Know Your Numbers! The Quantity-on-Hand (QOH) Quick Guide. Retail Best Practices Series. An Epicor White Paper

Transcription

1 Know Your Numbers! The Quantity-on-Hand (QOH) Quick Guide Retail Best Practices Series An Epicor White Paper

2 Table of Contents Introduction...1 Getting an Accurate Count...2 Hiring Inventory Accuracy Ambassadors...3 Creating a Team Environment by Setting Key Policies...4 Keeping a Finger on the Pulse...5 Taking Control...by Using Controls...6 i

3 Introduction Epicor works with many retailers who face fierce, big-box competition, rising customer service expectations, and an increasingly rapid pace of doing business. You likely face similar challenges. As important as it is to out-price and outsmart the competition while also providing exceptional customer service focusing on those challenges without an eye on inventory is a common and unintentional oversight. We have observed that most retailers are not fully aware of the impact inaccurate inventory numbers can have on a business. It seems so harmless, but it s not. Inaccurate quantities-on-hand (QOH) data is costing you more than you think. It can mean you have dollars locked up in excessive, unprofitable inventory. It can also mean that you might be providing inaccurate answers to customer stock inquiries, which, in turn, could be forcing customers to shop elsewhere. That lost $20 sale today from a mistake in inventory numbers could grow larger. Simply consider the long-term: lost future sales from that customer, wasted marketing costs, and even negative reviews that could cost you other potential customers and further limit your sales. You could be out of thousands of dollars simply by not having accurate inventory numbers to rely on. You know the story: a customer has called asking if an item is in stock. Your data indicates that yes, you do. However, when the customer arrives, the item is nowhere to be found. You offer to special order the item, but the customer is upset and no longer wants to do business with you. The customer goes to another retailer for the item and you ve just lost sales today and in the future. Experts say that increasing your customer retention rate by 5% can raise your bottom line by anywhere from 25% to 100%. One way to keep customers loyal is to have accurate inventory data you AND your customers can rely on. Every retail business management system worth considering is designed to keep track of inventory. But the best systems help you tackle the most important elements of inventory control: keeping cash flow and dollars in your business while also making your customers very, very happy. For more than 40 years, Epicor has provided software solutions that help retailers better track their QOH, provide exceptional customer service and improve margins. Use the tips on the following pages to help you get started on accurate QOH today. Read strategies on: 1. Getting an Accurate Count the Traditional Way, or the New Way 2. Hiring the Right People to Become Your Inventory Accuracy Ambassadors 3. Creating a Team Environment by Setting Key Policies 4. Keeping a Finger on the Pulse of Your Business by Implementing Routine Monitoring Activities 5. Taking Control by Using Controls Let s get started. 1

4 Epicor Eagle N Series Software Does That! The Eagle Mobile RF scanner is designed to help you with physical inventory counts, printing bin labels, receiving and more. Eagle N Series software also offers built-in, on-screen analytics that can make it easier to develop cycle counting strategies. Epicor has certified a large number of managed inventory service providers that can work seamlessly with businesses using Eagle N Series software so you can spend less time counting and more time growing your business and helping customers. A companion data service ensures accurate, timely data sharing between your Eagle N Series system and the technology used by these outsourced providers. Getting an Accurate Count the Traditional Way or the New Way At the heart of every retail business is its inventory. It is, after all, your largest asset, and your largest capital investment.! Here s our first lesson on QOH. You really must take a physical inventory. We know, we know, you d rather stick your finger in an electrical socket, or go swimming with sharks AND piranhas. But it must be done in one way or another. Without an accurate count, you cannot accurately determine what to order. You also cannot generate an accurate Financial Statement for your business. Simply put, it s the essential starting point. The first step in getting your quantity-on-hand up to date is to see what you currently have. Whether you close down and call an all-hands-on-deck on the prettiest weekend of the year (Murphy s Law makes this inevitable), decide to cycle count, or invest in managed inventory accuracy services (which give a targeted monthly count sheet of special SKUs to monitor), it has to be done. Here are the three methods of counting and more about how to do each: 1. Physical Year-End You are probably most familiar with this type of counting. Usually you have a mandatory work weekend, you shut down the store at year-end, and you count all the items in the store, then load and reconcile the counts against the system s numbers. In short, this method is a pain in the neck. It requires a lot and we mean a LOT of labor hours to work through the store all at once, it can take weeks to reconcile the counts, and it usually means you re foregoing sales revenue while you re closed. And you may need to rent extra scanning equipment in order to get through the process quickly enough. 2. Cycle Counting Instead of waiting to count at the end of the year, this method involves continuous physical inventory done in cycles tied to physical location, category, or other attributes. Cycle frequency can vary across categories, locations, sales volume, dollar value and other factors. Those items most important to the business might be counted monthly; others require less frequent counts, which can cut overall costs and labor hours. The advantages of cycle counting include staying open for business during counts, achieving more accurate counts, and spreading counting hours (and related costs) throughout the year instead of in one fell swoop. The greatest challenge in cycle counting is simply keeping up with the counting requirements, and this is best resolved by making a plan and calendar so that each location (or category, or other grouping) is counted at least three times a year. 3. Managed Inventory Services A third approach involves the outsourcing of physical counts and (sometimes) related activities. Specialized companies can provide large teams of specialists, each armed with appropriate scanning equipment, to perform counts then provide the results to you in report or digital formats. Some offer even more specialized services such as analyzing and optimizing counting cycles for your inventory categories and locations they may even provide SKUspecific count sheets on a monthly basis, to be used by your internal staff for cycle counting. 2

5 Epicor Eagle Solution Does That! Eagle N Series software comes with an integrated Training on Demand solution a large and customizable collection of concise, instructive videos built in, along with complete, oneclick Online Help. One click from virtually any Eagle screen delivers in-context Eagle and retail instruction designed to help users work more efficiently, effectively and... happily. When you bring in a new Inventory Ambassador, Training on Demand and Online Help get them up to speed quickly. Which approach you choose will depend, among other things, on the technology you have available to commit to an accurate inventory count. Now that you have counted, let s keep that number up-to-date. Hiring the Right People to Become Your Inventory Accuracy Ambassadors The second lesson for an accurate QOH is to get the right people. Perhaps this is an oversimplification, but sometimes, things really are that simple. With your best, most organized people assigned to promote inventory accuracy, you re on your way! Back to Basics Quiz Q: Where should you put your best people? A: It might be that your very best thinkers and doers are also the best people to have working the POS. You may not want to take your best floor clerk away from your customers, even for two hours a day. It s also important to consider who will be the best fit to take the lead in receiving a key role in inventory. In all likelihood, however, you know which people to put where, and everyone will benefit, including your customers. Here are some tips for finding your best people for inventory accuracy. When hiring, remember to: Ask yourself if they can do the job. Do they fit with the culture of your business? Ask them what they think it means to be successful, which can reveal a level of drive, ambition and aptitude. Determine their level of focus. Inventory accuracy requires the discipline and ability to pay attention to a range of SKU-level details. Promote ownership. Ideal employees work with pride and treat their area of responsibility as if it were their own business or store. Encourage a recruitment environment, 24/7. Show your employees that you value them, and make it worthwhile for them to stay on your team. When you hire seasonal employees, look for ones that might want to transition to full-time hires. Consider schedule flexibility, education, and experience. Look for a positive attitude. The most successful people are enthusiastic and work passionately to meet or exceed their assigned goals. Now, make the most of your recruiting and retention efforts. Make sure your most organized people are the ones tracking your inventory. 3

6 Eagle N Series Software Does That! Training on Demand, seamlessly integrated in Eagle N Series solution, allows you to post your policies on a central training portal, so that employees can access those important elements at any time. Curious about policies used by other companies like yours? Access the Eagle Customer Community forum with a single click from anywhere in Eagle, then search the forum or pose your own question any time. Creating a Team Environment by Setting Key Policies Keeping inventory working well is like keeping order on the highways and byways: things work better when everyone follows a basic set of rules. The third lesson in QOH accuracy is that you ll need to set some clear policies and encourage everyone in your workplace to follow them. When everyone follows these policies, it will create a team effect and help you maintain accurate inventory data, which can lead to better customer service. The specifics will vary depending on your business size, market, inventory breadth, and other factors. But some things are nearly universal such as the following: Every item to be stocked and/or sold has a unique SKU. Some exceptions may exist, based on your particular business model but EVERY effort must be made to limit these exceptions to the base minimum. Except where completely impractical, every item has a barcode. Barcodes affixed to stock or stock locations must be accurate. Always. Your policy on returns, refunds and exchanges must be clear and consistent, and should address defective items, validation procedures, and other pertinent issues. You need to post this policy for all customers and employees. All employees must be well versed in the policy. These are just examples, but... see where we re going here?! Here s a policy for setting policies: If an activity, event, stakeholder or other factor of any kind affects items or the way they re counted, received, sold, or returned, rules may be in order. Back to Basics Don t be afraid to set rules, nor to stress, to every employee, the value and importance of following those rules. Maintaining an accurate inventory is every employee s responsibility. Anyone who touches product any place during the business cycle has the ability to affect the accuracy of an inventory. Finally, know that there will be more rules to come most of them specific to certain situations or activities. You ll get to those, when you need to. For now, just set up the basics, and follow them. And know that they re very, very important. 4

7 Did You Know? You can use a mobile app (Eagle Mobile Manager is one of them) to get access to business performance data, where and when you need it. Having this kind of visibility at a glance gives you the power to respond quickly to issues and opportunities. Eagle N Series Software Does That! In Epicor Eagle N Series, the Inventory Transaction Register or ITR is an invaluable tool for tracking and understanding changes to QOH. NOTE: ITR is part of the System Audit & Reporting Tools package (SART). SART includes multiple viewers and archives to track changes made to Customers, Vendors, SKUs, Quantities, etc. Eagle Performance Manager and the mobile app Mobile Manager are great tools for tracking and then analyzing these items at a glance, saving you the effort of sorting through multiple reports and viewers. Keeping a Finger on the Pulse of Your Business by Implementing Routine Monitoring Activities Monitoring information important for inventory mastery means using your system to access all the transactions that affect inventory. Think purchasing, receiving, POS, transfers, returns, write-offs.! Here is the fourth lesson of QOH accuracy: monitor the numbers even if you re on the go. If you re like most retailers, you re not in front of a computer all day. You re on the floor, or visiting important customer sites, or your other store locations, or checking out the competition. Monitoring shouldn t really, must not stop just because you re away from your desk. What s selling today? And what isn t? Where do you have extra quantities of a hot item? Which stores, departments or inventory classes are lagging and leading? Here are a few things to keep your eye on every day: Low inventory: which items are at risk of stock outs? Review quantities-onhand for your popular items. If your QOH drops below your order point, you risk running out. Excess inventory: where do you have capital needlessly tied up? Review quantities-on-hand vs. order points in your system. If your QOH is much greater than the order point, then you are likely sitting on excess product and dollars, particularly if the items are slow-moving or dead items. Inventory value by department or location, and by vendor. Run an inventory valuation report nightly in order to best monitor how much cash you have tied up in inventory. Top Sellers (and bottom-dwellers). This one s all about popularity. Run a report ranking your items in terms of their popularity and profitability at least weekly.! If items are not selling, come up with a plan to reduce or eliminate them. Re-merchandise your store, so that your customers can discover items that have been there all along. Create promotions to attract buyers to non-selling items. Donate non-selling items to appropriate outlets and take the tax break. Churches, schools, shelters, and other organizations will welcome your castoffs. Use online marketplaces to expand your customer base. 5

8 Eagle Does That! Leverage the Reorder Point Calculation Report (ROP) in Eagle to calculate reorder points, or, if you want a more accurate and sophisticated way to calculate reorder points, try Eagle Inventory Planner. Taking Control...by Using Controls Our final lesson in QOH management: gain greater control over your inventory by mastering the procedures and tools that help keep QOH accurate and customer service in tip-top shape. Here are some widely used examples of QOH tools and techniques that you must master in order to keep your QOH in check: Tools for setting and using reorder points. ERP systems often provide inventory management software that includes reorder point calculation reports. More advanced technology will offer forecasting models to best match supply with demand. Tools for systematic cycle counting or managed inventory accuracy. If you re cycle counting, use RF scanners to check QOH variances and better track inventory shrinkage. Some companies also provide services that supply customized monthly count sheets for more targeted inventory tracking. Tools for creating and using forecasting models to predict demand and drive replenishment. Accurately predicting product demand is difficult. Sophisticated forecasting models allow you to make the best possible demand predictions based on past sales history. Tools for balancing stock across multiple stores/locations. Reduce the amount of time it takes you to balance inventory levels across stores by using Stock Transfer Balancing software designed to help you make better product movement decisions. You can also set your system to auto-generate transfers, shortening the time it takes to manage a multi-store inventory. Call us today for more information Already an Eagle customer? Contact us at New to Epicor? Please call Epicor Eagle N Series provides a wealth of inventory control points and tools, found in both the core system and in inventory-focused solutions including: Eagle Inventory Planner Eagle Mobile Inventory Eagle Pricing Planner Eagle Performance Manager 6

9 About Epicor Epicor Software Corporation is a global leader delivering business software solutions to the manufacturing, distribution, retail, and service industries. With more than 40 years of experience, Epicor has more than 20,000 customers in over 150 countries. Epicor solutions enable companies to drive increased efficiency and improve profitability. With a history of innovation, industry expertise and passion for excellence, Epicor inspires customers to build lasting competitive advantage. Epicor provides the single point of accountability that local, regional, and global businesses demand. For more information, visit Contact us for more information on Epicor Products and Services eagle@epicor.com Corporate Office 804 Las Cimas Parkway Austin, TX USA Toll Free: Direct: Fax: Latin America and Caribbean Blvd. Antonio L. Rodriguez #1882 Int. 104 Plaza Central, Col. Santa Maria Monterrey, Nuevo Leon, CP Mexico Phone: Fax: Europe, Middle East and Africa No. 1 The Arena Downshire Way Bracknell, Berkshire RG12 1PU United Kingdom Phone: Fax: Asia 238A Thomson Road #23-06 Novena Square Tower A Singapore Singapore Phone: Fax: Australia and New Zealand Suite 2 Level 8, 100 Pacific Highway North Sydney, NSW 2060 Australia Phone: Fax: This document is for informational purposes only and is subject to change without notice. This document and its contents, including the viewpoints, dates and functional content expressed herein are believed to be accurate as of its date of publication, March However, Epicor Software Corporation makes no guarantee, representations or warranties with regard to the enclosed information and specifically disclaims any applicable implied warranties, such as for fitness for a particular purpose, merchantability, satisfactory quality, and reasonable skill and care. As each user of Epicor software is likely to be unique in their requirements in the use of such software and their business processes, users of this document are always advised to discuss the content of this document with their Epicor account manager. All information contained herein is subject to change without notice and changes to this document since printing and other important information about the software product are made or published in release notes, and you are urged to obtain the current release notes for the software product. We welcome user comments and reserve the right to revise this publication and/or make improvements or changes to the products or programs described in this publication at any time, without notice. The usage of any Epicor Software shall be pursuant to an Epicor end user license agreement and the performance of any consulting services by Epicor personnel shall be pursuant to the standard services terms and conditions of Epicor Software Corporation. Epicor, the Epicor logo, Business Inspired, Eagle, and Eagle N Series are trademarks or registered trademarks of Epicor Software Corporation, registered in the United States, certain other countries and/or the EU. All other trademarks mentioned are the property of their respective owners. Copyright 2015 Epicor Software Corporation. All rights reserved.