Preventing Inventory Shrinkage Using Your Computer

Article written by EricBank

The National Retail Security Survey (NRSS) reports that Inventory shrinkage -- the vexing disappearance of items for sale -- bled U.S. retailers for over $34 billion in 2011. Small businesses are especially vulnerable, because they may not have good controls or systems to fight shrinkage. However, a small investment in a computer system and perhaps some security cameras can make a big improvement for not much money. Here's is how a small business should proceed.

Data Capture

The first order of business is to detect where shrinkage is occurring. Identifying your vulnerable areas lets you know where to allocate your time and money. It's pretty easy to track inventory nowadays thanks to cheap and sophisticated barcode technology. In fact, barcoding has allowed many merchandisers to adopt a perpetual inventory system, giving them timely information regarding the location, count and movements of inventory items. The scanners are not expensive, so you can deploy them wherever needed, from your receiving area to your cash registers and shipping dock. Using off-the-shelf software, you can quickly compare warehouse scans with order invoices to discover items missing from a shipment. Portable scanners let you make surprise spot checks at any time and may indicate areas where you need security cameras.

Employee Theft

The 2011 report from the NRSS estimated employee thefts to account for 43.9 percent of all shrinkage, the largest component of the problem. Having identified the problem locations in your store, vehicles or warehouse, you can use work records to see if there is any relationship between shrinkage incidents and certain employees. Analysis might reveal suspicious patterns involving workers who drive delivery trucks or work in your storage areas. Broadcast the fact that you are taking steps to catch employee stealing -- this alone can be a deterrent, especially to the casual perpetrator. If you catch a worker red-handed, you should prosecute them to set an example and show that you are serious. You should also set up fake thefts to see how well your system catches it.

Shoplifting

Shoplifting is common at retail locations. You might detect the most vulnerable merchandise by frequently spot-checking your inventory reports against physical counts. Once identified, you can post signs, install extra lighting, station store security persons strategically, add monitoring equipment -- anything to tip the scales in your favor and away from shoplifters. Your computer system can alert you to missing items that never passed through the scanners at your cash registers.

Errors and Fraud

A computerized system helps prevent honest errors, such as entering the wrong numbers or illegal item codes on orders, invoices and other documents. Beware the rogue employee who occasionally games the system. For example, in a manual environment, a purchasing manager might try to enter an inventory receipt for goods never ordered and then steal the payment made to a non-existent supplier. The right surveillance and computer equipment can prevent you from paying for imaginary inventory. Prominently display your daily system reports such as cancellations, returns and voided transactions, in order to deter theft by checkout employees.

Top 10 Tactics for Consultancy

Article written by EricBank

Many small businesses deal with services rather than products. Well-trained individuals might be interested in offering their services as management consultants. Often, experts who have worked in a particular industry for an extended period decide to branch off into management consulting. Each industry has a learning curve that requires years to master. However, once mastered, this knowledge is exceedingly valuable and can serve as the basis of a successful consulting career.

For those with the necessary expertise, this can be as fulfilling and remunerative business. You should consult with legal and accounting resources to work out the feasibility and business plans required to start up the company. We have identified 10 important tactics to help ensure the success of your new consulting career:

• Newsfeeds: Arrange to have the latest news about your client and three of its competitors fed directly to you. You can use a service like Google Alerts. Nothing beats staying on topic of client and industry news to make a good impression. 
• Financial Data: Memorize key financial statistics, such as overall revenue, market cap, gross profit and margins. You'll look like a genius at meetings if you know these numbers cold.
• Senior Management: Learn the faces and profiles of the client's top executives. You don't want to innocently run into one in the cafeteria and not know it. Familiarity with the executive staff will help you manage client relationships.
• Competitors: Get to know the top five to ten competitors, including their market shares, key offerings, strengths and weaknesses. You can gather this data from analyst reports, client intelligence, and financial websites such as Yahoo! Finance. Keep your knowledge up to date by frequently searching Google and Techcrunch.
• Contacts: Use a contact management system that works equally well on your computer and smartphone. Keep phone numbers and email addresses of each contact and his or her secretary. Great resource when you need to reach someone quickly.
• Institutional Knowledge: Assimilate the knowledge libraries of your consulting firm and clients. This is basically information about previous projects and the firm's latest strategic thinking. This is the fastest way to come up to speed on a new project.
• Entertainment: Get to know some good restaurants favored by your clients. These are good for team events and a popular choice will score points. 
• Project Library: Assume leadership of a project library that contains annual reports, tax filings, previous documents and presentations, and primers on the client's industry. Keep the library up-to-date with new reports and presentations as they become available.
• Travel Smart: Always carry extra supplies, such as Ethernet cables, USB drives, mice, power cords, etc. You may seldom need these, but when you do, you'll be the hero.
• Proofread: Never hand in a document to a client without thoroughly proofreading it, even if is not your personal work. Sloppy work is a killer - remove all typos, syntax and grammar errors and misaligned charts. Make sure the analysis makes sense. Failing to do this can be fatal to your career.

Advantages of Consignment

Article written by EricBank

Merchandizers, retail stores, kiosk operators, artisans, artists and tiny manufacturers can all benefit from the consignment method of selling. It's a useful alternative for selling goods that reduces the retailer's need to pay for inventory in advance. This allows the retailer to use the savings for other purposes, such as expanding its purchases inventory or improving its facilities. It also shifts the risk of an item not selling from the merchandizer, or consignor, to the supplier, or consignee, especially if the merchandizer has extra display capacity that would otherwise lie fallow. Let's take a closer look at the advantages of selling on consignment.

How Consignment Works

Using the consignment method, a retailer is cast in the role of consignor for goods provided by the consignee. The consignee might be a local artist or artisan, such as a sculptor, toy maker, baker or clothing maker. There are dozens of small mom-and-pop operations that would rather sell on consignment than make other, more complicated arrangements. It's the consignee's job to produce or otherwise supply goods for sale but employs the consignor's store to market and sell its wares. The storeowner doesn't have to fork over any money in advance to the consignee -- rather, it just makes some space and time available to display the goods and handle the sales transactions. The consignee doesn't get paid by the consignor until a sale occurs, and the consignor keeps a portion of the sale proceeds, which is usually almost pure profit. If any of the goods don't sell, the consignor returns them to the consignee. In this case, the only cost to the consignor is the opportunity cost of the sales foregone had it instead displayed other, more popular goods; otherwise, there are no out-of-pocket costs to the consignor. It is the consignee's responsibility to deliver and remove its merchandise. It may also need to periodically come to the retail location to dust off the merchandise and check that all items are accounted for.

Cost Savings

 

Consignment conserves the retailer's money, because it doesn't buy the inventory. The consignor thus minimizes overhead costs, such as those for storage, insurance and transportation. In addition, because the retailer doesn't pay for consigned goods, it collects revenue before sharing the proceeds with the consignee. The arrangement reduces the consignor's need to borrow funds to pay for its inventory, thereby reducing interest costs. Of course, this put more of the financial burden on the consignee.

Convenience

 

Consignment selling is a convenient time-saver for the consignor, who doesn't need to reorder stock, because the consignee will quickly replenish sold items. This furthers the consignee's goals by ensuring its goods are always available for sale. For certain merchandisers, such as catalogers and website storefronts, that do not stock inventory but rather order goods only to complete a sale, have fast, easy access to consigned goods because the consignee wants to facilitate a sale. Sometimes, consignees will physically arrange their goods for display in the consignor's facility, saving the retailer both time and labor costs.

Market Penetration

 

A consignee benefits by the opportunity to display its goods to the public and thereby stimulate demand. A retailer might be more willing to show new products from a consignee than from a conventional source because of the various benefits of consignment. For example, it might temporarily display consigned seasonal or holiday items that it would otherwise avoid because of limited demand. By explaining the many benefits of consignment to a retailer, a consignee can gain a foothold to compete with products sold through conventional methods.