Help! My Inventory is Out-of-Whack!
By Tim Slapnicher ABOC
Release Date: 7/1/2012
Expiration Date: 1/30/2017
Upon completion of this course, the participant
should be able to:
- Find creative ways to reduce an out-ofcontrol inventory.
- evelop a Frame Matrix using patient demographics.
- mprove vendor relations and create a true partnership, while setting up rules and guidelines with your reps.
- Learn how brand training can help boost sales and how it can create a better patient experience.
- Implement a healthy board management system that works for you, your reps and your practice.
Tim Slapnicher ABOC, CPO is currently the practice coordinator at Rivertown Eye Care in Hastings, Minn., where he lives with his family. He uses his experience of teaching kindergarten to bring a fresh perspective to management in the optical industry.
This course is approved for one (1) hour of CE credit by the American Board of Opticianry (ABO).
Course # SWJM252-1
INVENTORY CHAOS IN "5"
If you are the owner, manager or buyer of
an optical shop, you could have a stomachache by the end of this paragraph. At least
I did when I experienced this in real life.
We had over 2,000 frames, 31 reps and
averaged 0.67 turns per year. That was an
investment of $130,000 on our boards
and a loss of $7,000 in optical the previous
year. Purchased frames would stay in
unopened boxes for three to four months
before being placed on the boards. We
ordered 40 to 70 frames per rep visit, and
almost 50 percent of our inventory was
high-end luxury product. An average of
three to four hours was spent flipping
product when reps visited our optical.
I told our doctors that if we figured out
how to turn this around, I would probably
be able to write and speak about how we
did it. And here it is.
HOW IN THE WORLD
DID THIS HAPPEN?
That was my first question. I had no idea
where to start. There were so many red flags
that I did not know how to proceed. We
eventually came to the realization that until
we could figure out what happened and
what we were going to do about it, we
would implement an inventory freeze. This
is every optician's nightmare—no more
exciting, trendy, fashionable frames for
the foreseeable future. It was interesting
observing our opticians bring patients over
to our frameboard. They became great with
sales, though they had to fake enthusiasm
for product that had been in our optical for
over three years. This was rough.
PHASE 1: "TRIM-DOWN"
The frame freeze helped a bit, but it was
still very difficult to sell off our frames
which were not current and that our opticians were sick of. We had to get creative
with clearing out our inventory. Here are
some things to try, some more successful
1. Buy-backs: This is when a frame company would take 70 "duds," and we would
get 70 new frames at a discount. Although
it was an even trade and did not lower our
number immediately, current frames are
more saleable and will lower inventory
2. Free frame as a second pair: Everyone
tells you to sell multiple pairs, right? Even
though we weren't making a dime on the
second frame, we were getting paid for
the lenses and patients get into the habit
of having more than one pair.
3. Dots galore: Purchase a whole bunch
of colorful dots and place them on outdated
frames. Red Dot: 50 percent off frame;
Yellow Dot: Free frame with purchase of
lenses; Blue Dot: $20 sunglasses with a
year's supply of contacts
4. Optician incentives: If trying to sell
off a frame line, consider giving a $50
incentive if sold at full price. After three
months, consider discounting those
frames 25 percent off and pay opticians
$35 for selling them. Incentivize $20 for a
frame that was 50 percent off and a high-five if the frame was 75 to 100 percent off.
Regardless, working hard at a frame line
can ensure that it gets eliminated.
After two painful years, we had greatly
reduced inventory and were ready for new
product. We chose to allow this trim down
two years—yours may take less time.
PHASE 2: CREATE A PLAN
Our optical brand was damaged. What
once was known as an exclusive and trendsetting optical had become a big mess of
confusion. We had no identity or direction.
Everything had been done randomly
and without a plan, and we paid dearly
for it. We watched as patient after patient
requested their prescription and walked
out the door. We needed a plan and a
vision to regain our once-elusive
optical reputation. Where to start?
1. Ask the basic questions. Which
brands and companies should we
work with? What frames do our
patients like? Who helped us switch
out product during our ordeal? Which
companies contributed to this mess?
Which reps were willing to sacrifice
their sales to help us turn around? What are the immediate next steps?
During the question period, ask many of
your reps to share their observations on
what builds a successful optical. After all,
they see many different opticals. How do
most businesses control inventory? What
lines, besides theirs, do they like? Which
are complementary, which conflict and
why? What are the secrets to creating an
amazing optical experience? You'll get a
ton of great input, but realize that needs
to be distilled into more guidance and a
better plan to save a reputation.
2. Develop a Frame Matrix. Before
making any big purchases, consider a
Frame Matrix, i.e., what percentage of
men's, women's, kid's, sun, plastic, metal,
semi-rimless, rimless, etc., are required
and which lines excite those that sell them
and the demographic of your practice.
Remember, patients who request prescriptions to shop elsewhere are telling
you that the selection is not exciting.
3. Calculate the total number. To calculate
the number of frames required, collect
specific numbers on patient demographics: age, gender, style, etc. This is available
by mining the data in your practice
management system. That will provide a
black and white plan on what a frame-board would look like. Before diving in
and ordering frames like mad, make sure
you are on the same page with your reps.
SAMPLE TOWN'S FRAME MATRIX
Research your town's demographics
(www.city-data.com). Here we've created
a sample. Sample Town's demographics
have a population of about 5,000 people.
54 percent are female, 46 percent are
male. The average age for women in this
town is 46, and for men, 44. The average
income per household is $62,000.
The target for the inventory will be
women ages 30 to 65. Frames will be
elegant, classic and fun and funky. For
men, the target will be young professionals. Frames will be rimless, retro and
bold. Sunwear will focus on high-performance lenses and fashionable styles.
Frames for children will be traditional
with a fun twist.
Based on research of Sample Town's
demographics, we will have an inventory
of 200 pieces (for perspective, the average optometric office, with revenue of
about $700K stocks 750 frames in inventory. Source Keymetrics, mbe-ce.com),
which will consist of 40 percent women's, 25 percent men's, 20 percent sun
and 15 percent kids. Frame reps will be
given a board space number and will
provide a mix of plastics, metals, zyl,
semi-rimless and rimless with a variety of
sizes and colors. Monitor the turns of
each frame line on a quarterly schedule.
Be flexible enough to slowly add more
pieces to high performing lines. Have
two to three frame lines on your wish list
for underperforming lines or reps. (The
following brands are for example only,
choose your own preferences.)
Saks 5th Ave
|Marc by Marc Jacobs
PHASE 3: IMPROVE VENDOR
RELATIONS AND CREATE
A TRUE PARTNERSHIP
Do you trust your reps? While we made
many mistakes during the process, we
had mixed success with reps. We even
found a few that had been and still continued padding orders. Some of them
were eager to switch us out of old product, but many weren't. However, it is your
responsibility to address those unhealthy
patterns. Has this happened to you?
Some reps came in without an appointment, and we felt pressured to buy as we
were informed they wouldn't be around
for another three months… it was now or
never. Some opened their frame trays in
front of patients, and staff had to choose
between helping the patient and looking
at new product. Some reps had favorites
on our team, and the others felt left out
and unengaged. Gifts were sent to some
opticians without full knowledge of doctors or managers. Some frame buying
was frequently done offsite at restaurants
where gift cards would be exchanged for
large orders. The problem is not the reps
but that of the office. Develop a set of
guidelines and/or expectations for reps,
and then train them.
RULES AND GUIDELINES—
It has taken this office some time to nail
down, but these guidelines have helped
tremendously to move us forward with
- All reps must call or e-mail for an
appointment (no surprise visits).
- All reps will set up their own displays
with POP and other decorations that go
with our décor.
- If reps bring in treats or gifts (shirts,
mugs, chocolate, free vouchers, etc.), they
must provide enough for the entire team.
- If gift cards or incentives are provided,
those are communicated with the owner/
doctor and manager before presenting to
the optical team.
- All individual gifts, gift cards, vouchers,
etc., are placed in our rep box.
- Sales goals are set together: the number of turns targeted, exchange percentage, etc.
- Visits are scheduled for once per quarter to go over numbers and new releases.
- At least one brand training event is
scheduled per year.
- Reps will e-mail a summary of the visit
to an agreed list of opticians, manager and
- "Partnership" is defined together to
come up with mutual expectations.
- "Board management" expectations
are defined together.
REQUIRE BRAND TRAINING
Want to be able to do the right "frame
speak"? It may be the coolest thing we do
at our optical. Consider hosting a brand
training event about once per quarter.
Deliver an open invitation to all of your
reps to brainwash staff with all there is to
know about their company and frame
lines. After all, who knows more about the
product than the rep? The optician and
staff goal—be able to ooze with the same
passion that the rep has for the brand.
When? Pick the night that works best. In
this office, Tuesday nights work best for our
team. The event is for all members of the
team (not just opticians). Consider starting
right after work and make sure to have
plenty to eat and drink (perhaps a meal
catered in, fancy pasta and wine for one of
our luxury lines). Other times, it's subs or
pizza. Vary the menu—often consistent with
the brand's identity. Dessert is a must (aka
chocolate) to cap off an evening together.
The goal: Learn the brand inside and
out. This helps separate your office from
others. With online options, lower prices
and more competition, you must create a
better patient experience. Patients deserve
an education about their investment.
What should you know?
Consumers who identify with particular
brands and/or designers would want you
to know the history of the designer, what
inspires them and what they are known
for (shoes, handbags, jeans, dresses,
frames). Do they have any quirks? What
celebrities wear their fashion? For
celebrities, see Hall of Frames in 20/20 (2020mag.com). Editor-in-Chief James
Spina tells us that "Hall of Frames routinely gets the most online comments
since consumers want to know what sun-glass or frame their favorite is wearing."
What colors and style are they known for?
How often do they release new lines, the
current trends and what is coming?
Know the history of the frame company,
country of origin and the quality attributes
of the lines. How are the frames assembled? How big is their design team? How
long is the design to completion process
(from initial drawings to production)?
Then answer, why is this frame company a
great partner for your optical? How are
they an extension of your own brand?
Review magazines that feature the
brand and ask the reps for copies. Consider purchasing copies for countertops
and reception so the brands carried in your office are also seen in the material
that patients see in the office. Leave magazines opened to the right pages. Ask
reps for presentations that describe the
history of the designer and company, how
frames are designed and assembled, and
other helpful information related to the
brand. Ask if those presentations (slide
show or video) are available to be shown
on that flat screen in reception. Require
the rep to do a little quiz at the end of the
presentation to test key facts. It's helpful
if a rep hands out small prizes to team
members that get correct answers—it
reinforces the facts.
Then as a team, develop a list of two to
three phrases or facts to remember to share
with patients. Be able to connect the frame
to stories about the history of the company,
current fashion trends, quirks about the
designer or fashion intricacies found on
each frame. That allows patients (and staff)
to experience fashion in a different way.
The brand becomes more tangible—patients can feel it. Share the quality of the
frame… this is what you get when you
wear this frame. It becomes an experience
that can't be duplicated online or down the
road. It is experienced only at your optical.
Be able to look at any frame in the collection and understand why certain colors
or materials were used. Know the history
of the brand and the company.
PHASE 5: MAKE BOARD
When I tell other managers and opticians
that we are using a board management
inventory system, their reactions are usually
negative. I don't necessarily blame them.
Here is how we set up our system, and
why it works for us.
Working with our Frame Matrix, we
determine how many board spaces a particular line will get. If we allow 20 pieces
for a line, we decide how many plastics,
semi-rimless, metal, etc., that our patient
demographic will support. Before we bring
the frames in, we set up an appointment
for a brand training session; we want to
really understand the line inside and out.
When we open an order with a frame
company, our reps choose the frames that
go on our frameboard. We don't flip product with our opening order. They understand their frames better than anyone.
They know what sells in our region. They
are also accountable for this first order. If
none of them sell, it's not going to work.
They have to put frames on our board that
will best represent their company.
Typically, when we have 20 pieces from
a frame line, there are usually eight pieces
that turn on a regular basis. These are the
cash cows, and we either keep them in
back stock or reorder immediately. Some
opticals may not even sell these off the
board. Then there are about seven pieces
that we categorize as "wait and see."
These have the potential to make great
turns, but they often don't take off like we
would imagine. The last five pieces are
ones that didn't work out. When our rep
gets new releases, we will add five new
releases (we flip these) and remove the
five duds. This cycle is continuous and
works well for our team.
As part of board management, consider
allowing reps to decorate their space. They
often bring POP and other accessories that
make their line stand out. Ask them to consider the current themes of your optical
and the season of year as they dive in. Give
them control and they usually make it look
spectacular. If it needs your touch, tweak
some of the POP placement or add some
of your own décor to their space. We
appreciate their efforts, but we want it to
match our flow and culture.
Always have two to three reps waiting in
line for underperforming reps and lines.
Some reps make it clear that they don't
have time to decorate our office, come in
to do brand training, help with a Frame
Matrix or visit as often as we might feel
necessary. Don't stress about it. It's a
suggestion that their line won't be a good
fit. Meeting reps and sharing guidelines
means there are no surprises. It's either
a good fit or it isn't. Similarly, if a line
doesn't turn, and if it's not what patients
are demanding, phase it out. Never have
such an emotional connection to reps that
it doesn't allow a good business decision.
Care about your reps and work at a healthy
partnership, but make sure patients are
taken care of first.
WHERE WE ARE NOW
I can't bring myself to use the word "conclusion," as the process is always changing.
This current model has helped tremendously. Although it's not yet where we want
it to be, we have improved our average
turn from 0.67 to well over two. We have
about 1,000 frames on our board with a
total investment under $80,000. We place
frame orders ( five to 12 pieces) three times
per week. Product mix looks much better
after giving more control over to our nine
rep partners. Our opticians are giving our
patients a much more meaningful experience with their newfound knowledge and
enthusiasm for our brands. There's way
less stress with reps, as the expectations
and guidelines have given all a better
understanding of goals. We will continue
to be flexible with what works and what
doesn't, but we will not be flexible with
our focus of becoming an exclusive optical
again. How about you?