What checks do you have in place to check that the price, as reflected on the system, is in fact the correct price? I’m talking in particular about the cost price of a product.
What do I mean?
Ok so here is the scenario; A delivery of fruit juices arrives at the back door. It is received and the paper work is sent to the back office. The products get placed directly onto the shelves for sale to our customers.
The person at the back office puts the invoice on the pile of work to be attended to tomorrow morning. When he gets to input the data, he looks at quantity and enters this onto the system against that item. All well and good if the cost price of these items has not changed. But what if they have changed since the last order? How would you know that it has changed?
Well you don’t do you? You rely on the work ethic (…….say what?), the integrity and willingness of that employee to pick it up for you. And if they are in a hurry or are behind in their work schedule, they will not pick it up. Trust me – I have seen this happen countless times!
Some of the more sophisticated software around today has a mechanism at the back end which ensures that the back office person has to capture the complete information on the invoice – that is the cost for each item, VAT and totals. OK, so now the system tells him that the cost price has changed – really great news for us.
BUT, what happens if the person decides not to input the change straight away? Some systems allow them to do this. In theory he is supposed to come back later (a week, next day…or never) to “fix” it all up. Each time he runs a day end report it will tell him that he needs to attend to this data, but he can override it and let the end of day report run as is.
Of course it can become quite a mess down the line but if nothing else you have sold X number of fruit juices at potentially a loss! AND not all of us have a system that insists on the full invoice being duplicated on the back office.
So here is my question again – How do you know that the price is right? What checks can you do daily to ensure these lapses in administration do not take place?
1. Go to the back office at least once a day and pick up an invoice or a goods received voucher and go onto the system to check the information has been captured correctly.
2. Walk your store – and manually check on prices. Recently on one site I noticed a new brand of cigarettes and the packaging indicated to me that it was a low end product – but it was priced higher than any other brand on the shelves! And yes the wrong cost price had been captured!
3. Check the cost price and the retail price of that item on the system against the invoice
4. If there has been a price increase you might want to phone that supplier?
5. Do this randomly – do not always pick up an invoice from the same supplier
6. Do not rely solely on the system to tell you the price of goods – these numbers have been inputted manually!!
AND promotional items?? There is supposed to be a change in the cost price – do you check that the supplier has invoiced at the lower rate? And you probably have being selling them at the lower rate because it has been advertised as such! Check and double check all the time!
Once again stock will balance! But profit will be out of the window..
Take care out there