Put Down the Sales Reports
Mondays are generally known in retail as “report day.” Sales and in-stock reports aplenty, sorted and summed by every conceivable angle land on every desk from the CEO on down. The point of all these reports is to find exceptions and actionable items. But sometimes it’s like looking for a needle in a haystack. You don’t need a bigger haystack; you need a magnet!
Sales reports are meaningless
Now that’s a bold statement. Sales reports ARE meaningless, if you are trying to find exceptions. They only tell you what you did, not whether or not what you did was exceptional. Most of the time the “problems” you find turn out to be exactly what you expected to happen. When you do find something that needs fixed, the report doesn’t help you fix anything. Sales reports simply make the haystack bigger.
Exception Management = Super Magnet
Many retailers spend hundreds of man hours concocting ever more complex reporting in an attempt to get to what is important. Rather than making the haystack bigger with more and more reports, retailers should be looking at the following to find true exceptions.
5 Ways to Get More out of Your Monday
- Demand forecast accuracy, not sales: Your demand forecast for item A was 500 and you sold 498. A sales report will make item A the most important thing for you to look at as it was your best seller of the week. But that’s not an exception. That is exactly what you expected to happen. It would be more helpful to know that item B had a demand forecast of 25 and sold 100.
- Service attained, not in-stock: In-stock reports easily create a false sense of security or a false sense of panic. Say you own 4000 pieces of Item C and it’s 100% in-stock. You might think you are set. But what if your demand forecast for the week is 10,000? Not feeling so comfortable anymore. On the flip side, do you really need to be 95% in-stock on an out of season item with a demand forecast of 5? A better measure is whether you have enough on hand to do the business you expect.
- Reporting inside the system, not on paper: Most demand forecasting and replenishment systems have little or no reporting capabilities. If you happen to find an issue on a paper report,you still have to fix it elsewhere. The solution is to find the exceptions inside the system that can be used to fix the demand forecast.
- Automated alerts, not canned reports: You get the Top 100 report every Monday, you get a monthly summary on the first Monday of the month. By the time you get the report, it may be too late to do anything. Instead of reporting on a certain day, you should be getting alerts as the exceptions happen.
- Customized, not one-size-fits-all: Everyone sees the same Top 100 report. But does a Top 100 report make sense for a department with 50 very expensive items? Everything is a top item then. Each business segment should be able to set their own thresholds for finding exceptions. Alerts should be changed thru the year as seasons and priorities change.
Sales & Inventory Future Looking
Sales reports will always have a place in retail. How else can a public company report to Wall Street or an owner track progress? But we should stop kidding ourselves. Looking at a sales report or an in-stock report on Monday morning doesn’t mean that you are on top of your business. If you want to get ahead of your competition, you need to be looking forward, not behind. You need ways to get to the real problems more easily and to fix them faster.
If your demand forecasting, replenishment or supply chain system has you stuck with backward-looking reports, maybe it’s time for a change. Contact us today to find out how we can help with robust exception management and Tighten The Links In Your Chain.™