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Stock control policy and proceduresInventory controlThe store has clearly defined policies and procedures in place and it is the Supervisor’s responsibility to ensure inventory control is efficient, as loss of stock and damages result in a loss of profit.
The buyer’s role
Forecast sales and budget orders
Keep up-to-date with trends
Order merchandise
Ensure a variety of merchandise
Understand the target market
Monitor stock levels
Supervisor’s role
It is the Supervisor’s responsibility to train staff members in the correct procedures for receiving stock.
Minimise shrinkage (theft and waste)
Control the level of mark-downs
Monitor stock levels
Monitor fast and slow sellers to avoid sell-outs
Coordinate stocktake and prepare reports for Management
Ensure all merchandise is correctly priced, following Company procedures
Monitor re-order levels for fast selling merchandise
Liaise and communicate with the buyer over the sales performance of stock
Inform all staff of new product lines and price changes
Staff member’s role
Check the load
Check delivery records and procedures
Check the quantity and quality at delivery
Check the quantity and quality after delivery
Store the stock securely
Deal with damaged and missing stock after delivery
Inform Supervisor of any damaged or missing stock
Stock handling
Stock handling and storage of goods
Care must be taken in the storage of goods to ensure against damage and theft. A fundamental part of your supervisory duty is to ensure the personal safety of your staff members, and to provide a safe working environment. For more information, refer to the Safe Work Practices Manual. A few issues relating to the safe handling of stock are:
All fire exits and fire extinguishers should be kept clear of stock for easy access in case of an emergency
Stock is to be stacked to prevent it from falling on staff members and customers
There should be at least 30cm clearance above stock and around fire extinguishers
Empty pallets should not be stacked too high and are to be laid down flat and not stored on their sides
Be aware that poor manual handling accounts for the majority of accidents in the retail environment
Stock safety
Stock needs to be placed in security areas and put away as soon as possible. Store procedures are to handle stock in the following manner:
Special items, such as handling stock, must be stacked in the appropriate way and hung on the appropriate fixtures
Fragile items should not be stacked on other stock or on high shelves
Perishable items must be stored at the specified temperature to keep them fresh e.g. milk and frozen foods
Flammable items should be kept clear of heat or combustible materials
Storage for hazardous items must follow manufacturer’s storage and handling instructions
Stock re-orders
Although our Company has a Stock Controller and Buyer, the Supervisor still plays an important role in monitoring stock controls. Our policy is to
always try and avoid the situation of stock out by frequently communicating with the buying office. By doing this, all staff members can be aware of planned promotions, target markets and be informed of new stock items and trends for the new season.
An empty looking store or an overcrowded store will impact badly on sales.
Re-stock shelves and display stands from stock in reserve
Fax or email all order requests to the buying department with an order number
File order forms in due date order
Place orders on a regular basis; weekly or more often if required
Supervisors are responsible for re-ordering all standard stock lines.
The buyer handles all other items, which are known as specialty lines.
Store pricing policyThe Store’s image is up to date, stylish merchandise. The type of customer our store attracts is more image-conscious than price-conscious.
Our merchandise is medium- to high-priced, however, our emphasis is on supplying a wide selection of quality merchandise as well as providing excellent customer service. Furthermore, our store is known for our end of season mark-down sales where merchandise is cleared at bargain prices.
Considering this, the purpose for a store pricing policy is for prices to reflect and fit in with the store image, so that prices are competitive and most importantly, the store makes a profit.
Mark-up and profit margin policies
Mark-up and profit margin polices are confidential to Management, the Stock Controller, Buying Department and selected Supervisors.
There are two key elements to consider when developing a pricing policy. These are mark-ups and margins.
Price Points are to be as follows:
Below $1: to be priced in even multiples of 10c, 20c, 50c, 70c, etc.
$1 and $2: as even dollar amounts $1 and $2
Over $2: prices should end in .95c so $3 becomes $2.95, $5 becomes $4.95 and $10 becomes $9.95
Over $30: revert to even dollar amounts $1 below the $10 multiples. So $50 becomes $49, $70 becomes $69, $100 becomes $99 etc.
Mark-up
Mark-up is the amount added to the cost price of merchandise to give a selling price that meets profit requirements. All items are to be marked up 150% of their true cost price.
The cost price should be multiplied by 150% and added to the cost price. For example:
Cost Price Mark-up Selling price
$10 150% $25 rounded to price point of $24.95
$20 150% $50 rounded to price point of $49
$50 150 % $125 rounded to price point of $125
$100 150 % $250 rounded to price point of $249
Profit margin
Profit margin is the estimated gross profit that would be achieved by selling goods at full selling price. It is calculated by deducting the cost of goods sold from the selling price. For our store to be viable, a profit margin of 60% needs to be achieved.
$25 – $10 = $15 profit.
To convert this to a %, use the formula below:
((selling price – cost price) selling price) 100 = Profit Margin
(($25 – $10) $25) 100 = ($15 $25) 100 = 0.60 100 = 60%
It is important to understand that marking up merchandise 150% will only achieve a 60% profit margin. If merchandise is sold for less than the recommended selling price for reasons such as stock losses, mark-downs, shrinkage etc., the overall gross profit is reduced.
Some elements that contribute to the level of profit margin and mark up are:
cost price
freight
storage
wages
rent
Supervisor’s role in mark-downs
All supervisors should be aware of the reason for mark-downs. Remember unwanted stock takes up valuable space and costs our store valuable profits. It is the supervisor’s responsibility to keep an eye out for slow-moving stock and suggest strategies to rectify the problem. Supervisors must keep good records so that Management can keep track of what is being marked down.
When should supervisors mark-down merchandise?
Merchandise is to be marked down at the end of its selling season or if it is slow moving, obsolete, damaged or priced higher than that of our competitors. It is preferred mark-downs are planned for holiday programs or special events.
Benefits of mark-downs:
Increase the traffic flow of customers
Increases the sales of other merchandise in store
Procedures for Mark-downs
Supervisors must carry out a weekly inspection of merchandise in their department and fill in report of slow moving merchandise and suggest mark-downs figures
Mark-down sheet is sent to the Stock Controller for approval and sign same
Once the mark-down sheet is approved and signed by the Stock Controller, it is the Supervisor’s responsibility to inform all staff members of the price mark-downs to prevent embarrassing situations of staff members quoting old prices to customers
The mark-down sheet is to be filed in the mark-down book, which is kept under the counter for easy reference to all staff.
Supervisors have permission to discount up to 15% on any items that are damaged or stained without permission from the buying office. However it must be recorded on the mark-down sheet. It is important for shrinkage and profit records that these are recorded accurately.
A Mark-down Worksheet is attached later in this document.
The Supervisor should carry out spot checks to ensure:
All staff mark merchandise with the correct price and are following store policy
All price tags and tickets have been changed
Staff or customers are not fraudulently changing mark-downs
Price marking
Price marking is a critical area, which, if not properly controlled, can cause major problems with customers.
All price tags are to be attached to the inside label of clothing garments.
Never insert plastic tags through the garments.
Other merchandise price tags are always to be placed on the right-hand corner of the item.
When a price is reduced, over stamping the old label with the mark-down price is permitted.
When the price goes up, all of the old label must be removed without fail.
The price of merchandise on sale is correct and clear to the customer.
Coordinating stocktakeStocktake is the physical count of stock that is in the store at a certain period of time being a true measurement between the physical stocktake figures and the book stock.
Supervisor’s role
Preparation
Preparation and supervision are the key to a successful stocktake. Supervisors need to keep updated. Give staff members clear direction
and training of the store’s procedures. Tasks should be allocated to staff members. Furthermore, all tasks on the stocktake preparation checklist must be carried out.
Rosters
It is the Supervisor’s responsibility to consider budget allocation and time constraints. Always ensure extra staff are rostered on to attend to customers’ needs during this period. Stocktake is only to take place outside normal trading hours. If time constraints allow, finish stocktake before 10am.
Supervisor’s responsibilities
When in progress:
Allocate tasks in a logical order to ensure efficient progress and good end results.
Stocktake should be completed in the shortest possible time.
Issue staff members with stock sheets and direct them to appropriate area to count.
As a control measure, carry out random spot checks on staff counting and recording procedures to ensure that tasks are completed.
On completion:
After the stocktake has been completed for a certain area, another staff member carries out a spot check. It is Company procedure to choose five fixtures from an area and complete their own stocktake.
These records are then compared with the original stocktake documentation and, if there is a discrepancy, a report is compiled.
Discrepancies must be investigated and reported when preparing accurate reports for Management. (Discrepancy Report attached)
Stocktake checklist
Preparation and supervision is the key to successful stocktake. All Supervisors are to ensure all tasks are carried out before commencing a stocktake
Develop a concise set of instructions that can be used. Explain how to carry out stocktaking to a new staff member
Design a roster, allocate group members areas of responsibility
Conduct a price check of tagging and bar code of fixtures
Be aware of cut-off points for orders, deliveries and shelf filling. Plan a cut-off day or time that these activities are carried out
Ensure lay-bys are put aside and follow up and record any stock out of store on loan
Design a floor plan of the department where all fixtures are labelled and numbered for easy identification. Numbered stock sheets are allocated to correct staff members
Discrepancy reports
Obvious discrepancies to identify:
Mark-downs that are not recorded for known shrinkage e.g. damage and theft
Incorrect registration of mark-downs and transfers in and out
Stock in the wrong position on fixtures for example, in reserve areas, above eye level, on display, in drawers or closed bins
Bar code for an item that does not correspond with fixture bar code
Invoices or credits input incorrectly
Staff incorrectly counting or pricing items
Stocktake staff training
It is the Supervisor’s responsibility to ensure all staff members are trained in the correct procedures. The following instructions will make a good starting point for training staff.
To ensure a successful stocktake, please observe the following instructions:
Your Supervisor will issue you with the appropriate stocktake sheets and direct you to the area you will be counting.
You must count each fixture as a separate unit because each has a separate stocktake sheet.
Every fixture is numbered and this number appears on the top-right hand corner of the stocktake sheet.
You must count each shelf from left to right, starting at the top shelf and working your way down to floor level.
You must not interfere or talk to other staff members when they are counting.
You must not leave your fixture in mid count.
You must always count from physical stock to the stocktake sheet to minimise counting errors
You must make sure the fixture bar code corresponds with the product bar code.
Your supervisor will carry out random spot checks for quality control.
Our Company has developed a coloured tagging system as a communication tool to ensure a successful and accurate stocktake.
Green stickers indicate that all items are checked and correct.
Red stickers indicate there is a problem with the count or the bar code needs investigating.
Yellow stickers indicate counting is in progress and a Supervisor is to be called for clarification.
Blue stickers indicate second count has occurred.
Preparing accurate reports
When the physical count has been completed and recorded on stock sheets, stock sheets need to be collated and put in fixture numerical order. Check that all addition, cross calculations and totals are correct. Keep an eye out for obvious discrepancies. After investigating any obvious discrepancies and reporting, it is the Supervisor’s responsibility to collate into a report as follows:
Computer Data
Department Name:
Sales figures:
Stock level computer print out for the department:
Previous stocktake results for comparison:
Manual Data
Stocktake sheet for actual stock figures for the department:
Shrinkage sheets, mark-down sheet and a discrepancy report:
Shrinkage report
Our store allows for 3% shrinkage in our budget as we realise mistakes will happen. However, effective stock control can minimise shrinkage. If you neglect control of shrinkage, you may be out of a job. It is the Supervisor’s responsibility to ensure all shrinkages are recorded correctly on the shrinkage sheets.
Possible valid reasons for shrinkage:
Goods expire or go past their Use By date.
Thefts sometimes occur.
Items are wrongly priced.
Goods sometimes are accidentally damaged.
Display items get damaged or soiled.
Stocktake sheetFixture number:
Product reference
Quantity Price Total quantity
Total value
167929 $1.55 15 $23.25
723496 $2.45 4 $9.80
235782 $6.55 45 $294.75
1122341 $7.45 2 $14.90
Staff member: ______________________________________
Supervisor: _________________________________________
Date: / / Time: : AM/PM
Shrinkage sheet
Description Ref No Dept
Qty Price New Price
Reason Total loss
Ladies socks 4702 7 1 $12.95 $7.95 Damaged $5.00
Mens training shoes
2648 5 1 $69.00 NA Stolen $69.00
Staff member: ______________________________________
Supervisor: _________________________________________
Date: / / Time: : AM/PM
Discrepancy sheet
Area Fixture/Item
Description Price Original count
Recount Variance
Socks H2 Black Kayser
$2.95
20 17 3
Sports brief
4 Blue X brand
$11.95
15 14 1
Staff member: ______________________________________
Supervisor: _________________________________________
Date: / / Time: : AM/PM
Mark-down Worksheet
Fix-ture No.
Product Brand Size Bar Code Qty Price Mark-down %
New Sale Price
3 Ladies Pyjamas
X Brand
14 97341249907
11 $29.95 25% $22.95
7 Boots Y Brand
5 57291288934
7 $89.00 30% $62.00
10 Board-shorts
Z Brand
16 86431539845
6 $44.95 15% $35.95
Supervisor: _________________________________________
Stock controller: ___________________________________
Date: / / Time: : AM/PM
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