The purpose of a physical count is to measure shrink, right? Of course. But can the numbers you are seeing tell you about how to better run the business? Yes.
In order to use the numbers to improve operations, it is important that they be easily understood – and presented in a way that makes it simple to compare one store to the next. They should also be able to provide answers to “solvable” problems.
1) What is your percentage of product in storage? The more inventory in back stock and not on the sales floor, the more chance the items can become out of date or damaged. When this information is tracked and measured across all stores in your chain, it becomes readily apparent if a store is burdened with excess inventory.
2) Are there any items in the store that are ONLY found in back stock? If you have product in storage that is not found anywhere on the sales floor you are missing opportunity.
3) What is the dollar value of damaged or spoiled goods? – By store, by region, by chain. Sometimes your operations team is reluctant to write off product if they can’t get credit for it or sell it. If unchecked, this can cause big problems. Your audit team should be counting this spoilage, logging the numbers and presenting it in a format that is easy to digest so you can pinpoint recurring problems and address them.
4) What are your cigarette values as a percentage of total inventory? Again, you should look at this by store, by region, by chain.
These numbers might not mean much if only looked at month after month on a same store basis. For example, if Store A consistently reported cigarettes were 28% of total inventory and that is the only store you looked at, that might appear to be the norm. On the other hand if you had an easy to digest spreadsheet comparing Store A’s percentages with 10 other stores, all of which have cigarette inventories hovering somewhere in the 12% range, you might ask different questions.
Think about it this way: A number is just a number. A set of numbers tells a story.