July 2006

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Local Guy Makes Major Discoveries About Business

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Operation News

Precision at the Point-of-Sale (PoS)

by Dan Frost, Operations Manager

In this article I’d like to call your attention to the secret society we call the PoS. Actually, PoS is a misnomer that has carried from the team’s original and still primary purpose: to maintain the data in our point-of-sale (register) system. The team actually spends a tremendous amount of effort and brain space managing our product data in general—not “simply” for the purpose of providing an accurate check-out experience. The most important example of this is found in margin management, the process of coming up with our prices in the first place.

When the PoS team was first formed (it was one person), the job was primarily to enter pricing data other staff provided into our register. Now, probably ten years and one PoS system later, the team of three to four people is charged with accurately recording the costs and fees we pay, calculating the price we need to charge for an item, noticing out-of-line pricing and bringing such instances to product managers’ attentions, printing the tags you see on the shelf, and constantly (and I mean constantly) working to ensure that those tags match what our register system says. All of this is an expansion of the original (and still typical, among many co-ops) role of transcribing predetermined prices into the register system.

To put the task of calculating prices in perspective, this year the Board and management is asking you owners to approve a budget that dramatically increases our net operating profit to 1.4% of sales! That’s less than a penny and a half of every dollar that we earn that we expect to have left after all expenses. The result: if we do not capture our costs in a timely and accurate manner—even in just a few seemingly minor or isolated instances—our ability to meet budget is put in serious danger. Undercharge for 10 high volume items (out of 10,000) for long enough and the business is challenged. The dangers—and rationale—of using such a tight pricing strategy are topics for a larger article, but suffice it to point out that our purpose, like that of all businesses, is to serve our owners. In our case, our owners live in and around Madison and make up a large portion of our clientele.

Even this literally tremendous burden only scratches the surface of what the PoS team does. They ensure promotional pricing accuracy, print various product signs, assist buyers with producing order sheets and reports, monitor compliance with foodstamp and tax rules, play an essential role in valuing our inventory when we count it, and many other things.

Audit: passed again!

So that covers the misnomer; let’s get back to the PoS team’s original and essential role: making sure the prices on the shelf match those in the register. For the second time in the two years that the City of Madison Department of Weights and Measures’ Inspection Unit has audited our pricing accuracy we have passed with flying colors. Last year we achieved 100% accuracy. This year, the only error found was related to products stocked and to some degree managed by an outside vendor. We have taken steps to prevent the kind of error we experienced from happening again.

At a time when the city has seen news of large grocery chains being unable to provide systems of ensuring pricing accuracy, we are feeling very much like the little grocery store that could. Frankly, we hope you recognize that our attention to detail doesn’t stop at beautiful produce displays and tasty Deli salads. Our efforts permeate our business: careful selection of packaged product, short lines at the register, professional customer service and a rarely seen group of dedicated individuals determined to build your trust in our pricing.