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Understanding the Root of the Discrepancy

Understanding the Root of the Discrepancy

Understanding the Root of the Discrepancy

Bill Gates, upon discussing automation, stated that implementing technologies in an efficient process would magnify the efficiency. Similarly, implementing technologies in an inefficient process would also magnify the inefficiency. This is the old concept of “garbage in, garbage out.” Consequently, before implementing and investing in technology such as a point of sale system, storeowners should understand the business process involving the management and administration of their inventory.

Questions such as, where is product going to be received? Who handles the reception process? How will an order be processed and how will inventory be updated? How often will orders be placed and who will be in charge of placing them? How much storage space will be needed? Is there a designated space for receiving merchandise? These are just some of the important questions that storeowners should be asking. The idea is that the response will help clarify the business process and will force the retailer to design an efficient process that can be automated with the use of a point of sale system or similar technology.

An elemental and often missed process is that of temporary product placement as inventory is being replenished. A lack of clarity in this process can produce invalid information in a store’s point of sale system. Such invalid information can lead to a magnified inefficiency. The concept is simple: a store’s point of sale system may have invalid inventory counts for one of three reasons. Theft is involved, there was a mistake selling the product, or there was a mistake in receiving the product. Most stores cover the first two reasons well as these are more intuitive and clear. However, the third reason takes planning prior to opening the store and involves understanding the overall business process. Consequently, most stores have issues in the reception of merchandise.


The Case

The morning crew receives a pallet of merchandise. The store is busy and the pallet is left in the stock room for later processing. The morning crew takes lunch and the afternoon crew reports for work. The crew sees the pallet in the stockroom and realize that the merchandise is needed in the sales areas. They proceed to open the cases and display the needed merchandise. Who processed the inventory? Who entered the quantities in the point of sale system? When that product sells, it will now reflect invalid information. The errors had nothing to do with the technology and everything to do with the business process.

The repercussions of this process affect all systems and other processes. Data and reports that the system produces can no longer be used to make wise business decisions. In order to correct the problem, the business process must be analyzed, measured, and improved or corrected. The case presented has a simple solution. All stores should use some sort of reception bin or reception space where non-process products are temporarily stored prior to being processed. Product is stored in specifically marked areas to provide clarity and distinction between processed and unprocessed goods.

Successful technological investment and consequent implementation, such as a point of sale system, involves a lot more than just purchasing a technology. Storeowners must possess knowledge of the business process under which the technology will be implemented and must understand how to align the technology with the business process. Furthermore, the store needs to have key personnel that can execute the processes. Knowledge, people, and technology must be aligned with the organizational strategy and business processes in order to achieve successful outcomes.


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