Forecourt Trader - 30 years at the heart of the fuel retailing community

Money on the shelf

01 July, 2004
Virtual reality is not enough...
Page 16 
However obvious it may seem, we still need to remind ourselves that stock is money, and that it should be counted and protected as if it were bundles of notes on the shelves rather than ‘just’ packets of cigarettes or bottles of pop or packets of crisps. Two recent experiences have again illustrated how the reality of physical stock can clash with the virtual picture painted by even quite sophisticated stock control systems.
Scene 1: A major national DIY warehouse chain. The customer was looking for two extra boxes of laminate flooring, not realising that it had recently been discontinued. The store staff were very helpful, offering to look up remaining stock of the product on their nationwide stock control system. ‘Forty boxes in Dublin’ was encouraging, but not immediately relevant to a customer in Solihull. ‘Eight boxes’ in one Birmingham store and ‘12’ and ‘six’ at different stores in the Midlands seemed more promising. The customer phones all three stores before setting out, just to check… needless to say, when the staff at all three searched in their store rooms, they came back with ‘zero’ at each of them – and laughed rather disconcertingly when told by the customer that their colleagues had suggested calling them on the basis of the stock computer’s figures. The happy ending for that particular customer was due to several boxes of the stuff eventually being located – at a store which apparently didn’t have any according to their computer, but where the manager remembered seeing it in a warehouse count some weeks earlier.Scene 2: A direct-managed fuel retail site in a sensible chain that thankfully still relies on stocktakers to visit sites and check the reality against the virtual picture on the stock computers.The stock auditors turn up at the site and find some £10,000 of ‘extra’ stock that the system didn’t have on its records. Much consternation at head office. Only when the site manager and the stocktakers start dragging whole boxes of new but supposedly non-existent tobacco and confectionery off the store-room shelves does everyone agree that the count was real enough. The stuff was there, and it hadn’t been left there by the stock fairy.OK. Anyone can make a mistake, and most of us do at some time: deliveries not booked in, invoice quantities not matched... and technology itself isn’t always infallible – the unnoticed ‘link break’ between point of sale and back office that allows a false stock value to develop, for example. The tendency of manufacturers and marketers to forever re-package products for ‘promotional’ purposes, and change bar codes and prices to match, certainly doesn’t make it easier for the poor retailer to keep their stock records accurate either. The point is that these errors will just sit on your system, unnoticed unless you go out and actually count the stuff in the shop. Our most recent Database figures show the ‘average’ site as carrying some £20,000 of shop stock, derived from a range of sites. But at the upper end of the range there are plenty of c-store fuel sites where a typical stock value at any time will be closer to £40,000. Look at what that stock consists of at such sites: around 22 per cent is tobacco; 25 per cent is alcoholic drinks; confectionery and soft drinks account for around 13 per cent and various snack/grocery lines for another 16 per cent. Or looking at the cost, that’s about £9,000 of tobacco and £10,000 of booze, just for starters. If you replaced the products with that much cash, would you just leave it sitting on the shelves for months without counting it yourself?If money itself is not enough to make you take the idea of stock accuracy seriously, look at it as a management information problem: apart from not having a clue whether you’re really making any money or losing it every day, how can you run those sophisticated automatic re-order processes that your stock software boasts, if the figures they depend on aren’t accurate?Chances are that if you haven’t updated the stock system from a reliable physical count, then you‘ll still be trying to sell Euro 2004 goodies come World Cup 2006 time, and the last batch of this year’s Easter eggs will make for novel last-minute Christmas present ideas come December.




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