Article by Ron Pawlowski
Retailers in these challenging times face razor thin profits,escalating expenses and leaner customer traffic. We allagree that 2009 will be a stormy year for the smaller retailer.One aspect of your business that can devastate profits is in thearea of inbound shipments. One organization assumed thatvendor shipments were accurate and store employees simplydid a cursory review of larger items that came in.After conducting a detailed audit of all shipments and allitems for all stores, the retailer determined that shipmentswere shorted by as much as 4 percent. Over the long run,paying a vendor 4% for goods never received can put aretailer into bankruptcy in our new economy. Most retailersare so pressed to get goods out on the floor, that scrutiny ofshipments is at best a haphazard exercise. Junior employeesmay not appreciate the critical importance of close examinationof waybills to the smallest of items in a shipment if the storemanager has not voiced concerns over shipment accuracy.Studies conducted on internal warehouse to store shipments fared a little better with an average 1% to 2% error rate. Lowervolumes and a vested interest to make sure the shipments areaccurate are likely factors that create better accuracy. How accurate are the shipments that YOU receive? When was the last time you really scrutinized your shipments for accuracy?What would short shipments as high as 4% do to your organization?Too many retailers assume that shipments are accurate, howeverin these tight times, everyone is trimming costs including employees,double checking, failsafe stations and more, within the distributionsystem. The retailer ultimately faces the loss if vigilance is notexercised at a high level in our new economy.It’s likely that the higher the volume, the higher the errors as well. Short shipments will really hurt retailers over the long run in anera where we can ill afford these devastating losses.Step back and look at all your shipments under a microscope!
Take Action Today:1) Discuss short shipments with all employees and introducetighter receiving procedures for all stores.2) Consider having staff double check shipment receivingprocedures. One employee receives and the other auditsthe paperwork and unit count.3) Get management to periodically spot check shipments.4) Audit inter-store transfers as well. Large stock balancingexercises have proven to also be largely inaccurate.
retail, retailer, leadership, operations, merchandise, shipments, transfers, vendors employees
About the Author
Ron Pawlowski is a ManagingPartner at The Retail Institute.He has 30 years of experience in the Retail Industry, a Bachelor’s Degree in Science as well as an MBA.The Retail Institute is dedicated to the support of the small to medium retailer through timely informative articles as well as affordable retail seminars, manuals and systems.http://www.retailinstitute.ca
