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====== Inventory Management Procedures for Overstocked and Obsolete Inventory ======
__Item Status (SP) and Item Type (GP) //Currently using field “Item Class”//__
=====Active=====
Regular inventory items with” months on hand” targets ranked as follows:\\ 
\\ 
**A = 	Min 6 Max 12\\ 
B = 	Min 5 Max 6\\ 
C= 	Min 4 Max 6\\ 
None =	 Min 3 Max 5**\\ 
\\ 
Item rankings are determined by the inventory planner and the Director of Sales and Marketing based on historical sales, trends, feedback from shows (on new items), and forecasting. The rankings are reviewed and updated in January and June each year. Items may change ranking at any time at the discretion of the Director of Sales and Inventory Planner. See ABC ranking Analysis document for details.\\ 
The determination to change the status of an item is made by the management team in January and June each year based on recommendations and reports provided by the inventory planner.
=====Overstocked=====
Overstocked inventory is any inventory volume that is in excess of 12 months for an A item and in excess of 8 months for B, C, or non-ranked items available based on projected sales. Projected sales are calculated by the inventory planner based on the average monthly sales of the previous 36 months less any anomalies and direct import sales. Overstocked items may be offered at up to **30%** off the wholesale price. Only the overstocked quantity is available at the discounted price. The inventory planner updates this status weekly and publishes a report that can be shared with internal sales team and customers.\\ 
As soon as an item is designated as overstocked, the inventory planner will change the status in GP/Sales Pad and add the item (including image) to the specials list located in S/Purchasing/Overstock. The available quantities will be updated weekly by the inventory planner.\\ 
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<color red>First 60 Days</color>\\ 
**Flash Sale Websites** – Implemented by key retail (Guy)\\ 
Zulily, Rue La La, Hautelook, Guilt, Joss & Maine\\ 
**Key Retail Sites** – Implemented by key retail (Guy)\\ 
Overstock, Wayfairer, Amazon Lightning Deals (Laura)\\ 
**Regular Wholesale Accounts + Wholesale Reps** – E-Blast created and sent by Marketing (Bri) FIXME\\ 
\\ 
<color red>Next 30 Days</color>\\ 
**Off Price Wholesale Accounts** – TJX (Brandon/David), Tuesday Morning (Brandon), Nordstrom Rack (Brandon), Sierra Trading Post (Scott), Ross Stores (Scott), Saks (Scott), Burlington Coat Factory (Chris) , Century 21 (Brandon)\\ 
\\ 
<color red>Next 90 Days</color>\\ 
**Promotional Accounts** – Promo Department (all members)\\ 
\\ 
<color red>Final Days</color> //(over 200 days with quantities still categorized as Overstock)//\\ 
Decision by management to consider larger discount
=====To Be Discontinued=====
This status means the item will not be reordered for general inventory, no backorders will be accepted, and all goods in this status will be immediately put on sale at **40%** off the wholesale price. Offers may be accepted as low as 0% margin (cost) with management approval. Any offers that will create a loss require partner/owner approval.\\ 
The designation of items to this status usually occurs annually in June when there will be an overall review of item sales and inventory levels. In general, the inventory planner will be identifying items based on one or more of the following criteria:\\ 
  - Sales less than $20,000 in the last 12 months
  - Inventory turns less than 1.5 per year
  - Return rates greater than 5%
  - MOQs that result in inventory  levels greater than 12 months on hand
In most cases, items will not be designated with this status until the June following 12 months after the items introduction date. Items designated will not be featured in the following year’s catalog but will remain on the price list and our websites and databases until inventory is reduced to zero.\\ 
As soon as an item is designated as to be discontinued, the inventory planner will change the status in GP/Sales Pad and add the item (including image) to the specials list located in S/Purchasing/Overstock. The available quantities will be updated weekly by the inventory planner.\\ 
\\ 
<color red>First 14 Days</color>\\ 
**Off Price Wholesale Accounts** – TJX (Brandon/David), Tuesday Morning (Brandon), Nordstrom Rack (Brandon), Sierra Trading Post (Scott), Ross Stores (Scott), Saks (Scott), Burlington Coat Factory (Chris) , Century 21 (Brandon)\\ 
\\ 
<color red>Next 14 Days</color>\\ 
**Regular Wholesale Accounts** – Urgent e-blast created and sent by Marketing (Bri) Mike M. will set default wholesale pricing in GP/SP to 40% off wholesale for a two week sale period. \\
\\  
<color red>Next 60 Days</color>\\ 
**Flash Sale Websites** – Implemented by key retail (Guy)\\ 
Zulily, Rue La La, Hautelook, Guilt, Joss & Maine\\ 
**Key Retail Sites** – Implemented by key retail (Guy)\\ 
Overstock, Wayfairer, Amazon Lightning Deals (Laura)\\
\\  
<color red>Final Days</color> (indefinitely)</color>\\ 
**Promotional Accounts** – Promo Department (all members)\\ 
=====Phase Out=====
The criteria for designating a “Phase Out” item is the same as the “To be discontinued” above. This status means the item will not be reordered for general inventory, no backorders will be accepted, but it will not be on sale. The inventory planner will determine if the goods will likely sell out before the end of the calendar year at full price based on projected sales. If Phase Out items have quantities remaining at the end of the calendar your, they will be reclassified as To Be Discontinued by the inventory planner.
=====Liquidation=====
Items with this status have been marked as “To be discontinued” for more than 12 months and need to be liquidated. \\ 
Once an item is designated for liquidation:\\ 
During the <color red>first 90 days</color> the maximum discount is **60%**\\ 
Off Price Wholesale Accounts – TJX (Brandon/David), Tuesday Morning (Brandon), Nordstrom Rack (Brandon), Sierra Trading Post (Scott), Ross Stores (Scott), Saks (Scott), Burlington Coat Factory (Chris) 
After  120 days of being marked for liquidation, inventory will be offered to close out buyers/liquidators with the goal to “take all” for the following discounts:\\
\\  
<color red>After 120 days</color> **70%**\\ 
<color red>After 210 days</color> **80%**\\ 
<color red>After 300 days</color> **90%**\\ 
\\ 
These will be __negotiated sales__ that must not exceed a 90% discount from wholesale without partner/owner approval. All liquidated sales will be identified on the monthly margin analysis report.\\ 
This list is updated by the planner __weekly__ to ensure accurate available inventory is communicated to the sales team.
=====Discontinued=====
Once an item that was To Be Discontinued, Phased Out, or Liquidated has an inventory level of zero in all locations, zero on order, and zero allocated, the type (GP card) and status (SP field) will be changed to “Discontinued” discontinued by the inventory planner.  A physical inventory must be done to verify all bins are zeroed out prior to the change of status.\\ 
The inventory planner will notify the Licensing Supervisor when a blank item that has active licensed kits is discontinued. The licensing department will be responsible for updating GP/SP, notifying sales team and customers and making sure all databases are updated. Refer to policy S/Licensing/_Procedures/LICENSING STUFF/Licensing Notes/Licensing Procedure for Discontinuing Licensed Items.\\ 
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The Specials list is available to Sales Managers and Marketing Coordinator to use for mailings, e-blasts, and various flash sales and specials. The internal sales/service teams in the Wholesale and Promotional Depts.  also have access to this list and have commission agreements in place as an added incentive to sell these items quickly. It is saved in S/Purchasing Supply Chain/Overstock/Picnic Time Special 2017 with Images (and Picnic Time Overstock Specials 2017 with Images).\\ 
This policy will reside in the Picnic Time Knowledge base and be updated by GM (Kevin). The Word document will be saved in S/Reference/Office Procedures and Instructions/Inventory Management Procedures for Overstocked and Obsolete Inventory.
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