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Recovery
~Pull down top stock
-Check all boxes for what is inside.
-Refill shelves to reasonable capacity – slide bin tags if
necessary.
-Place leftover stock on top shelves.
-Update counts.
~Pull out back room stock.
-Check stock room for additional stock.
-Refill shelves to reasonable capacity – slide bin
tags if necessary.
-Place leftover stock either on top shelves or stock
room.
-Update counts.
~Face and front.
-Pull items to front of shelves or pegs.
-Items should be in proper location, replenished, and
fronted.
~Clean and dust.
~Remove empty pegs and bins.
~Remove boxes on floors.
~Check end caps.
~Bin tags.
-All items should have bin tags.
-No hand written bin tags allowed.
-Bin tags should be placed on plastic backing and on
the left side of bins/shelf spaces of items.
~Bin Tag Colors.
-Yellow – Standard Color Tag.
-Green – Never Out Listing.
-Red – Do Not Reorder Z Flag Or Close-Out Y Flag.
-Blue – Impulse.
~Signage Colors.
-Yellow – Regular Signage In Aisles – Never Outs.
-Pink – Main Aisle, End Caps, Displays, Sidewalk.
-Lime – Circular/Flyer Sales, Additional Signs
Needed.
-Red – Z Flag And Y Flag Close-Outs.
-Orange – In Store Specials.
~Counts.
-The best way to always have items in stock is to
have accurate inventory counts.
-Update incorrect counts as often as possible.
-Short card – insist all staff to use it.
-Frequent zero, negative, and cycle counts.
~Close outs.
-Let your manager know when you have items that need
to be reduced in price.
-Overstock.
-Z Flag Items.
-Permission To Z Flag.
Inventory Count Accuracy
Maintaining count accuracy is ensuring that your
in-store computer system always has the correct quantity
on hand for every item. Having correct counts is
critical to your system’s ability to generate an order.
The system uses yours sales history and the weeks’
supply value you select to determine each item’s reorder
point. It is compares that reorder point to the quantity
on hand and the quantity on order to determine if you
need to reorder more. Following the procedures to keep
your quantity on hand and quantity on order figures
correct is necessary for the computer to suggest an
accurate order.
The actions of every person in your
store, even customers, can affect the accuracy of your
on-hand quantities. All associates must be fully trained
on your store procedures including cycle counting,
receiving, point-of-sale, back-office, and customer
service.
For example, items being returned
to the store are a frequent cause of incorrect counts.
If the item is in sellable condition, it must be handled
as a regular return. If it is not sellable, it must be
handled as a defective return or defective exchange. A
defective exchange is when a customer wants an identical
item to replace the defective item. A defective return
is when the customer wants to return the defective item,
but not replace it with the same item.
Return Scenarios
Refund Reason Effect on QOH Effect on
Sales $
Return Increase
Decrease
Defective Return
None Decrease
Defective
Exchange Decrease None
Cycle Counts
Cycle counting is a method of performing an inventory
audit by checking product quantity on a continuous
schedule. It is important to count every item in your
store at least twice a year. To accomplish this, the
store is divided into four-foot sections, with each
section defined by a unique location code. These
locations are then combined into a number of groups, and
the items in each group are counted each. Cycle counts
are performed weekly with two sections being reviewed
each time.
The key purpose of cycle counting
is to identify items with an incorrect quantity on hand
in the computer, so this issue can be researched,
identified, and eliminated. Some of the other reasons
cycle counting is important:
~Improves accuracy of quantity on hand.
~Necessary to generate accurate computer assisted
orders.
~Minimizes lost sales.
~Improves customer service.
~Improves accuracy of management reporting and inventory
valuation.
~Allows timely detection and correction of errors.
~Identifies high-shrinkage items.
~Replacement of items in proper location codes.
~Reduces year-end inventory write-offs.
~Reduces the need for a physical inventory count of all
products at one time.
Before cycle counts can be
performed, recovery of the week’s selected sections must
be completed. Those assigned to perform the cycle counts
for the week, obtain the assigned sections from the
intranet. Once the listing is retrieved, the cycle
counts are performed. The sections are either manually
counted and logged onto a cycle count sheet or counted
with the RF unit. Regardless of how the cycle counts are
performed, manually or electronically, the counts must
be verified by another person to ensure accurate counts.
If there are shortages in quantities of the items, an
attempt must be made to find the missing items. Usually
these items are misplaced in different sections or
placed in the claims box where the special orders and
rainchecks are stored. If the items are not found, the
necessary revisions are made. Once this is completed,
the counts are logged into the Eagle Browser in PIP. If
the counts were counted with the RF unit, then the
counts are already recorded and sent to PIP. (The
sections must be logged in individually. They cannot
coincide with each other.) The reports containing the
updated counts are printed through RPI. After this, the
counts are posted on the intranet and a copy of each
report is stored in the cycle counts binder.
Accessing Cycle Count Sections
~Log on to the MVL intranet site.
~Click on the Operations tab.
~Click on the Cycle Count Program link under
Useful Links.
~Click on the Calendar link.
~Select store.
Posting Cycle Count Results On Intranet
~Log on to the MVL intranet site.
~Click on the Operations tab.
~Click on the Cycle Count Program link under
Useful Links.
~Click on the Cycle Count Results link.
~Find store and click on the down arrow of link.
~Click Edit Item.
~Enter in results.
Negative Counts
An automatically generated list is checked weekly for
items in the store that have a negative quantity on hand
(QOH). The count can be done throughout the week, but
should be completed before the RSO (Suggest Order) date.
Negative counts should not be done on freight and
receiving days. The report can be accessed at anytime on
the Eagle Browser under the title of RIS.
Before negative counts can be done,
recovery must be performed. This includes checking to
make sure none of the items are in receiving or in the
claims box where the special orders and rainchecks are
stored. If items are found, their counts are recorded.
After this is completed, the negative counts are
performed. The items with negative quantities on hand
are located and counted. The quantities of the items are
changed to their correct counts (instructions below). A
report of changes is printed and stored into the
negative and zero counts binder.
Changing Counts & Running Report
~Log on to the Eagle Browser.
~Type in PIP in the Launch field.
~Click on QPIP F3.
~Enter in the SKU number and the correct quantity on
hand. Click OK. Repeat this for all of the SKUs.
~Close Program.
~Enter in RPI in the Launch
field in the Eagle Brower. Select print settings and
then print the report (spool and print).
Zero Counts
The counts are done to ensure that items with quantity
on hand (QOH) of zero are recorded as zero so they can
be reordered. The counts can be done throughout the week
but not on freight and receiving days.
Before zero counts can be done,
store recovery must be performed. This is done to ensure
that the inventory counts in the database are accurate
so that the correct amount will be ordered. If the
counts are off, then the store will have a surplus/
shortage of supply of the respective items.
After recovery is completed, zero
count sheets are used to record the SKUs and section
numbers of the items with a supply count of zero. These
SKUs are entered into the Eagle Browser in the PIP page.
Once this is done, the reports are printed through the
RPI page. Recounts are done after this as a confirmation
measure to verify accurate inventory counts. Recounts
employ the reports produced from RPI.
Recording Zeros
RF Unit
~Scan the SKU from the bin tags of the zero items.
-If the SKU does not scan, manually enter the SKU.
~Enter 0 into the Count field. Press
FCN and then 3.
Manual Count
~Make a record of all the SKUs that are zero.
~In the Eagle Browser, type in PIP in the
Launch field.
~Click on QPIP F3.
~Enter in the SKU number and the correct quantity on
hand. Click OK. Repeat this for all of the SKUs.
~Enter in RPI in the Launch field in the
Eagle Brower. Select print settings and then print the
report (spool and print).
Staple Items
Items that the store should always have in stock. These
are items that should always be available to customers.
Promotional Items
Items that are being promoted or put on sale. These
items usually are staple, seasonal, and/ or new items.
They are promoted through store events and
advertisements as listed in the sales plans and
promotional schedules.
In/out items are items bought
specifically for the purpose of quick sales through
promotions. These items are temporarily in stock and
usually are not repurchased unless the sales are immense
and the demands are high.
Reviewing Promotion Items List
By Promotional Codes
~Log on to the Eagle Hawaii Network.
~Enter MIP in the Launch dialog box.
~Enter the promo code into the Type dialog box or
scroll down in this box to view a list of the promo
codes.
~This page displays lists of current and upcoming items
that are being or will be promoted or on sale. To view
past promotion items:
-Click on the Miscellaneous icon.
-Click on the View Promo History button.
-Click on the Lookup icon. This allows you to
choose your desired lookup setting.
-Pick your desired setting and then either enter the
SKU number in the SKU dialog box or the
promotional code in the Promo Name dialog box.
ACE Hardware Sale Plan Preparation
& Execution
Accessing Advertising Schedule
(ACE Hardware)
~Log on to the MVL intranet site.
~Click on the Advertising tab.
~Click on the Store Documents link.
Ben Franklin Crafts Sale Plan
Accessing Promotional Schedule
(Ben Franklin Crafts)
~Log on to the MVL intranet site.
~Click on the Merchandising tab.
~Click on the Merch Documents link.
~Click on the Promotional (Sales Plan) folder.
~Click on the Craft folder.
Seasonal Items
Items that are only sold in their particular season. In
this context, season is taken to mean a particular time
of the year such as Christmas, Summer, etc. Thus,
Christmas items would not be sold during the Summer
season.
Accessing Seasonal Items
Schedules
~Log on to the MVL intranet site.
~Click on the Merchandising tab.
~Click on the Merch Documents link.
~Click on the Seasonal Items folder.
~Select desired store and document.
New Items
Items that are new to the stores merchandise list. These
items are usually promoted through print ads and store
displays.
Accessing New Items List
~Log on to the MVL intranet site.
~Click on the Merchandising tab.
~Click on the Merch Documents link.
~Click on the New Items folder.
~Select desired store and document.
New Items Procedure
Adding Items To Stock
~Before requesting a product, make sure you have space
for the item.
~Research the product.
~Print out the item with a picture and description.
~Write the reasons for wanting to bring in the new item.
~Put all requests into the inventory coordinator’s box.
~The inventory coordinator will review the request
weekly.
~The inventory coordinator or the manager will write the
approval/denial.
-If approval, arrival time for new items logged.
~Original paperwork will be returned to supervisor’s box
indicating the status of the request.
~All other new items that have not followed this
procedure will be Z Flagged.
Locations For New Items
~On Thursday or Friday, the inventory coordinator
receives the ERP (day varies by store).
~The inventory coordinator will assign a temporary
location code in IMU and post the new item list with the
date of arrival.
~The supervisor will then create a home on the shelf or
peg and put the new bin tag up with the correct
location.
~The standard time for completing this is six days.
New Items Arrival
~New items will arrive ten days after the Tuesday or
Wednesday of their ordering (day varies by store).
~A home must be made and the location code must be
updated.
~Sales associates must be instructed of the arrival date
of the new items and their respective homes so they can
be properly stocked.
Items From Merchandising
~The inventory coordinator will let you know when new
merchandise is being ordered from Hilo office’s
merchandising department.
~Repeat procedures from Location For New Items and New
Item Arrival.
Discontinued Items
Items that are discontinued from selling for the
following reasons:
~Manufacturer suspended or terminated production of
item.
~Poor sales history for item in stores.
Accessing Discontinued Items
List (ACE Hardware)
~Log on to MVL intranet site.
~Click on Operations Documents located on the
left side of the page.
~Click on the ACE Cancelled Items excel sheet.
Accessing Discontinued Items
List (Ben Franklin Crafts)
~Log on to MVL intranet site.
~Click on the Merchandising tab located near the
top of the page.
~Click on the Merch Documents bullet located on
the left side of the page under the category titled
Merchandising.
~Click on the folder labeled Hot Sheets.
~Click on the desired folder and the desired month.
Adding SKUs To Inventory
Merchandising emails over a new SKU request form to the
stores. The stores make their respective requests and
then email the forms back to merchandising.
Merchandising makes the changes in the inventory
database.
Clip Strips
Clip strips are small merchandise display units that
promote impulse sales. Data shows a 25% unit sales
increase for items that are clip stripped. Examples of
items that have been successfully merchandised on a clip
strip include utility knives, safety goggles, desktop
scissors and batteries. It is best to locate clip strip
items near products they are associated with. For
example, placing utility lighters near fire logs or
permanent markers near food storage containers.
Damaged & Pilferage Items
~A damaged item is an item damaged through receiving or
through the store.
~A damaged item through receiving is an item that is
received defective. This item is reported and a claim is
processed to the vendor. The defective item is then
destroyed and the store is compensated with credit by
the vendor. If the item is only slightly defective, it
may be bought at a reduced price and sold at a reduced
price.
~Damaged items through the store are the items that are
damaged while being in the store. These items are
reported in the store damaged items binder and the
losses are taken off the funds in the store budget.
~Pilferage items are the items that are stolen. The
losses from these items are reported and taken out of
the shrinkage category.
Deadstock Clearance Program
The purpose of this program is to identify and dispose
deadstock items that have not sold for the past 12
months and have not been received for the past 90 days.
Deadstock items negatively impact our cash flow and our
ability to bring in new items that can generate sales
and gross margin dollars. It affects our ability to
manage shelf space and long-term customer perceptions on
our in-store merchandising.
Item Ranking
Ranking is the process of grouping items into categories
for analysis and reporting. The Eagle Browser offers a
number of ranking categories, such as units sold,
dollars sold, gross profit dollars, gross profit
percentage, on-hand value, and year-to-date
transactions. This document focuses on the “units sold”
ranking, or Popularity Code, and how it can be used to
drive calculations for order points and computer
suggested orders.
Ranking Codes
~A: Top selling items
~B: Next best selling items
~C: Next best selling items
~D: Slowest selling items
~X: No sales within reporting range
Ranking Calculation
~The computer assigns a ranking code to each SKU by
comparing it to every other SKU on the system. Users
determine the breakpoint between codes (for example,
where A-ranked items end and B-ranked items begin) by
specifying a breakpoint percentage.
~For example, if the breakpoint percentages were set up
as A=40%, B=70%, C=90%, and D=100%, the top 40% of all
units sold within the year receive a popularity code of
A, the next 30% of all units sold within the year
receive a popularity code of B (the difference between
the A and B percentages), the following 20% would
receive a code of C, and the final 10% would receive a
code of D.
Why Ranking Is Important
~If using the computer for inventory management and
generating computer suggested orders, order points are
calculated by rank after the first year the store is
open. This allows for different weeks of supply values
to be assigned for each ranking code.
~For top-selling, A-ranked items, a lower number of
weeks of supply help optimize inventory turns and reduce
overstock. For slow-moving, D-ranked items, a higher
weeks of supply helps maintain adequate shelf quantities
and promote sales.
~When calculating order points by rank, changing the
ranking code values may have a significant impact on
your overall inventory levels and turns. For example, if
the breakpoint percentage for A-ranked items is
increased from 25% to 40%, a number of SKUs that were
high-end B-ranked items now become low-end A-ranked
items – resulting in a lower weeks of supply order point
calculation and lower inventory levels. Or, if the
breakpoint percentage for A-ranked items is reduced from
70% to 40%, a number of low-end A-ranked items now
become high-end B-ranked items – resulting in a higher
weeks of supply order point calculation and increased
inventory levels.
~To ensure the appropriate weeks of supply value is used
when calculating each item’s order point, it is a good
practice to rank every store’s inventory file according
to the following annual unit sold ranges.
Location Codes
A location code is a brief series of letters and numbers
that identify a specific area of your store. A
distinctive code is assigned to each four-foot section
where the items are displayed or stored. Then, location
codes are assigned to every item in your store.
Markups & Markdowns
~A markup is a price increase for an item. This usually
is the result of a market price increase for the
material(s) used to make the item.
~A markdown is a price decrease for an item. This can
result for any of the following reasons:
-Decrease in market price for the material(s) used to
make the item.
-Unpopular or deadstock item.
-Overstock of item.
-Discontinued item.
Obsolete Inventory
Obsolete inventory is merchandise that does not have any
true or anticipated demand. Carrying the cost of dead
items causes a drag on all of your financial ratios.
Every store needs to create a plan to recapture cash
from dead inventory, to reinvest in inventory that
turns. In recent years, the lifecycle of products has
diminished. Today’s hot item is tomorrow’s dead item.
Liquidating non-performing assets
can be time-intensive and emotional. Many retailers do
not have a dedicated system in place for this, and may
view it as a low priority. Some of the reasons for
identifying and liquidating obsolete inventory:
~Having a documented process for assessing the value and
merchantability of slow-moving inventory assures that
these items are kept to a minimum.
~Liquidating obsolete, non-performing inventory for the
best price you can get is crucial. Every dollar obtained
for a non-performing asset is a dollar of working
capital preserved.
~By liquidating obsolete inventory, your store looks
fully stocked with clean, in-demand items. Customer
visits are enhanced when they can count on finding
interesting, updated product assortments.
~Merchandise sitting on a shelf costs money. It is not
unusual for a retailer whose inventory has not been
reviewed over a period of time to find that 20 – 25% of
the store’s total items are non-performers. Even a store
that vigorously culls its inventory could have 5 – 10%
of total inventory in non-performing merchandise. There
are a number of reasons for this, many of which are
almost unavoidable.
There are three components of the
costs of carrying dead inventory and its impact on your
bottom line:
~Lost Gross
Profit Dollars
-Using a very aggressive approach and disposing of
your dead inventory, even at any price, will generate
useful cash and clear up space.
~Real Estate
Costs
-The high occupancy costs of retailing require that
every available inch of merchandising space produce a
return on investment. For example, if a store with
10,000 square feet of sales space has 23% of that space
occupied by non-performing merchandise, and a base rent
of $12 per square foot, that store spends $27,600 per
year on space for merchandise that is collecting dust.
If a store with 10,000 square feet of sales space has
just 5% of that space occupied by non-performing
merchandise, at $12 per square foot this is still $6,000
per year with no return.
~Other
Carrying Costs
-Inventory is a nonproductive asset – it earns no
interest but costs you space, shrinkage, insurance and
handling.
Overstock Program
An item is considered to be overstocked when its
quantity on hand count is twice its minimum order point.
When this happens, the quantity on hand of the item is
reduced through inventory reduction procedures. These
procedures usually include temporarily lowering the
price of the item until it reaches the desired quantity
on hand count or temporarily promoting the item until
the inventory count is reduced.
Price Changes (RHR)
Merchandising sends over a list (RHR) of new item
prices. The stores must adjust their item prices to
match the prices on the RHR. These changes are usually a
result of changes in market prices. If there is a rise
in a particular material, the price of an item made up
of this material will reflect the rise in cost. The same
applies for a decline in cost.
Processing Claims
RIS
A report that lists items and their respective
quantities on hand. Stores use this report to verify
that the actual quantities on hand in the store match
the counts on the report. Stores view this report weekly
during inventory maintenance procedures. Ultimately, the
purpose of this report is to retain the most up-to-date
inventory count.
Sale Plan Carryover
At the end of each promotion, merchandising sends a
report of the sales plan carryover to each store. This
report lists the items that the respective stores have
an overstock of. The plan is to create a new promotion
to reduce the inventory count of the items. Along with
the list of items that should be included in this new
promotion, the report contains the new promotion prices
for the items.
To run the report:
~Log in to the Eagle Browser.
~Type in MIP in the Launch box.
To print the report:
~Type in RUP in the Launch box.
~Click on the Option link and select Finalize.
~Click on the From/To link and select Promotion Type.
~Print report.
Signs and bin tags with the new
prices are made for the overstocked items through Eagle.
The items are promoted until they reach a certain point
in their respective inventory counts. The signs and bin
tags are removed and the original prices are reinstated.
Store Supplies
Store supplies are items you purchase to use within your
store or give away. They are not normally sold to
customers and you may be required to pay sales tax on
them. Some examples include shopping bags, computer
paper, and brochures. Store supplies should not be
confused with store use items, which are items you
purchase for resale, but also use in your store (i.e.
batteries, paper, etc.).
Store Use & Donation Items
Store use items are goods that you purchase for resale
to customers, but also use in your store. Examples of
store use items include paper towels, glass cleaner,
toilet paper, snow shovels and batteries.
Store use items are often confused
with store supplies, but they are very different. Store
supplies are items you purchase to use within your store
or give away. They are not normally sold to customers,
and you may be required to pay sales tax on them.
Examples of store supplies include shopping bags and
computer paper.
Donations are items you buy with
the intent of selling to customers, but remove from the
shelf to give to charity. One example is a power tool
that you decide to donate to a Little League auction.
With store use items and donations,
it is important to have procedures that ensure the
correct quantity on hand is maintained and sales tax is
properly applied (if applicable) when these items are
used or consumed by the store.
Transfer Program
If a store is out of stock of a particular item and
another store has this item, the item is transferred to
the store in need. This usually occurs when Customers
request a particular item or if a certain store location
sells this item more frequently than the other stores
and is in need of more. This program only applies to
intra-island or intra-state transfers. The transfer
program procedure can be found in the Eagle Browser
manual.
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