How long should I wait Mr. RETAILer? -Part II
Retailers have lots of sophisticated functions available in an ERP system to effectively serve customers. But, it takes more than these functions to fulfill the three important needs of the customer i.e. Making sure that product is available at the right price, at the right place and at the right time. The three significant ways to strengthen a retailer system are:-
Maintaining accuracy of inventory data
Most retailers have detailed inventory data available in their systems i.e. book stock information regarding the amount of stock of every item in the store. Book stock reports are created to report stock availability in store and are used as main basis for availability figures. However, the correctness of data is limited by:
- Movement of stock by customers in the store between display and payment point.
- Damage to the product and thefts.
When a book stock report is wrong, ineptness in store operations creep in. That's why retailer should not rely on one source of data. The retailers can use crowd source data methodology to bring in more accuracy to inventory data and effectively reduce OOS events. In crowd sourcing consumers are asked to report their views on product availability in the store using:
- Web surveys.
- Social networking sites.
This helps in getting feedback about the products which customers often find out of stock. The retailer can then bring distinct focus on book keeping of such products, increase buffer stock for them or increase their delivery frequencies.
Simplifying the replenishment system
The retail store that I visited was using a forecast based replenishment system designed to analyze data from over long time periods. In retailing world, replenishment often starts with a reverse principle: the most complicated way of doing something is the best. I have seen lot of complex ERP solutions becoming ineffective over the period of time and I think same could be happening in this store.
In my opinion, it is not easy to evaluate sales history and seasonal patterns in forecasting for all the products. I would rather have retailer a mixed approach to determine replenishment quantities instead of forecast based replenishment. This mixed approach could include forecast based planning for one set of products and min-max replenishment approach for another set of products. This way supply chain team would have better control on the replenishment.
Revamping Point of sales (POS) system
The slow and inefficient handling of payments at the cashier desk discourages a customer visit a store again. POS is the best time for a retailer to interact with a customer and a good POS streamlines the invoicing process. The POS at the retail store that I visited should be configured to handle mismatch in price checks in customer's favor, allow cancellation by billing clerk (and not restrict this authorization to store manager), update inventory and handle any other customer interactions impacting customer satisfaction.