Controlling Your Business from the Point of Sale View

– Alan Fisher

I have always been astonished to watch salespeople from some software companies review reports with retailers. They seem to assume that quantity of reporting and level of detail sell systems. Unfortunately, many retailers also equate quantity with quality. Once the software is installed, faced with thousands of combinations of reports, the retailer runs no reports, using the computer system simply as life-support for a series of procedures. The same uninformed decisions are made, maybe just a little faster.

Think about a controller’s approach to analyzing a business. At the end of the month, the controller does not start by saying, “I think I’ll review all the journal entries in the general ledger and see how we are doing”. The controller looks at a financial statement for the business to find areas that have missed the budget or have experienced significant change over previous periods. Then, details are reviewed to determine why these events occurred before a course of action is determined.

Inventory management should be approached the same way. The first step is to look at a financial statement for the inventory to determine problem areas that need further research. Starting at the top with a class-level look at performance, areas with high shrinkage, low profits, low turn rates or high markdowns should be reviewed with more detail to determine what is causing the problem and what action should be taken.

So, if you find yourself talking with a software salesperson who believes 10,000 reports are the answer to your problems or that inventory management is the same as reordering, run as fast as you can. Instead, find a company that understands what inventory management is and how it is done.

Alan Fisher is the president of Retail Business 101, Inc., an inventory management consulting firm. His company specializes in working with independent retailers on open-to-buy and system utilization.

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