1
Many apparel retailers face some challenges when dealing with color and size variables in the items they sell to their customers. The conundrum does not lie in the reality that the retailer needs to offer color/size choices, but rather how color/size is tracked by their POS and backend systems. Although most frequent with apparel retailers, this conundrum can extend to any retailer that sells a product that has multiple options (furniture, electronics, dinnerware, etc.).
This is the first in a series of articles where I hope to shed some light on the subject and present what I feel is the preferred approach. At the same time, I would love to hear your feedback regarding the challenges you are facing in this area, as well as your great (or not-so-great) solutions for dealing with size/color in your POS and backend systems.
In this first article, we will identify some of the ways that I have seen retailers deal with the issue, and try to list the pros and cons of each. We will mainly focus on the benefits that can be gained from what I feel is the preferred approach. In future articles in this series, we will drill down into various functional areas of POS and backend systems where color/size is part of the equation (pricing, barcoding, replenishment, purchasing, sales analytics, etc.). Instead of talking hypothetically about POS and backend operational treatment of these functional areas, I have chosen to use a real retail ERP system to illustrate what is possible and support my “preferred approach” to the color/size conundrum. The ERP system shown is LS Retail NAV, which is built on Microsoft Dynamics NAV.
Punt: I have seen quite a few retailers just decide to punt and only track inventory at the style level. They will separate out items that have different prices (plus sizes), but for the most part, there will be only one or two SKUs (and barcodes) for all size color combinations. Pros: Simple and easy setup of the POS and backend systems. Cons: No visibility whatsoever as to what sizes and colors they have in stock at each store and replenish calculations are now reliant upon a physical count and spreadsheet. Quite frankly, if this is your system today, then maybe it’s time to look for a new POS/backend ERP system.
Hail Mary: For quite a few retailers, setting up each color/size combination as an item in their system seems to be the preferred approach. This seems logical, and takes care of the cons listed for those who decided to punt. It does, however, have a few cons of its own. Pros: Visibility of backend system inventory by color size and all the trimmings that go with it (pricing, vendor costs, ability to use vendor barcodes, individual settings for replenishment rules and sales history). Cons: No (or clunky) analytics by style. Lack of ability to “matrix order” the item. It’s difficult to define allocation rules or pre-pack functionality for the item. It’s harder to create promotions for the style itself. Tons and tons of data entry must be done to set up the items properly. Not to mention keeping all these items up to date with pricing/vendor cost changes discontinued items and additional color size options made available by the vendor.
Touchdown: We now enter what I feel is the proper and preferred approach. Problem may be for most is that their POS and backend systems do not support these concepts. In this approach, the item is set up at the style level and color size combinations for the style are set up as what we call “variants.” Yes, I would tend to agree that from a data entry standpoint, this is not much different than setting up each combination as a normal item. However, one other tool in our belt that keeps me from agreeing is something we call the variant framework. The variant framework, along with some additional automation that ArcherPoint authored, takes the heavy lifting out of the complexity and time it takes to set up an item with many option combinations. At the same time, it still allows for analysis and control at the style level.
In future articles, we will actually work through how the variant framework can import a file of information from a uniform apparel vendor, and quickly set up the base item and all its “variants” along with the associated cost, price, barcode and vendor item number, as well as create the replenishment calculation skeleton ready for you to update with the specific changes in calculation for each color size combination (for each store as well, if you like).
I will leave you with just one screenshot showing a benefit of using and setting up an item with variants rather than throwing the Hail Mary or, worse yet, punting. The screenshot is an example of ordering product by a matrix data entry form. The user entered a quantity of 200 and the matrix form appeared pre-populated with suggested quantities of each color/size combination. The quantities were “weighted” by factors set up by the user. Of course, the quantity to order for each color/size can be changed at this point in time by the buyer. If you would like to check the math, the sum of all the quantities in the matrix view should add up to the quantity of 200 entered on the purchase order line.
Again, this is the first in a series of blog articles that for the most part will walk through the process of setting up an item using the variant framework, and hopefully will illustrate quite a few more benefits of this approach. In the meantime, reply to this post with your thoughts, frustrations or solutions in dealing with color and size in your retail business.
Be sure to check out the second part of this blog, The Color-Size Conundrum, and see how to quickly set up items with color and size attributes using Microsoft Dynamics NAV with LS Retail in a video demonstration with Matt Street.
Author: Wm. Matthew Street, Solutions Consultant/Retail Product Lead at ArcherPoint
Wm. Matthew Street is a developer and business analyst at ArcherPoint. A retail ERP expert, Matthew has spent more than 28 years focused on driving improvements in business processes, operations, inventory management, business planning and accounting.