Customers buy what they can pick from the shop floor or online catalogue. Not what is “on its way from a warehouse” or “gathering dust” on our stockroom shelf. Stock not available to the customer is therefore waste. A waste of committed money (cash flow concern which immediately introduces risk) and a waste of space in our shop stockroom which in turns reduces overall shop floor space and slows staff looking for product.
Because “Buying” is the most critical of the four pillars of retail, it seems the sensible place to focus our attention on to gain further improvement. I’m going to challenge ourselves to use 2017-18 to maximise our buying by refining the workflow. This will be a collaboration between me, retail, user research and our digital team.
At present we do our buying like any other retailer, we order by supplier when we feel or notice heavy product depletion. Furthermore at any one time we’re “holding” about 10% of our annual total stockholding in our stockroom and another 10% on the shop floor. If it is on the stockroom shelf it has zero chance of being sold. In addition to having a costly quantity of product hanging around, the space used to hold our product could potentially be converted into public shop floor space. For example at Bristol Museum and Art Gallery there is a false wall which conceals our stockroom which is about 8m in length with a depth of 1.4m. If we’re about to improve how we buy, it is possible to push this wall back further and gain that space as public floor space that could be used for 2-4 nesting tables worth £10,000+. The challenge of course is that would reduce our total stockroom space by 2/3.
If we can nail our understanding of what to buy and when, this would unlock the potential to carry out operation “shrink the stockroom”. Order exactly what we need when we need it and not before.
The upsides would be:
- Move to a new process of ordering “just in time”
- reduce stockroom size thus freeing up new floor space for customers worth £10,000+
- reduce “out of stock” scenario by improving the buying process
- order by need not assumption
- reduce ordering time across the full year
- reduce owning costly stock that may not sell which also takes up space
- maximise available money set aside for buying products that sell
- Reduce time lost by staff who have to hunt around a big stockroom
- Heavily reduce human interaction which will reduce our cost per transaction and help us move to being digital by default
- Allow retail manager to focus on other tasks