A Better Path to Inventorying

The following was re-posted from Convenience Store Decisions and features commentary from Ed Collupy. The original posting can be found here.

Gaining control over store inventory is a necessary step to boosting your bottom line.

When store operators talk about inventory and cash management I always hear them talk about it in terms of accountability, control and operational improvement. How they get there, even with similar objectives, isn’t always the same. Many put technology to use, prioritizing what’s important to them and later widening the circle to learn more about their system to make further improvements.

CIRCLING THE SUPPLY CHAIN

Sam Nino, operator of Cabazon Fuel Centers in Southern California, described his inventory management process to me as a circle of activities that need to work together. That’s exactly how I describe the procurement-to-pay process.

Each step in the inventory management supply chain has its own processes and opportunity to put technology to work—let’s move around the circle and look at a few of them.

Vendor Management. Centrally managing vendors and the items that are authorized for each store is a key component and putting to use the Price Book functionality of your back-office system is a step that can help to ensure availability of product for the store personnel to place an order. There are case studies throughout the industry where retailers have stopped unauthorized inventory by disallowing open item purchases, resulting in immediate inventory control and vendors’ unauthorized items are immediately returned.

Ordering. A colleague of mine says “the prize” that comes about from taking progressive steps in inventory management is Computer Assisted Ordering (CAO). But before you get there most back-office solutions support different types of orders:

  • The ability to walk the c-store and order against the authorized Price Book.
  • The ability to copy or re-use a prior order.
  • View a theoretical on-hand during the order process as well as the last few weeks of sales history.

At a recent gathering of industry back-office solution users, they learned more about implementing some form of automated ordering capability.

For those already on this journey there was advice to take it in steps—ensuring first that new inventory processes have been mastered in terms of execution and timeliness. CAO offers the most return on investment for any inventory management technology implementation that a c-store might be pondering.

Receiving. With the use of technology/processes comes a great opportunity to introduce and automate policies that are critical to managing vendors delivering product. Earlier identification of cost discrepancies is an opportunity in the receiving process that can’t be minimized. When a vendor delivers, in most back-office systems, the store staff will have immediate visibility of a cost from the central Price Book being different from the vendor’s invoice. Nino noted vendor controls like these “gives you accountability.”

Adjustments & Counts. There are many types of modifications that need to be made to maintain an accurate store level inventory: returns/credits, transfers and waste. Entry of adjustments into your system is critical to maintain an accurate perpetual inventory.

Having the capability to report on adjustments helps identify causes of margin erosion and true shrinkage allowing for action planning.

Inventory counts are completed based on your inventory management method—full c-store, partial count, category and/or item level filters. Your back-office system should help track sales during the count process. Counts also allow you to see the result in shrinkage and overages as a performance measure and guide.

Invoices. A true time saver at store level and an overall business process improvement that Donna Perkins, Price Book manager at E-Z Stop Foodmarts, spoke about when she led the recent Conexxus webinar “How Much Can You Save with Electronic Data” is importing an electronic invoice from wholesalers and direct delivery vendors.

This system-based process allows for the tracking of transactions from ordering to receiving to returns and audits. Identification of cost and quantity discrepancies before the vendor leaves the c-store allows these exceptions to be identified and resolved before they update your financial system and reduce overpayment.

Perkins reported that with just one vendor they have saved over $23,000/year and knows that this will grow as they continue importing new vendor invoices.

A HANDFUL OF USES

Using a hand-held terminal during the inventory management process is a key technology that many grocery wholesalers and back-office solutions offer to improve inventory accuracy. A solution that is integrated with the Price Book will enable further efficiencies.

“Time is everything,” said Nino, who has been able to delegate the receiving process to cashiers because using the hand-held is “simple and easy to do.” His hand-held uses a docking station to upload data but he knows that wireless devices and real-time updates are available.

The hand-held is best used to complete the inventory management circle:

  • Display calculated on-hands when ordering.
  • Receiving against the order once the items are delivered.
  • Matching the order and receiving to the e-invoice.
  • Facilitate faster and more accurate counts.

A hand-held device also removes duplication of effort, in terms of matching and counting manually against the order and/or paper or e-invoice and then requiring entry into another system. The introduction of substitution products or unauthorized products prior to arriving at the point of sale (POS) is prevented.

Brandy Clark of Clark’s Pump N Shop refers to the proverb “time is money” when she points to the inventory management processes she uses along with what’s close at hand, her smartphone or tablet, wherever and whenever she needs information.
Nino sees the day when he and his employees will use a tablet in the ordering process that will “keep operations as streamlined as possible.”

EVERY PENNY COUNTS

Smart operators make it a point to follow Ben Franklin’s “a penny saved is a penny earned” advice when it comes to business. Technology-based cash management practices are able to quickly identify actionable steps to bring more than pennies back to the bottom line of your store operation.

One back-office solution provider consultant recently told me that working with his customer and the system brought to light and resolved a long-standing problem.

Their previous method of reconciling money orders left a hole allowing the store manager to manipulate sales and receipts figures to make a day seem in balance, when in fact it was not. Analyzing back-office and auto-imported POS data that auto-calculates the over-shorts accordingly made it quick and easy to see the discrepancies.

Clark utilizes the c-store analytics module of her back-office solution and reports that cashier performance has improved at her 62 stores. She said, “Using a cashier heat map enables monitoring of incidents by cashier by store allowing us to address training or shrink issues.”

Her back-office system collects transaction data from the POS and with its heat map capabilities report using “different colors to quickly show us when a store/cashier’s average has shot up. It’s a quick and easy way to spot a problem.”

Inventory and cash controls within a closed-loop system are necessary in successful operations. With strong processes supported by technology, managers can close the gaps in the supply chain cycle and let the pennies add up quickly to significant dollar savings.

Ed Collupy, executive consultant at W. Capra Consulting Group can be reached at ecollupy@wcapra.com. Collupy has IT leadership and business team experience providing strategic, operational, and project leadership to retailers, emerging businesses and technology companies.


2017: Observations in Review & What’s to Come

The following was re-posted from Convenience Store Decisions. The original posting can be found here.

As the year ends, it’s a time for reflection and to look into the future.

 By Ed Collupy

It’s that time of the year when it’s always good to take time to look back, reflect, and muse – where did the time go, what did I accomplish, how have I helped others, what’s changed since and what’s next?

The best retail systems event of the year, Retail ROI’s Super Saturday, is held in January. It was filled with technology updates, but there’s nothing like combining it with an opportunity to tell the story of how, together with Retail ROI, thanks to several grants including one that came from them later on in 2017, that a non-profit I helped found (Share The Blessings) has been able to dig wells in Ugandan villages providing clean water to orphans and hundreds of other villagers. 2018 is shaping up for this to be another great event leading up to the NRF Big Show – will I see you there?

In February I wrote about Inventory Management in my “Store Data Deserves Protection Too” article. According to rankings released in a November survey by SecurityScorecard, “the retail industry comes in fifth out of 17 industries on cybersecurity, though it gets a grade of D for network security and patching cadence.” The challenge to new threats continues into the new year.

As Spring approached I hit the road several times in March visiting c-stores. In Oklahoma, I had a lunch at a quick-service restaurant at a Love’s Country Store and to get a feel for their stores. In Houston, I visited a brand-new Speedy Stop store where I paid for gas using an app on my phone. And here at home in the Boston area I took some solution providers on a visit to stores we had helped pilot a new technology at. As pilots are purposed for, we learned and were able to make sound decisions. In 2018, lets plan to get into even more stores to hear ideas from both store employees and customers and really understand the c-store experience.

At the Conexxus Annual Conference in April I led a panel of IT Leaders in a lively discussion about what’s important to them – people, governance, and security. I learned that Joyce Pingel from Kum & Go was named by the governor of Iowa to the state’s STEM Advisory Council. Be sure to join me and the many IT leaders at the 2018 Annual Conference in Chicago – registration opens soon: https://www.conexxus.org/content/2018-conexxus-annual-conference.

Even during the year its good to reflect back and I had the opportunity to do that in May with Gray Taylor (Conexxus) & Lesley Saita (Impact 21) – we re-presented our 2016 NACS education session on Customer Engagement Technologies. Not much had changed since our October session and unfortunately that’s similar to EMV – I wrote about the slow progress with implementations both inside the store and certainly outside at the forecourt (EMV Hopes – An Implementation Update May 4) and here we are a half year later and although there’s been a few stores live with chip readers in the pump the overall state of EMV in the c-store/retail petroleum industry continues to lag other segments. 2018 will see some slow progress with EMV on the forecourt.

I reflected in June on what I thought Amazon’s big news with its acquisition of Whole Foods would mean in August when the deal was to come together and more on that later but 2018 will bring continued advancements at Amazon that will pressure traditional retail – they’ll be some innovation in the c-store industry thank heavens to 7-Eleven.

During the summer I had the opportunity to work with some interns my firm on-boarded to expand both their and our horizons. In July I wrote about my experiences with interns and weeks after the blog post heard from an intern I had brought on during my career who had just started a new job and recollected how experience counts – causing him to add a “second focus with project management, which has largely dominated my career over the last eight years.” I’m looking ahead to meeting and working with our 2018 interns.

My look to the future of Amazon & Whole Foods in June revealed itself in August; I did all right as a futurist! And here we are in December and we continue to see and learn how the Amazon powerhouse continues on a path of being both ‘Click & Mortar’ – my local Whole Foods now has Amazon lockers and expect to see Prime members become the first in 2018 to be enrolled loyalty members at Whole Foods.

Disruptions abound and in September I was quoted as saying in a NACS Magazine article disruptions will come from the Internet of Things (IoT), “with its endless opportunities to increase customer traffic, services, and basket size”. At the NACS Show a month later IoT was all around the show floor so I spent time talking to solution providers about a need I see to consolidate all of the IoT data that is and will continue to come across networks looking to be accessed easily. I won’t be the only one in 2018 asking for a common platform to manage IoT devices and data.

A holistic view of security and foodservice are top of mind topics for c-store/petro operators in 2017. I took readers on a store tour in my October article “Unlocking Security Issues” and learned from a demo, one of my Study Group members shared with our group, how a newly deployed video management system has brought his company many wins. I was privileged over the prior few months to work with Ryan Riggs from Sheetz—CSD’s 2017 Convenience Store Chain of the Year— as he pulled together a presentation, for a Tech Edge session at the NACS Show this month that included his systems portfolio and thoughts on technology as a food service business leader. The 2018 NACS education sessions will be the best yet – planning is well underway.

It’s always great to hear from others in the industry and throughout the year I did – several people commented back to me on my November article “The Expanding Back Office.” In the short time since it was written, more is afoot with solution provider acquisitions, partnerships, and expanding services. In 2018 the use of back office systems will continue to grow with more smaller operators looking to gain efficiencies and make better decisions.

December is a time for giving and as I reflect back I hope that some of what I’ve shared this year has helped you and I look forward to next year to continue to provide insights and thoughts on what’s going on and what’s ahead for the c-store/petro industry.

Ed Collupy, executive consultant at W. Capra Consulting Group can be reached at ecollupy@wcapra.com and be sure to visit www.capraplus.com for more retail technology and business insights. Collupy has IT leadership and business team experience providing strategic, operational, and project leadership to retailers, emerging businesses, and technology companies.


The Voice Assistant: A New Mobile Frontier for Merchants, Part I of II

Voice activated personal assistants like Amazon’s Alexa or Apple’s Siri have exploded onto the scene.  It’s expected that by 2022, 50% of US households will have at least one smart speaker with personal voice assistant capability.[1]   While the number of devices in use is huge, the functionality they currently offer is just the tip of the iceberg.

Most people are using voice-activated assistants to manage their home automation, play music, and stay up to date on news and weather, but these devices also offer the possibility to make purchases using a stored wallet that can authorize purchases using the owners’ voice.  Currently 29% of these device owners have used their voice to make at least one purchase.[2]  Given the relative newness of this technology, this statistic is significant, especially when we consider the low adoption rates of users who have utilized Apple Pay to perform a contactless transaction. Anyone who wishes to tap into a new payment modality should take note of this – the number of users that use their voice to complete a purchase is only expected to increase. Merchants who wish to support voice commerce must understand the challenges that exist in developing a user interface and perfecting an experience that can only be heard, not seen.

Current Voice Assistant Landscape

Of the 30million homes that currently have one of these devices in them, Amazon’s Alexa dominates with 70% market share.[3] The Google Assistant, Apple’s Siri, Microsoft’s Cortana, and Samsung’s Bixby are all considered top offerings from the world’s largest brands.  There are also many smaller, independent offerings attempting to carve out a niche for themselves. Many of these devices are intended to be fixed in the home but manufacturers have on eye on making them more mobile. Apple’s Car Play allows its mobile devices to seamlessly integrate with car entertainment systems, but Amazon is making headway in this space with an agreement to have Alexa preinstalled in all BMWs starting in mid-2018.

Voice Assistants as a Commerce Channel

Alexa can place orders from Amazon for any specific items that a consumer requests. It will also provide suggestions if you don’t know exactly what you’re looking for.  Google’s Assistant has partnered with Walmart to fulfill customer purchases.  Third party integrations with these devices are currently limited, but there are a few merchants taking advantage of this channel.

Domino’s Pizza and Starbucks both allow users to order and pay for purchases using their voice once they have linked their device to an account.  The same is true for Uber and Lyft, who will send a car to your location using voice commands.  Customers are enjoying the novelty of this functionality, but businesses hoping to engage their customers through this channel must carefully design a simple, effective, and easy to use experience.

Strategies that worked for engaging consumers on the internet, their mobile devices, or in their inboxes might not be the same ones that are effective with these personal assistants.  The experience must be smooth and efficient otherwise the consumer will revert to a more familiar experience. Part II of this article will take a closer look at the components of an effective strategy for enabling commerce through these personal assistants.

 

[1] https://www.forbes.com/sites/gilpress/2017/10/29/22-million-amazon-echo-smart-speakers-to-be-sold-in-2017-driving-us-smart-home-adoption/#6c618de1481a

[2] http://www.geomarketing.com/over-30-million-households-will-have-a-voice-first-device-by-the-end-of-2017

[3] https://www.emarketer.com/Article/Alexa-Say-What-Voice-Enabled-Speaker-Usage-Grow-Nearly-130-This-Year/1015812