Joe's Journal

Over the past three weeks, we have been discussing the 5 Steps to Successful Inventory Management (order process, communication, receiving inventory items, audit invoices, and reports). Weeks 1 and 2 highlighted the importance of streamlining your ordering process in addition to listing tips on how to effectively communicate your policies to vendors and employees. Today we will discuss Step #3 — best practices for receiving inventory items.

As a general rule, we are taught that it is always better to give than receive. Whoever said this (which, after a quick Google search, could be anyone from Jesus to Elton John’s boyfriend) clearly never had much experience in working retail. The goal for the items in your store should be like Tiger Woods in Vegas — get in, get out, leave the money on the table. While receiving items from vendors may seem fairly routine, common pit falls do abound. The following scenarios are what clients have told us is critical to their success (and is easily remembered by using the acronym GREAT):

1. GET What You Pay For. Did you get all the items you ordered? Do your store employees know what to do if an order is not fulfilled? Is there a substitute item? If it is a popular selling item, when will you receive the missing item? How is the home office notified? Remember…communication is key!
2. RELEASE Cupid’s Chokehold. Ah…the sweetheart deals. If you do not have a policy in place, then you leave the potential for a vendor to get too cozy with your store personnel. Before you know it, your store becomes a dumping ground for every new product to hit the market. These types of stores are easy to identify — product is stacked from floor to ceiling, inventory turn reports reveal numbers that would lead you to believe product delivery should be every 90 days instead of 7 days, and your inventory keeps growing while your cash keeps shrinking.
3. EYE the receipt. It is imperative that you verify your receipt process.  Most grocers provide an electronic invoice.  Hand-held scanners can be used to check vendors in and weed out any unauthorized items and invalid pricing immediately.  If the costs are not correct, you should have a policy in place for notification to the vendor and to the home office.
4. That’s AMORE. Don’t let a vendor show your store personnel all the love. Showing your store personnel that you care and that they are a valued member of your organization, gives them assurance and confidence in their job…at least until their daily prayer of “Lord, let me prove that winning the lottery won’t spoil me” gets answered.
5. TRIM the Fat. Did you get items you didn’t order? How do you handle unauthorized items coming into your store? Your store personnel know to contact you, right?

Each of these five elements is critical and should be checked and re-checked to be certain the processes you have in place are followed religiously by all parties. Be sure to join us next week as we discuss the thrilling topic of audit invoices. Have a GREAT day!

Last week, we kicked off our 5-step series regarding How to Successfully Manage Your Inventory by discussing some best practices to use during the ordering process. Today, we move on to the topic of communication.  Of all the five steps (order process, communication, receiving inventory items, audit invoices, and reports), communication is the most important. It is this process that could have your organization as synergized as a fine-tuned concerto or as dysfunctional as a baby mama waiting for the paternity test on the Jerry Springer show.

It is imperative that every employee in your organization understand their role and responsibility. In addition to your employees, the vendors you allow into your store should understand the same. Assuming you have one person (and a backup person) assigned from your organization to place orders, following are examples of what should be effectively communicated within your company:

• New products. The store supervisors, managers, and vendors all need to be notified of newly authorized products.   Not only should you let your store personnel know a new product is going to be delivered to their store, the also should know where that product will be placed for maximum selling exposure.   If you have a “Back-to-School” promotion of a new brand of energy drink you want the product placement prominently displayed.
• Price Changes. Communicate new price and cost changes. While price changes are done automatically within most systems for scanning purposes, it is always a sound practice to verbally review with store personnel to be sure display signs and shelf labels have been changed. We see exception reports with retail prices lower than costs every week. Don’t be that person.
• Discontinued Items. Is it time to mark down seasonal items or do you have items on your shelf that just aren’t moving?  What about that can of chocolate covered worms? After 4 years, it’s bound to become a collector’s item, right? Wrong! Let your store employees know when it is time to free up space for hotter selling items.
• Vendor relations. R-E-S-P-E-C-T. Do your vendors respect you or do they steamroll over you like Chris Brown on a bender? Vendors need to know YOUR policy for being able to do business in your store. If your policy is that no vendor is allowed to place a product, change prices at the time of delivery, or change quantity ordered, the vendor needs to know. If a product cost has been agreed upon, the vendor needs to know that is what you are paying and not a penny more. If you order 30 cases of Corona 12 pack bottles, then your store will ONLY accept 30 cases.  Why?  Because it is your store, not the supplier’s annex warehouse.  Vendor communication is absolutely critical.  Much like a toddler, vendors appreciate boundaries and will respect you for establishing the ground rules for doing business in your stores. Your stores are not their stores.  If you do not communicate the rules of doing business with your suppliers, you are placing your business jeopardy.  Vendors really do want you to be successful, so actively communicate with them to place product where it will sell and work with them to find the top selling and high grossing items.

As Saul Alinsky put it, “Without effective communication you cannot lead…you end up taking a walk on your own.” Everyone works best when they are all on the same page. Implementing the steps above puts your organization one step closer to perfect harmony…and that, friends, is a sweet, sweet sound. Ka-ching.

Today’s blog post kicks off our 5 Steps to Successful Inventory Management series which, as mentioned last week, we have been asked to present live at the 2010 Pacific Oil Conference (POC) in September.

If you will recall, we listed the 5 steps in our previous posting: Ordering Process, Communication, Receiving Inventory, Invoice Audit, and Business Intelligence Reports. The first step to creating a successful inventory management program is to:

Evaluate Your Ordering Process

You should never ever treat the purchase of items for the store the way you would pick out a personal gift. While, yes, that leopard print Snuggie may very well be both fashionable and practical…it probably isn’t going to end up on Oprah’s Favorite Things list anytime soon (*cough cough* ever) and your shelf space could be put to better use.  Remember how you start to profusely sweat when you pick out a gift for your wife or girlfriend (or, in Tiger Woods’ case — both) because you know, whatever it is, has a 99% chance of being completely wrong? Luckily, ordering items for your store requires little speculation and far less antiperspirant. Let us introduce you to a more systematic approach:

• Delegate an Heir and a Spare. Determine who in your organization is authorized to place an order. Is it your pricebook guru, your store supervisor, your manager, or your cousin who is in a work release program? For a solid, centralized pricebook, and, most importantly, for accountability, select one person and one backup person. Do not let just anyone in the company stock your store.
• It’s Not Personal…It’s Business. So what should you order? Put aside your personal preferences and stick to your list — this is where a Top/Bottom Movement report is invaluable. Check your top 50-100 moving items and be sure to order the products that sell in your store.  Resist the urge to splurge on what you remember as a hot item last year or a cheap promo for some chatchke that no one wants.
• ‘Tis the Season. Depending on your store location, seasonal sales items may play a huge part in your success. Be prepared, but don’t be ridiculous. While getting my weekly shot of testosterone at Home Depot last weekend, the air conditioner displays were already being replaced with space heaters.
• Acclimate to Automate. Efficiency is key. Whether you are using a hand-held scanner or an electronic ordering system for your weekly order, reduce your dependency on manual ordering. Automating this step will allow you to verify proper costs and inventory levels assuring a higher degree of pricing accuracy. You will be amazed at how accurate your vendors will suddenly get when you automate.
• Have Control Issues. While this comes naturally to some, it is imperative to control the order. Have the process in place to order based on your replenishment needs, your negotiated prices of promotional items with your vendors — NOT what the store manager and vendor simply want to put on your shelves. The next 4 steps will bring this more into focus.

Next week we will discuss Step #2: Communication…a subject I’ve been told I know little about, but will share with you what others have told me should be done.     

This summer has been quite a busy time for us here at CMI! In addition to all of the work we have been doing to expand our online and in-house educational offerings, we are thrilled to announce that we have been invited by the Pacific Oil Conference (POC) to lead a seminar entitled “Inventory Management: Retailer Best Practices” on September 21, 2010 as part of their Retail Track seminar sessions.

The Retail Track seminar sessions are new for POC and include workshops presenting information regarding Security & Theft Protection, Credit Card Interchange industry updates, Petroleum Profit Margins, and Retail Inventory Management. Attendees will walk away with a wealth of information to help them maximize the bottom line. We were honored by the invitation to facilitate such a program…especially in its inaugural year.   

As we prepared for the panel discussion, we solicited best practices from a group of our convenience store clients, petroleum distributors, grocers, and DSD suppliers.

Through our discussions, 5 key elements rose above all others in how to best manage inventory:

1. Ordering Process – how and what to order
2. Communication between home office, store, and vendor
3. Establishing receipt of inventory procedures – did you get the items you ordered?
4. Audit Invoices for accuracy – whose cost is right, yours or the vendors?
5. Analysis of reports – are you drowning in paperwork?

Over the next several weeks leading up to the POC convention, we will discuss these 5 Keys to Inventory Control for those of you unable to attend the POC. If you are attending POC, but have already signed up for the Golf Tournament or the Bowling Tournament, have no fear. Swing by booth #528 for your very own autographed copy of the presentation.

See you at POC!

Darlene was really worked up during the drive home hour yesterday. Normally her tirades are limited to a particular vendor who is notorious for showing up during lunch hours or a less than stellar employee who went MIA again. Yesterday’s issue de jour involved changing over her POS controllers for PCI compliance and, to make sure nothing got mucked up, she was planning to spend the night with the POS vendors.

Yes, our favorite supervisor, and self-diagnosed control freak, was planning on spending the next 12 hours at the store just to be sure all went well with the equipment jocks.

To prepare for the long night ahead, Darlene had reached for the new $3.99 twin pack of “Stacker2 6-HourPower” shots just before I had arrived. Anticipating the long 12 hours ahead, you guessed it, she downed both 6-hr shots at once. The tag line on the bottle says “Feel it Fast, Energy that Lasts, No Crash”. They aren’t lying. It’s true. Darlene was as jittery as Tiger Woods leaving a voice mail for his bimbo(s) while ducking his golf-club wielding wife.

What lessons did we learn this week, folks?

1. You don’t have to work 24/7 when you trust and surround yourself with reliable equipment vendors and sound software solution providers (like CMIsolutions…cough, cough.).

2. Sometimes a 5 hour energy boost just won’t cut it. However, don’t be gluttonous. One shot at a time, people. One shot at a time.

3. Keep your golf clubs locked up with your fire arms.

I never know what to expect when I walk into my favorite convenience store. Take last week, for instance. I enter in and Darlene is hunched over the counter grasping a freshly scratched lottery ticket. Her eyes closed in prayer, she laments about losing another $10 to the State of North Carolina

“Darlene,” I said. “You’re supposed to sell the tickets, not scratch the tickets!”

Laughing, she replied that a customer hit a winning $300 game card the day before and she was just trying her luck at winning the Mustang Fever $100,000 grand prize.

Speaking of the lottery, I asked if she had installed the latest version of CMI’s PriceBook Manager with lottery reconciliation.  I wanted to see if she had any questions or suggestions for enhancements. Darlene’s eyes lit up like the sparkling headlights of her fantasy ‘Stang as she praised how easy it was for her to now track lottery sales, end games, and activate new games. She loved how the store can now keep track of its lottery inventory in just a few minutes each day and how the online help screens and FAQs were really helpful in her understanding the system.

To those of you with the latest CMI upgrade, please take advantage of the lottery reconciliation enhancements recently made. You will hit the jackpot in time and efficiency!

We just received a “tweet” from our local c-store manager, Darlene, to let us know about her July 4^th promos that are kicking in this week. No, Darlene isn’t practicing her karaoke version of “Rockin’ Robin”. She has catapulted her store into the Social Media Marketing Age and utilizing the website, Twitter, to inform her customers of the latest goings on at her store.

D’s tweets range anywhere from the latest promos and discounts to new product shipments. Because setting promotional pricing and date ranges in her PriceBook Manager software is so simple, Darlene can have her promos ready to roll and be speeding along the information superhighway to update her Twitter account faster than Bernie Madoff ‘s cellmate can say “wanna’ back rub”.

CMI clients such as Darlene, may also find Chapter 8 in the training manual helpful when setting promotional pricing. It covers Zone and Store pricing, depending on your particular needs. The changes are easy to do, just remember to record the expiration date of the price change so your pricebook will automatically revert to the regular pricing after the promo period.

Happy 4^th of July everyone! Let freedom (as well as your cash registers!) ring!

When marketing a business, it is oftentimes easy to get caught up in the high-level hierarchy that comes with trying to simultaneously obtain new customers while, at the same time, retaining the old.  We become consumed with finding that newest cash cow product or finally striking gold with that magic number price point. The thought for this week questions “Are you effectively communicating your new discoveries to your customers?”

A fellow CMI employee and “Darlene” from the convenience store down the street are quickly becoming BFFs.  Here is the story my co-worker recounted to me last week:

“I went in today for my regular chips and sandwich lunch purchase and, as I was checking out, Darlene let me in on their combo promotion. She told me that if I purchased a fountain drink, I would receive combo pricing.  After verifying that they had fountain Coke products (and not just Pepsi…ick!), I said why not and filled up.  So, now, with the combo pricing my total came to $3.50ish. Typically, without the combo pricing, just my chips and sandwich would have been over $4!  Here is my insight:

1)     Luckily, Darlene was nice enough and had time (as opposed to being buried under a pile of paperwork), to fill me in on these discounts.

2)     While it’s always an adventure to converse with Dear Dee, I probably would have been making this combo purchase weeks/months ago (and possibly more frequently) if there had been signage or a banner advertising their “value meals”.

Regardless, I’m definitely psyched about the promotion (however old it is) and am solidified as a repeat customer.”

As the price of fuel climbs in the coming months (and, come on, folks, you really didn’t think the oil companies were going to play nice all summer did you?), are you doing what is necessary to keep your customers  coming back to your store every day?

Proper signage and advertising are a must, but, more so, are your cashiers giving your customers a verbal invitation to partake in your “rope them in” promotions? After all, the allure of the c-store is that you can get “In-N-Out”, fairly “Quck & Easy”, and make it a “SpeeDee Stop”.  Your customers may be in such a hurry that they pay no attention to the bright red banner perched about the hot dog rotisserie. It never hurts to give a heads up and, in the end, it could be the start of a beautiful relationship between your store and customer.

Employee turnover is one of, if not THE, biggest concern of c-store owners today. The cost of hiring, training, and then losing an employee (either by employer or employee choice) has always been a challenge in the retail industry.

Since this is a subject many consider more important than the swine flu, the credit crunch, or the Yankees dropping three to the Red Sox last weekend, we turn to our store manager Darlene for the answers.

Darlene knows she wants an employee who exhibits the following qualities:

1. Honest (No history of stealing)
2. Strong  Work Ethic (An employee who will come to work as scheduled, and will work well with fellow employees, and do what is necessary to increase store sales)
3. Has the ability to Multi-Task  (Must be able to be polite with customers, assertive with vendors, be computer literate, and be able to handle pump controllers, lottery sales, bottle deposits, verify age of buyers, and so on…)

There are other areas Darlene attempts to check as well (i.e. substance abuse, Workman Comp claims, and ability to work in a stressful environment).

“In short, the same qualities you would want of an Air Traffic Controller, but at a slightly lower wage,” jokes Darlene.

How does Darlene find solid employees?  The best way is from the referrals of other quality associates within the store’s chain. The c-store clerks do have a network that was established long before Facebook and Twitter and, if they find out an employer will treat them well, the best ones will gravitate to that c-store chain.  Darlene is always on the lookout for good talent. In addition, if an employee refers a clerk who stays on board for over 90 days, both the referring employee and new employee each receives a $100 store gift card.

How are you getting the best employees?  Share your experiences with us so we can pass along to our network of c-store operators?  We will keep your name anonymous.

This is a very important concern in our industry and every suggestion is worth sharing.

I was reading an article this week regarding the sales crunch that many businesses put themselves under during the last quarter of the year as a means to make up for the first three quarters. Think that will business as usual for 2009?

Last weekend, we watched as Phil and Tiger attempted to make up for the first three days of missed opportunities with incredible drives and putts during the first 16 holes on day four just to fall short of their goal as Masters champions.

On Monday, we here at CMI reviewed the status of clients who have not fully implemented pricebook at their stores and of prospective clients who have not yet committed to implementing a retail accounting system at all. Waiting for the 4^th quarter to make up for lost sales is akin to not putting yourself in a competitive position on the first three days of The Masters.  However, failing to win a green jacket pales in comparison to a failing business.

The first quarter of the year has just passed.  Are you waiting for the 4^th quarter to automate your accounting and store processes with a sound pricebook and inventory management system? As the great Yogi Berra once said, “90% of putts that are short don’t go in.”  Begin making an effort now to ensure your business does not fall short for 2009.