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Improving College Store Inventory Practices
03/14/08
Keeping track of inventory is one of the most vital of chores for the head of any college store, but sloppy inventory practices can wreak havoc in every aspect of your operation. In his CAMEX educational session, The Seven (or is it Eight?) Simple Rules for Inventory Control, Jason Katzman, textbook buyer at the CU Book Store, University of Colorado at Boulder, Boulder, offered what turned out to be 10 guidelines and/or admonishments for having an accurate inventory accounting system.
1. Utilize talented people. It only takes one irresponsible or badly trained buyer to put you out of business. Katzman recounted for attendees how a former store buyer bit when a vendor dangled the incentive of an additional 10% discount for what amounted to a purchase 10 times the size of the regular order. Ultimately, it took a new director, a new buyer, and the discovery of the excess inventory squirreled away off-site before the problem could be corrected.
2. This leads directly to point No 2: Be sure to really understand the relationship between inventory control and profit. "Don't buy extra inventory if you can't sell that inventory in the same amount of time as the original order," warned Katzman. "Turn almost always trumps margin." One exception for an institutionally owned store could be if the administration demands that books be kept in stock year 'round or authorizes the store to order the maximum faculty-requested quantities. In that case, a buyer would be justified in securing margin deals.
3. Do your returns to vendors regularly and often. Does the advantage of not doing returns regularly outweigh the damage to your turn and gross margin return on investment? The longer you hang on to inventory, the more likely you are to have "at-risk" stock, i.e. shopworn, stolen, or otherwise unsaleable items. Katzman said this merchandise is also a danger to your store's health because this is one of the first things auditors use to analyze the overall vitality of a store. Having scads of money tied up in merchandise that isn't moving is just not smart retailing.
4. Count it and give your trusted staff some level of control during inventory. "Are you managing or micromanaging?" wondered Katzman of some people's penchant for making things harder than they have to be. When you empower staff to be vigilant against errors—and the ability to correct problems themselves as they are found—damage can be kept to a minimum.
5. Don't be afraid to write off and mark down merchandise. "You made a 'mistake.' Move on. Get over it. Mark it down. The longer you wait, the more it will hurt," he said.
6. Use open-to-buy models, but feel free to make them flexible for your own circumstances. "Even when they're not used as intended, open-to-buy models can be great tools," Katzman said. "Open-to-buy models frequently can open a buyer's eyes to proper inventory levels and out-of-control areas, even if they aren't used as restrictions on the buyer. A responsible buyer will put those models to work regardless of whether they're strictly enforced."
7. "Analyze, analyze, analyze, and, oh yeah, analyze." Katzman said he could not stress this point enough. "Numbers don't lie, but sometimes the people who interpret them do. Buying is a feeling process; there are many 'feel' buyers. Numbers have to play a part in that process, though, and should usually be handled by an objective party, otherwise it's simply natural for a buyer or anybody to use the numbers to make themselves look good."
8. Which leads to point No 8: Fix, fix, fix. Katzman pointed out that "the ability to recognize a mistake and move fast to fix it is one of the key characteristics of a good inventory-control manager."
9. Create value from valuelessness. Take your "dog" items that aren't selling and reposition them—or pair them with complementary goods—to make them seem fresh and new again. "In retail, there's rarely a product with absolutely no value," he said.
10. Loss prevention is a lot more than just cameras and security; it's also refining processes, implementing procedures, and simply making eye contact with your customers.
—Keith Galestock
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