Creating a Win-Win Relationship Between Finance and Merchandising

The merchant’s job is more complex than ever. There is an over abundance of information and data coming from both internal and external sources The merchant needs to respond quickly to changing information, analyzing and making decisions faster than ever before.  All this while also negotiating with vendors, reviewing new product opportunities and collaborating with marketers and inventory planners.  Finance can work with merchants to help lessen this burden and simplify things.  The valued Finance partner is the one who collaborates with merchants and turns information into actionable insights, thus helping the merchant to be more competitive in the marketplace.

Here are a few tips to help you demonstrate that Finance can be a MVP:

Breakdown the silos.  By identifying commonality, bringing value and working collaboratively, Finance can bridge the divide that often exists with Merchandising.  Whether or not Finance and Merchandising are currently measured on the same business performance metrics, it’s important to start by setting shared common goals.  This can begin to break down the silos that typically exist between the functions.  Additionally, working collaboratively to identify the most salient measures for merchants to efficiently make business decisions can help to bridge the functions and bring focus to what is generally an overabundance of data and information.  In the same vein, it’s important to ensure that key financial activities like forecasting and budgeting are more consultative, again using a collaborative approach.  Finally, as simple as it may seem, make regular contact a part of the process, providing just-in-time insight.  Remember that regular communication goes a long way towards building the relationship with your Merchandising counterparts and breaking down the Finance-Merchandising silos.

Provide actionable insights.  Understanding what drives the business will help you to anticipate issues before they arise.  Keep in mind that different aspects of a given merchant’s business may be driven by different factors.  Knowing the business drivers, you can then focus on identifying those things that require action on the part of the merchant as opposed to those that are “nice to know”.  It’s interesting for the merchant to know what sold the most, but it’s invaluable to identify those that don’t have enough on hand.  Also, it’s great to know the gross margin of key items, but it’s critical to understand the few that consistently have low GMROI.

Offer tools to support decision-making.  Merchants need to constantly re-evaluate their assortment – assessing sales, profitability, turns, GMROI, etc.  Finding and organizing the right data and measures can be time consuming.  Finance can ease the burden with tools that support these types of key tasks.  Tools that can help inform vendor negotiations are a great example.  Additionally, “what-if” scenarios to understand the impact of adding new merchandise to the assortment and having a comprehensive understanding of vendor profitability are specific examples of useful tools.

Today’s merchants are used to collaborating – they work with vendors, inventory planners and marketers on a regular basis.  Finance can also get a seat at the table to help drive overall performance.  Merchants who make decisions without the right insight can end up ultimately costing the company more money.  Break down the Finance-Merchandising silos and become the MVP who simplified decision making and helped the merchant identify and react to changing information quickly!

If you need more help making your Finance team a valued partner contact us at 1-877-TRY-PRGX or at .(JavaScript must be enabled to view this email address).