In my experience of over two decades, I have often come across many companies: young and old, who do a fantastic job on design & product but are not very serious about using software solutions effectively. In fact, I dare say they display apathy towards the accuracy of data, its recording, and using the software solution to even complete the transactions. All of this is when we know how rich insights can come from previous transactional data.

I notice that accuracy of financial entries is all that matters and once that is taken care of, the attention to operational details of business transactions falters. I see that Software solutions are bought and added as needed. This often results in disparate systems not talking to each other.

Many times, important masters and fields are not thought through deeply. Discipline to enforce any system compliance by people is rarely put into practice. Thus, data residing in various systems are not reliable.

The nightmare worsens when transactions are often maintained on Excel sheets by individual functional users. They tend to use their own formats that are not very structured. Naturally, there is duplication of data in Excel sheets which does not match with those maintained by others. Data is not ‘normalized’, leading to errors with unnecessary duplication.

Field headings also change from file to file. For example, one will use ‘Product description’ as the field name which the other will refer to as ‘Product name’. Entry of data is not validated for accuracy – SKU values such as ‘size’ or ‘fit’ would be mixed up, there’ll be spelling errors. Not to mention the spelling errors from one to the other! In short, the transaction data is in a mess.

As a result, I often see business owners not relying much on what empirical data (in whatever format they have) shows, instead they take qualitative inputs from their teams without corroborating it with hard data.
I find this to be a gross mistake as accurate previous transaction data is a veritable treasure for business insights.

7 important areas that business owners must give serious attention to:

 

1. Item code/Item master

The item master is perhaps the most crucial master in any system. Try not to complicate the code by trying to make it ‘intelligent’; there’s no need to load a lot of info onto it.

• • Any software system always generates a unique running serial ID for the item which is different from how you codify it.
  • You need to buy EAN codes for your products as they are unique identification numbers across multiple Sales channels. For more info about the item, use ‘attributes’. Attributes are individual fields that describe the item.

Refrain from making the item code very complicated; avoid using several letters in it indicative of other information.

2. Close transactions in the system

If you have not invested in an integrated ERP and say, you are punching POs in one system and receiving Goods Receipt Note (GRN) in another, you must take care to close the PO in the first system with GRN document entry. And, carry the PO reference onto the GRN entry system, so the transactions are both cross-referenced. This would help you a great deal when you wish to measure, say, lead times.

3. Sales Data

Make sure the sales data records identify the campaign code using which the sales invoice was made.

Great if you can maintain a separate Campaign/EOSS master which specifies every store location, the period for which the campaign was run, the campaign offer details, and so on. Thus, the spurts in Sales or troughs later can be attributed to the campaign.

It will also come in handy to measure which campaign produces better results, or what % off brings in what % of sales increase.

Make sure to store the Sales Returns data with negative numbers in quantity and value. This practice helps in getting to the net sales value result very quickly, especially when users download sales reports into Excel.

4. Stock Data

Typically, back-dated stock data can be derived by any decent software system. But, if such a feature is not given by your software system vendor, it will be a good practice every week beginning & month-end to record and store the Stock statement at SKU level.
So, there would be stock data for 52 weeks and 12 months both. This would come in handy to calculate stock turns, missed sales opportunities due to stock-outs, and so on.

5. Delivery Date Updating

If you are physically despatching goods against an order (consumer or channel partner), take care to register the delivery date against the invoice. I have often seen that Sales invoice record carries invoice date or shipment date at most, actual delivery date is rarely recorded.

True lead time from order to delivery is possible only when this information is recorded.

6. Invest in a data repository/BI tool

In case you have already made investments in disparate systems and now have to live with them, using a business intelligence tool will provide great help. It will at least get all your data in one place, one repository from where you can slice and dice it in a manner that yields insights. BI tools are offered on a subscription basis these days so you do not have to make heavy investments in them.

7. Review, review, review

It will pay rich dividends to ensure the accuracy of business transactions recorded into any system you may have bought. The best way to do this is to form a dedicated MIS function that cuts across the organization, taking data from functional systems and ensuring there are no discrepancies

Client Success Story

A client in the Ethnic Fashion industry used a custom-developed basic software system before I helped transition them to an ERP, leading to insightful data analysis and reduced inventory holding significantly.

The problem:

The item code in the old system was so designed that it only identified the product category, the size, and the MRP of the item. That was it! The item code actually represented a category-sub category combination and had no role to play in identifying the individual silhouette, style, design, or even color uniquely.

As the client expanded its presence and added more stores across cities, raising order indents for products became more and more difficult. Stores could not rely on simply mailing the item code & quantity desired. They had to attach the product photos to indicate the exact design! Store managers had to remember to take pictures of the better moving product lest it sold out and could not be identified for re-ordering.

The warehouse people too had a tough time picking and packing multiple orders from all stores. The whole system lacked efficiency and was vulnerable to human errors.

Solution:

Fixing the item code to uniquely identify a design solved the problem. However, we also coined it in a way that people found quite easy to remember. A welcome change from the ambiguous code before.

It took over 6 months before the old coded inventory was taken off the shelves and replaced with a newly coded inventory. This change made it possible to analyze Sales and the base stock to be planned in relation to the Sales.

This brought down the inventory holding by 3 months in select categories and by more than 1 month overall.