Managing Your Gourmet Food & Gift Basket Supplies Inventory: A Critical Part of Your Success (Part 3)

The "Open to Buy" Method of Gourmet Food and Gift Basket Supplies Inventory Control

One key goal of inventory management for your gourmet gift shop or gift basket business should be to ensure that an excessive amount of money isn't "tied up" in product stock.  Another key goal should be the maintenance of a balanced assortment of merchandise to meet your customer's needs.  However, these goals are not easily achieved.  How do the experts in the industry control their inventories of gourmet foods and gift basket supplies?

One commonly used method of maintaining inventory in the gift and basket industry is called "Open to Buy".  Under this method, "Open to Buy" is the amount of merchandise (in units or dollars) that you need to receive into stock during a given time period.  The period may be the selling season that is customary for a certain line or merchandise (e.g. the busy Christmas holiday season) or any other time span set by you.

At the start of a given period, a merchandise classification - such as gourmet cookies - is open to receive the number of units necessary to achieve the sales that you anticipate for the period.  Suppose for a given period (e.g. the month of October), you expect to sell 200 boxes of a certain type of gourmet cookies.  To start the month, you order 144 boxes; you are "Open to Buy" an additional 56 boxes of cookies. This figure is your control figure when you re-order fill-in stock. As long as you buy no more than 56 boxes of gourmet cookies during the month, your investment will be no more than you had planned.


What Happens To Your Plans For Your Plans Gourmet Foods & Gift Basket Supplies When The Unexpected Occurs?

But what happens if you get a large gift basket order that depletes much of the stock that you had planned to sell individually in your shop?  If the sales are very strong in the store, and you can re-order the gourmet cookies from your supplier with a short lead-time and your good judgment tells you that the cookies will continue to sell well during October and beyond, you can increase your "Open to Buy" for the item or for the category.

In summary, a good gourmet food and gift basket supplies inventory control system is essential to your gift shop or gift basket company's prosperity. No system, however, is a substitute for your experience and good judgment.  What you gain from your system will depend on you collecting the right information and asking the right questions as you analyze the results.

Phyllis and Greg Sprout began their company, epicureanfoods.com, in July 1993.  They specialize in supplying hard-to-find gourmet foods and gift basket supplies to gourmet shops, gift shops and gift basket companies across North America. 

They have helped the founders of literally thousands of gift, gourmet food and gift basket companies start and grow their businesses.  Many of these companies remain excellent customers of epicureanfoods.com today.  They can be reached at phyllisandgreg@epicureanfoods.com.