My routine job is usually IT related, but among my daily activities is to assist in many aspects of my family business. On December 2005, I was asked to handle a shop which is in trouble. All others have given up on this one. So I set aside a few days every week for this, and started working on it.
- On the books, it’s profitable. But, we have not been able to find the money for several years.
- It’s losing a lot of money daily. The money found at the end of the day is different then what’s recorded on the computer.
- The shop manager has communication problem. We’ve not been able to get our instructions implemented for many times.
- Staff morale is very low.
- Inventory is not efficient. A lot of stocks are not moving, hence holding up quite a lot of money.
- Sales are average, but profit percentage is quite low.
I concluded that the main problem is communication. The others are details.
I started my work there by telling everyone, that I’m not there to blame anyone. Instead, I’m there to work together, and try to help them to make the store to become better.
I make sure that everyone gets it – I’m their colleague, not a watcher.
I talked to everyone, and listened to what they have to say. They don’t get all that they wished for, but I made sure that they know why.
I also made short term and medium term programmes.
Short term ones are important to increase morale – especially if the gains are clear and visible. Medium term programmes are important to remind us of the big goals, the things that matters. Example: stock optimization, gradually we got rid of the old stuff by discounting them significantly, or returning them to the suppliers. It takes time, so it’s important to make sure that a bit of it gets done every day. We also started buying things direct, cutting the middlemen, hence increasing our profit margin; while keeping our prices low.
We also increased our control of the cashiers.
Process optimization – a few tasks are taking longer than it should be. Example, there’s no PO module on the POS system, so PO must be made manually. Each PO could take up to 30 minutes to make.
Once these inefficiencies has been identified, we’re then able to create software modules to automate them. The time saving is significant, but more importantly, it also increased staff morale, since they can now concentrate on things that really matters.
There were also numerous other tweaks and optimizations.
After about 4 months, we noticed the following results:
- The shop is now making profits, and we’re now actually able to find the money.
- The profit margin increased about 40%. This is despite the fact that its location is close to a competitor of a well-known brand name.
- There’s no more lost money everyday
- A new shop manager was appointed, after the previous one resigned. The new one co operates better, and together we’re able to produce the results above.
- Staff morale increased significantly, except for one which resigned after a few weeks. Shortly after, we no longer lose money from the shop.
- The staff now work with minimal supervision. Also now they knows that if they find problems, they can always talk to me directly if necessary (I gave them my mobile phone number).
- Shop operations now are more efficient and streamlined.
Not too bad, if I may say so.
Now I’ve been assigned to another shop near Pondok Indah. This one is much worse. It has similar problems to the one above, but with sales of only about 25% of it. Diagnosis: saturated market, there are about 6 similar shops in the nearby area, all of them of well-known brand. Among the action plan is to increase the scope of the shop, and to diversify the products; while applying the lessons learned from the first shop.
It’s a much greater challenge, and to be honest, not much chance of succeeding. But I’ll give it my best try.
Gotta go now, until the next article.
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