“We’ve Always Done it This Way”

200413369-001In this fast changing world of the “new economy”, we frequently still hear home furnishings retailers steadfast in their commitment to keep doing things the way grandpa did. In my years of onsite consulting it would astound me how many times users coming to PROFITsystems from other retail POS software were buried in paper. The tedious processes connected with doing things manually are a huge burden to any business.

If you’re an owner or office manager, I invite you to think about your processes: close your eyes and imagine a Macy’s store, Target, Walmart or similar retail giant going through the steps of purchasing, receiving, merchandising, selling, delivering and paying for product. Now granted, we’re not all going to turn into Target, but the processes they follow every day, as well as those tactics they’ve implemented to get where they are, do not include piles of paper and people touching everything over and over. There’s a glass ceiling attached to this kind of “we always did it this way” thinking.  As a business grows, the costs in the office increase right along with the number of transactions. In addition, office and warehouse overhead remain in lock step with sales growth; therefore, the anticipated economies of scale in growth are, in part, lost.

Let’s walk through an example. One firm I managed in the late 90’s involved three separate entities.  Two with one fiscal year; the third with a separate fiscal year.  Although not a huge firm, we processed heavy special order in all three businesses at volumes varying from $7 to $10M annually.  The office entered all sales, generated and sent all PO’s, processed all receivings, scheduled deliveries, and managed heavy A/R for one of the entities (which we handled in house as well).  This work was done by the equivalent of 2.5 full-time office staff. Oh, and we did payroll internally as well.

systems define outcome

How can that be?  The mantra “Systems Define Outcomes” drove our process. We rethought the entire paper flow and daily velocity of transactions.  Then, we prioritized transactions by ‘real order of importance’ and pushed every single one through our software so we didn’t have to revisit the paper ever again.

I call it pawing through the drawers. If you find yourself earning your paper cut merit badge searching file cabinets to look things up, then you could probably benefit from a review of current practices. There are an amazing number of benefits from getting “out of the old and into the new” way of cataloging your business.  These benefits include instant answers for customer service questions, easy research of anything from what she bought to how she paid for it.

The major benefit, as we’ve outlined in a number of webinars, of having all of your data in the software means your accounting bills should plummet. Creating financial reporting does not take an outside or expert accounting person. If I’m entering everything into the software, we automatically should get back a detailed financial statement acceptable to any bank or vendor. Now, accounting folks do need to help us with balance sheet issues, such as depreciation, etc., However, your P&L should already be there waiting for you to press “Print”.

Maybe it’s time to take a look at your processes and see where you can truly streamline your business. The paybacks are huge.

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