Thursday, May 26, 2011

The Case Against Category Management – A Radical New Idea -2

Sharing in a sense of ownership within an environment of trust and respect are key elements necessary for the success of any group, organization, small shop… even a Fortune 100 company.  I have yet to meet someone who has truly ‘done it alone’. Employees who have a sense of ownership are more honest, more dedicated, more motivated and far more valuable to an enterprise than those who aren’t.

I’ve worked with hundreds, if not thousands of convenience store personnel, both in the stores and at company headquarters. I have found some of them to be quite remarkable, but all of them capable of adding much greater value to a company than is expected of them.  Yes, you may be wasting extremely valuable resources you don’t even know about. I can promise you, there are diamonds in the rough just waiting to be polished.

Interested? A good place to start is with your second most valuable asset, the inventory in your stores. If you’re like most convenience store retailers, you have two or three shifts. Take the number of employees you have and divide your stores into sections. Make each employee a ‘section manager,’ and ask them to take responsibility for the section(s) they manage. Have your store managers grade them on each section’s cleanliness and presentation. Once a week, give out a blue ribbon to be placed on the winning section and maybe a small gift… a coupon to use in the store, five dollars of gas to help them get to and from work, or maybe just a pat on the back and a ‘thank you’ note from a company manager. Employees work for pay… but they hunger for praise.

The store’s inventory should be audited by the store’s employees and spot-checked occasionally by a store supervisor. You can’t do this unless your computer tracks the number of items of each brand in your store. Using our system, we provide our clients with a printout at the beginning of each shift, targeting items that were over or short on the prior shift.

Starting on page 85 of our book, “Turning Convenience Stores Into Cash Generating Monsters,” Jim and I go into far more detail, but what we discovered when we began auditing our client’s stores in 2004, was that on subsequent audits, 85 – 90 percent of the items in the stores were neither over or short. This means in a store with around 2,700 items, only 270 to 405 items are high-risk.

Auditing the store requires approximately three-hours per day, most of the time devoted to the high-risk items, and our experience tells us there is more than ample slack-time to accomplish this task, with selected high-risk items to be audited daily, and the remaining items audited during a two to four-week period. It breaks down to about two hours and twenty-four minutes dedicated to high-risk items, and the remaining thirty-six minutes for low-risk ones. Spot checks by store supervisors on high-risk items, helps to remind store personnel how important those items are to you.

When a high risk item pops up on the shift’s high-risk list, an employee who may have forgotten to pay for that item will be reminded of the importance of that item to the company.

Audits are taken with a hand-held data terminal and transmitted to the SRDC computers the instant an item is scanned; the system adjusts the inventory, recalculates a new moving-average cost for the product and is used to prepare the next shift’s high-risk list. For example, if a pack of Marlboro Lights 100 goes missing on the first shift, an employee on the second shift will scan it again. The more often an item shows up on the list, the more likely it is it will reappear on the next shift’s list. It’s a decision made by the SRDC computer and based on on-going historical data for all stores networked to the system.

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