DSD Receiving

In follow up to last month’s discussion on DSD some additional recommendations to help improve the process and receive a better ROI on labor invested.

AP Audits
It’s recommended that once a year an AP audit should be performed by a third party. This audit will catch the following:

• Deal pricing front and back loading
• Varying price by location
• Credits paid as bills
• Deals not offered

While you typically give up 50% of the findings, you can use the DSD Audit report to plan and train for the current year to prevent similar findings the next year. This process is a must in order measure the effectiveness of the receiver, buyer and accounting department.

Each year a goal should be set to reduce the findings by the outside auditor. You will know you are effective when the outside auditors don’t want to return because it is unprofitable for them. This is a sign of success.

Deal Pricing and Costs
While a 3rd party DSD audit will identify the issues mentioned, controls need to be established to insure that vendors are not loading in before or after the deal and costs between stores are valid. These functions can be accomplished via accounting, operations and your purchasing department.

• Proper pricing files should be maintained in the DSD system.
• Accounts payable should sort invoices by vendor (periodically if another sorting system is used) and look at pricing for the same item between stores. Sometimes different pricing is acceptable due to different distributors. However, if it is the same vendor, the lower cost between stores should be taken in all stores.
• Operations and merchandising can work together to police deliveries. Look at the ad items in advance. Are vendors loading in before the deal period? Have the store managers talk to drivers and let them know that this behavior is unacceptable. If it continues (besides deducting money from the bill) call the regional manager of the distributor and let them know what the route driver is doing. In short, let them know that you are watching.

Receiving audit
Someone who is not directly involved in the process should perform a periodic audit of receivers and vendors. Do not use your alternate receiver or receiving manager. It is a simple yes no audit and results should be reviewed for any weaknesses.

Security
The back door should be locked during all hours except hours that the door is manned by the receiver. (Please note, if this is an emergency exit, check with your local fire department or building inspector to determine if alarmed panic bars are acceptable.) The back doors should not be left unlocked for smokers or a cool breeze. Trash should be removed in clear trash bags (ideally, a locked compactor would be used with secure access from inside the store.)

SUMMARY
The above are general receiving practices and do not address the additional security required for items such as cigarette and alcohol deliveries. In addition a review of proper pricing and deal reconciliation is contained in a separate document. The above policies, coupled with a periodic operational audit and a 3rd party AP audit, will insure you are protecting your back door and your store operations and assets.

Getting More from your POS

Remember when your POS system was first installed? There were many things that you and your staff had to learn, such as the basic cashier functions to the back-office accounting and reporting features. There were adjustments that were needed to make the system fit your specific needs. Now that you have had some time using your POS system and your staff is proficient in their daily tasks, we’d like to suggest that you take another look at how you could get more out of your POS system to help improve your business. Most POS system users only use a small portion of the available functions and features. This may be sufficient to run your business but if you are looking for growth in your business or improving your bottom line, it’s worth your time to look at what else your POS system could do for you. Here are some examples and suggestions:


Advertising - It is everywhere. Advertising is on all forms of media and you see it from the time you wake up until you go to sleep. Most POS systems provide the functionality to place advertisement on the customer display. You may have the ability to place and change the pictures displayed on the customer display screen to further help you advertise to your customers in conjunction with the in-store signage.

Promotions - Everyone likes to get a deal. Promotions are great ways to gain new customers and create customer loyalty. However, it may take a little planning and creativity to come up with promos that benefit both you and your customers. We suggest that you don’t make the promo too complicated to understand. After all, the goal is to reward your customers for their loyalty.

Reporting - Arguably, the most valuable part of your system is the information gathered from all the transactions. What could you do with all that data? You could run reports like the basic daily sales and movement reports to comparison sales reports between this year and last year. Other options include reports that could help you with theft prevention and data-mining customer shopping patterns. These are just some functions and features that you could utilize to improve your bottom-line. Other functions and features which may be available include: deli scale management, ad-planning, price optimization and electronic signature capture.

If you would like to learn how you can get more out of your POS system and learn how to use any of the above functions or just want to know if something can be done, please contact STCR Business Systems at (607) 757-0181.

DSD Receiving

While store margins begin with purchasing and pricing, the true opportunity to protect real dollars begins with the receiving process. It is here, with one of the general staff in your organization, which the asset protection process begins. Because these people are typically non-management and have no stake in the company, it is extremely important to properly train, provide strict procedures to and audit these employees. By following the practices below, you can help to insure that the product cycle starts off correctly. The problems poor receiving can cause range from shrink, health issues with un-maintained damages and a slow front end due to items not on file.


The most important factor to effective receiving is a well-organized receiving area. This organization will prevent confusion and insure all products are adequately checked in, credits are received and vendors are monitored. This well defined receiving area can be accomplished using the following techniques:

Set up two defined areas on the receiving floor
One defined area will be for the vendor whom you are physically receiving. The second area is a staging area for the next vendor who will be received. All other vendors should wait outside of the store for their appropriate turn at delivery. These areas can even be marked by yellow lines painted on the floor of the receiving area.

Set receiving hours
Many times business dictates a wide receiving time. However, a range should be established. The range of hours should be set so there is a qualified receiver at the back door during those hours. This will insure that proper procedures will be followed when product is received.

Note: exceptions will always occur but should not be the standard. For example, if you are awaiting merchandise on sale and the driver is late, you will probably want to make an exception. However, if you are not in direct need, reject the delivery and set the tone for the driver and the company.
Damages and other credits
Assign an area by the receiving door and use old banana boxes or crates for alphabetical separation of vendor’s damages and credits. All products that are damaged or require credits will be neatly separated and containers cleaned if necessary to prevent rodent and other health issues.

Before vendors are received, all credits should be verified and counts made to insure proper credit. Credit should be received at full cost and retail and not a reduced cost and retail from the current weeks pricing, if applicable.

Proper receiving and counting
When the product arrives from the vendor, the product count needs to be verified for accuracy.
Improper Check in: “Hey Joe, I have ten to a layer and 12 trays on the rack.”
Receiver, “Ok go ahead.”
Proper Check in: “Hey Joe, I have ten to a layer and 12 trays on the rack.”
Receiver, “Hang on there, let me count what’s on each tray and check to be sure that it is the right product and quantity.”

Rotate receivers
All of us develop relationships with people over a period of time and we tend to offer favoritism to those we begin to know and trust. Rotation of receivers can identify problem vendors and prevent collusion or fraud.

Vendor violation tracking
Keep a list of each infraction a vendor has; shortages, unauthorized items, etc. Some companies go as far as fining the vendors for each infraction. Keep track of those vendors and more specifically those drivers that have violations. Look for patterns, report drivers and request a new route person or threaten fines if the track record continues. Use this violation list in conjunction with the receiver rotations to discover problem receivers. If receiver “A” never has infractions on a vendor, but receiver “B” always has infractions, you may want to audit receiver “A” from a distance to insure your procedures are being followed. Camera systems can offer a great tool to watch receivers and insure they follow policy when they do not know someone is watching.

Customer Survey

Everyday retailers think about how to increase their profits. Many of the ideas come from years of researching buying patterns. How often is the consumer asked “what made you buy that?” or “why do you shop at one store over another?”


The NGA (National Grocers Association) has done a consumer survey report covering many topics from where consumers spend most of their money to nutritional concerns. There are many variables in the decision to shop in one store over another. Some of the items that were most important were:

• Store cleanliness - 83%
• High-quality fruits and Vegetables – 90%
• Low Prices – 51%
• High Quality Meats - 76%
• Convenient Location – 36%
• Store Layout – 44%

The survey showed that 85% of the consumers do most of their food shopping in the traditional supermarket/grocery store. 5% shop at mass merchandisers and 3% said they shop at specialty foods store and warehouse clubs.

PCI Deadlines in July 2010

July 1, 2010 is the deadline for merchants to meet a number of PCI requirements:

* Debit and creit pins must be TDES from the payment terminal.

* All pin pads that are not VISA PED or PCI PED must be removed from service.

* All applications that “Store, Process or transmit cardholder information” must be PA-DSS compliant.

The Payment Card industry data security standard states that Pin entry Devices (PED) must use Triple Data Encryption (TDES). TDES means the pin number entered by the consumer has been encrypted multiple times making it much harder for a hacker to break. The standard also covers the device characteristics and management; how the pin pad is designed, produced, transported and stored.
Visa has said that it will not fine acquirers until July 1, 2012 but acquirers can fine merchants any time after July 1, 2010. A list of approved pin pads can be found here: https://www.pcisecuritystandards.org/security_standards/ped/pedapprovallist.html.

If you don’t know if your pin pads meet the requirements it is best to contact your processor to find out and, if necessary, have the pin pads replaced.

PA-DSS

Also July 1 is the Visa deadline for merchants to be using a POS system that meets the Payment Application Data Security Standard (PA-DSS). This standard was formerly called Payment Application Best Practices (PABP) and is the guideline for software developers to follow in order to build payment applications that are safe. Once a system is validated as being PA-DSS compliant it shows up on a list of approved applications at www.visa.com/pabp. If the POS application in use at your store is not on the list it should be replaced or upgraded. Yes, the version matters if your POS is at a different version than what shows on the list, it may need to be upgraded.

Although the deadlines mentioned above are important milestones on the PCI track PCI compliancy encompasses much more. For more information about PCI and the PCI Security Standards Council visit https://www.pcisecuritystandards.org/index.shtml.

Know Your POS

You may not be a mechanic yet you may be surprised on how much you really know about cars. Why does your car need gas? What does oil do? Tires are good for what? And what does the engine do? You may not be an expert in cars yet you do have a basic understanding of them. The same should be true with your POS system.


Get to know your equipment. Like a car your POS system is made up of different parts that work together to move your business forward.

What does your controller/server do? Your controller/ server processes transaction information for your accounting and reporting. It also handles item maintenance.

What devices create your network? Hubs/switches are the devices that create your network.

How can STCR connect into your store? The answer to this question is usually store specific. STCR offers a range of options for connecting to your store such as LogMeIn and PCAnywhere

How does your store communicate with your credit card processor? STCR supports multiple EFT processors and multiple ways to communicate with them. Satellite or high speed internet are the current popular choices for communication, yet the choice is yours.
A basic understanding of the answers to these questions is the key to keep your business running smoothly. Knowing where your equipment is located is just as important as knowing what it does.

Kosher Food on the Rise

In an era of concern over food contamination, allergies and the origin of ingredients, the market for kosher food among non-Jewish is setting records. A 2009 Mintel consumer survey shows that the primary reason people buy kosher is for food quality (62%), followed by “general healthfulness” (51%). The third reason is for food safety (34%), which contrasts sharply to the 14% of respondents who claim they buy kosher food because they follow kosher religious rules.


According to the kosher and halal food initiative, a research project at Cornell University, the non-Jewish kosher market has been growing in rapidly since the 1990s. Today, 40 percent of the food sold at grocery stores has a kosher imprint. Due to the large number of products marked as kosher, many customers do not even realize they are purchasing a kosher product. According to Packaged Facts, a research company, kosher spending could reach $260 billion by 2013.

Many major manufacturers are kosher-certified, offering kosher products under popular house-hold brands such Nestle, Coca-Cola, Oreo, Kraft, Lay’s potato chips, Crisco, Lipton and Heinz Ketchup. As the number of companies seeking kosher-certification rises, kosher is becoming the standard for food ingredients. In general, there is demand for a greater diversity of mainstream kosher food products. This year, for the first time, glatt kosher food will be sold at the Super Bowl.