Retail Business
Management
Software
1. Introduction
In the changing business environment, successful IT implementation plays a crucial role in the success and growth of a retail business. Right implementation of a retail business management software is the most important pre-requisite to enjoy the benefits of computerization. This white paper explains the current industry practice and the challenges in implementation and go on to propose a simple and effective implementation methodology.
The purpose of this white paper is to share our views on what a retailer must consider before deciding on the simple and effective implementation methodology for his retail business. We hope this white paper helps retailers in deciding on the same. Your feedback and suggestions are welcome and please send the same to [email protected]
2. Implementation Scenarios
There are multiple implementation scenario depending on whether the business is a new one or an existing one, whether the business is computerizing for the first time or changing the software, whether there is a change in nature of business or not etc. It is important that these are considered while planning the implementation
S.No Consideration Description Yes/No Comments / Remarks
1 Is it a new business or a existing business
New business can start with entering all data related to the business. Existing business require business continuity and does not require all data in the computer from the day of starting operations
2 In case of existing business, is it getting computerized the first time or is there a change in the business management tool
First time computerization is always easier then changing the software in a already computerized business. One of the significant consideration when business changes the
business management tool is the (re)training cost and the impact of new tool on business
3 Are there changes in business processes (or) nature of business planned as part of computerization ?
When a business implements computerization and also plans changes in business processes/nature of business [like a departmental store becoming supermarket], the
implementation complexity may be more
3. Current Industry Practice - Implementing Software first time in existing business
We will look at how the retail business management software is implemented in an existing business where the business is computerized for the first time. Almost every retailer goes for opening stock entry method of implementation. A brief overview of the method is explained below with the help of figure 1
In the opening stock entry method of implementation, the retail business starts with entering the stock details for the stock available at the time of computerization. While the business owner and staff focus on
business, they hire additional man power to enter the stock details for the stock available in the business. To carry out the implementation successfully, the following considerations / practices are a must
• From the moment stock details entry is started, all purchase must be kept separately so that purchase entry can be done for these stock
• Every item for which stock entry is done must be marked [visible marking to communicate the fact that stock entry for the product is over]
• When a marked product is sold [product for which stock entry in computer is already done], the sale transaction must be recorded so that the same is done in the software after completing the opening stock entry
• Depending on the speed of the data entry operator used, stock details can be entered for 150-500 products per day. This means, a retail business with about 5000 SKUs will take about 15 to 30 days to complete the stock entry. During this period, all purchased stock must be kept separately and all sales of marked items must be recorded. Any deviation from this will result in discrepancy between computer and physical stock
• As the opening stock entry covers more and more product, the volume of sales transactions to record manually increases. This is very very difficult in high volume counters. Also, for servicing fast moving product inquiries the sales staff must look for the product in two inventories i.e. the existing inventory as of stock details entry start and the new purchase inventory. This will slow down the check-out process / customer service and will result in loss of revenue and loss of customer • All the sales from purchase inventory must be recorded so that once the purchases are entered, the
sales details are also entered. If any sales from the purchase inventory is missed, it will result in discrepancy between physical and computer stock
• Once the stock details entry is completed for all products, the two inventory can be merged into one. But, all sales transactions must be recorded for entering into system later
• All the purchase invoices must be entered
• All sales of marked items [sales done after opening stock details are fed into the system] and all sales from purchase inventory must be entered into the system. Also, all sales transactions after merging the inventory must be entered into the system
As we can see from the above process steps, it is very tedious and error-prone to implement. This process of implementation increases the work-load of the retail business operator by 4-5 times and poses serious threat to customer service. Incorrect implementation of software using above method can cause irreparable
damage to the business
Retailers who start with opening stock entry method of implementation reach the conclusion that their business is unique and inventory cannot be managed with computer. This results in very poor utilization of their investment on computerization and they start using the computer as a billing machine
4. Bill and Reconcile Method of Implementation
The new approach recommended by GoFrugal is the bill and reconcile method of implementation. This implementation method allows the retail business to continue its focus on its core business while introducing and integrating the business management tool as part of its life. In fact, the tool improves quality of customer service at the time of implementation itself resulting in positive effect on customer satisfaction and long term business prospects
• Install and Configure software as per your business needs. Setup the bill format as per your needs. Configure the software for day 1 billing / allow negative stock billing so that you can start billing immediately
• Start billing every sale within 15 minutes of software installation. Bill every sales and other transactions in the system
• Create products, supplier, customer and other master data entry as per your business needs • While entering purchases, the system will prompt you for the quantity in hand. Enter the stock
details for the quantity in hand. The software will automatically reconcile to get the opening stock details at the time of starting computerization
• With the above, you will enter stock details for all fast moving products. This is done one product at a time as you purchase the product
• Take a report on products with negative stock. Enter opening stock details for these products. This can be done each day, when you have free time so that stock details for all products that have sales are entered into the system
• When the negative stock report is small or empty, we should start with the exercise of completing the stock details entry. Depending on how the stock is arranged in the business [alphabet wise, category wise / alphabet wise, manufacturer wise etc.], take a print out of 50-100 products each day • Verify the stock details from the system against the stock details in the shelf. The purpose of the
exercise is to identify products [dead stock or very slow moving / non-moving product] that are there in the shelf but stock details are not entered in the system due to non-transactions on the product • Identify the products for which stock details need to be entered and enter the same into the system • Repeat the two steps above, still all the racks/shelf are covered in the business
As you can see from the above, the bill and reconcile implementation process is hassle free and much easier way of implementation. Above all, the implementation can be done as you do your business and there is no need to rush with the same. Also, you can start managing the fast moving products using the business
management tool very quickly and the slow moving / non-moving products can be brought in at your own pace
5. Quick Glance - Bill & Reconcile Vs Opening Stock Entry Method
S.No Description Bill &
Reconcile
Opening Stock Entry 1 Instant Gratification : Start using computer to manage your business right from
the moment software is installed and configured
YES NO
2 Focus on business improvement instead of managing the induction of business management tool
YES NO
3 Get manageability based on the products role in my business i.e. ability to manage fast moving products first and slow moving products later [80% benefits quickly]
YES NO
4 Easy learning of business management tool as the tool usage is in line with your priorities i.e. focus on sales and reorder / replenishment of fast moving products
YES NO
finesse of execution
6 Gives a new insight / perspective into your business. As you start working with the identification of non-transacted product, the number and value of stock of these products hits you on the face
YES NO
7 Easy to synchronize physical inventory with computer inventory. This lets you use reorder / replenishment and other stock details based reports and
intelligence available in the business management tool
YES NO
8 Confidence that irrespective of nature of your business and volume of transactions done, you can still manage inventory with the computer and can benefit from business management and business intelligence tools. This is very important for the implementation of trade collaboration, web commerce and mobile commerce tools implementation
YES NO