Handling Risk

Handling Risk

Permission to republish granted by Management One  |  Written by Marc Weiss, CEO & President of Management One & Retail Orbit | May 1, 2018 Photo | by rawpixel.com on Unsplash


Investment planning and inventory planning have similarities. In investments, you look at ROI, and in inventory, you measure success with GMROI. Financial investments are held within a portfolio, and inventory investments are also in a portfolio of types of classifications, categories, and departments.

How do you allocate your assets, and are you happy with the returns you received for your investments?

There is risk associated with both financial investments and inventory investments.

They both follow trends, and they both require selection of products. They also have tools to use to measure and track performance.

Inherent in both is your choice to REACT to changing conditions or to RESPOND.

Although they are synonyms for each other, react is to respond emotionally and respond is to acknowledge and answer the challenge. They are both verbs with the meaning “to act.”

We are faced with challenges every day, of differing degrees. Sometimes they require an immediate answer and sometimes solutions can evolve over time. It is difficult to remove emotion, especially when it involves a significant opportunity or problem. You lost a good vendor, or they cannot ship on time. Your best salesperson gives notice, or your landlord just hit you with a huge assessment. Like the stock market tanking by 10% or more, these are issues that are better served by responding than reacting.

Emotional decisions can have unintended and severe consequences.

I work hard to follow the 24-Hour Rule— as do many of your— to let the situation settle and give ourselves more time to develop a series of options, by reaching out to others for input. This allows us time to assess, and then to the RESPOND.

I wish I had a dollar for every time I talked a retailer off the edge. I really cannot remember a situation where we did not find a resolution. That salesperson or vendor will be replaced. The stock market comes back. And eventually, and more often than not, we find ourselves in a better place.

I think the great football coach, Lou Holtz, summed it up when he said, ” life is ten percent what happens to you and ninety percent how you respond to it.”

 

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