Operational Improvements Retailers Should Pursue Right Now

Retailers with a store organization that are still functioning and have staff on their payroll should strongly consider this period of uncertain sales as a time to realign their store operations by tackling projects they had previously delayed. Salaried employees who may not have been furloughed, but have seen a shift in their workload, may be prime candidates for projects such as the following:

Detailed Inventory Review

It has been my observation, after almost 4 decades of store operations review, that few, if any, store managers analyze their store inventory. I have repeatedly been amazed at the lack of interest and understanding displayed by the average store management team in even trying to learn how to do this.

Current day system capability provides almost every retailer access to their inventory position and movement (sales $) by store. An inventory file export by SKU (showing current position, cumulative movement, cost, and retail) downloaded to Excel would be sufficient to permit the calculation of weeks of inventory on-hand (W-O-H) and inventory turns.

Although rudimentary, this perspective could allow alert store managers to spot stalled inventory, modify replenishment orders and further optimize inventory levels. This type of analysis is not sexy, but for many retailers it could mean huge savings in inventory carrying cost and unwanted mark-downs.

Refresh Store Operations Procedures

Few retailers have had a recent review of their operating procedures to determine if the stores are employing operational best practices. Best practice training, even if previously completed in a store, often is diminished by rapid associate turnover. Best Practice adherence needs to be maintained or the average operational team may revert to previous, less efficient, techniques.

Retailers should assign a team to review and challenge key operational tasks (prioritized by descending task hours required) and seek ways to optimize the operational techniques they encounter. Often an existing store procedures manual describes optimal methodologies, but it may not be employed. Any substantial operational processes that has not been updated within the last 5 years should be challenged for new, more efficient ways of completing the task. Once new methodologies are adopted, appropriate task labor standards also need to be calculated, communicated to store associates, and utilized in staffing calculations.

Update Your Store Operating Procedures Manual

Most retail stores operate with an incomplete patchwork of written procedures. When existing written procedures are modified and distributed to store management, there is an expectation that these new instructions will be promptly executed, and new procedural write-ups will replace previous versions in the store operating procedure manual. In actuality, this rarely happens.

Written procedures manuals should be replaced with an easily understood, easily accessed, current on-line manual. In order to maintain procedural security, many retailers restrict the “print option” of their procedures manual, so that it can only be utilized on-line by store personnel.

Redo Your Operational Training Program

If an organization updates and improves their store operating manual(s), an associated training script and training guidelines also need to be developed. Despite the financial benefit of e-training, the bulk of studies performed regarding e-training effectiveness continue to indicate that this training approach is not as effective as an in-person training routine. Think hard about how your organization will disseminate information regarding new procedures. Poor communication about new procedural technique negates all of the work done to develop those new methodologies.

One tool that has proven useful to store operations management as both a task planning and communication tool is called a “Functional Schedule”. This tool shows store associates which key tasks should be performed and when. The concept is simple to understand and follow, and it reduces new associate training time. These can easily be created for key tasks or by department. A sample follows:

Realign and Clean Your Store Receiving Area and Stockrooms  

Key operational work areas in the store (e.g. receiving, processing, stockroom areas) often become choked with stalled or unsalable merchandise and broken equipment over time. Receiving areas may house damaged (incoming) merchandise in cartons, unused fixtures, trash, old or broken merchandise movement equipment (e.g. fixed rollers, expandable rollers, hand trucks, floats, u-boats, etc.). Often the first step needed to be taken to improve the functioning of an operational area is to clean it so goods can flow through an area with fewer impediments.

Identify additional uses of technology to enhance CS

While reviewing the operation of your stores, one should continuously be challenging themselves with the question…What additional technological tools could I employ to improve my stores? Retailers collect incredible amounts of data, yet often little of it is effectively used by or even communicated to the staff in the stores.

Smart retail operators communicate to store management which SKU’s are moving rapidly and have become candidates for replenishment from the backroom or stockroom. This should be done on a recurring basis so that selective real-time re-stocking can occur.

Retailers are beginning to employ wandering robots to scan aisles for safety issues and shelves for out-of-stocks and pricing errors. While a sign of things to come, a simple POS alert sent to a manager’s phone could head off many out-of-stock issues in the near term.

While retail management may scoff at the idea of addressing these suggestions during this period of unprecedented challenge, these recommendations would better position your firm for a more profitable future. In actuality, retailers know there is no easy time to review how your stores operate. Challenging your salaried ranks with these types of efforts may help to foster new and innovative thinking about retail technique that may have never been considered, particularly if you push desk-bound corporate staff out into the field.

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