02-27-2004, 04:45 AM
Jonathan,
The system which you describe is really not an inventory system, as you say " since we should not have anything in stock to begin with... ". I would call it an Order Entry system coupled with an item file having reorder levels. However, there's nothing wrong with doing it as you described, especially if it works for you.
I have seen "real" inventory systems, those that do have stock, which also handle a situation similar to yours for certain exceptional items which they call OTO (Order to Order). These OTO items, like yours, have no stock. When an customer order comes in for one of these items, they order the items from the factory or the vendor, and when they come into stock (momentarily) they immediately ship the items out to the customer.
The minor difference is that while these OTO items are pending receipt from the factory or vendor, the On-Hand-Balance in the inventory is not set to a negative. That is, the Order Entry System handles the pending receipts, and the actually inventory is not used for this purpose and sits with an On-Hand-Balance of zero, which is exactly what you have in stock right now.
Although I've never been involved with this type of item, I agree with the way you say POS handles partial counts, like selling material by the yard.
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BTW, my favorite question regarding POS is: "What is the most important benefit of a POS system?"
Most people will answer Perpetual Inventory or Automatic Replenishment or Sales Statistics or Centralized Distribution, etc.
The actual answer is simply THE ELIMINATION OF UNDER-RINGS.
Under-rings are when a cashier rings up an item at a price which is under the price which the store intented to sell the item. In a store without POS this occurs for many reasons like the item is ticketed at 14.95 and the cashier enters 4.95. Of course, the customer says nothing and the store just lost money on this item. The error could also be that the item was ticketed wrong, or had no price and the cashier picked a wrong price, or the item was previously on sale and had an old sale price, or the customer switched prices.
Some years ago a major marketing firm did a survey of US stores without POS, and discovered that they were losing between 0.5 and 1.5% of their gross sales due to under-rings. That's very impressive because some supermarkets operate at a 2-3% profit margin.
The majority of large and small stores that have POS today have forgotten or were never aware of the main benefit of elimination of under-rings. Sadly, these businesses are trying to cut down on POS hardware and software costs, instead of rejoicing over this major benefit as well as many other business related benefits of a POS system.
Edward F. Moneo
*****
The system which you describe is really not an inventory system, as you say " since we should not have anything in stock to begin with... ". I would call it an Order Entry system coupled with an item file having reorder levels. However, there's nothing wrong with doing it as you described, especially if it works for you.
I have seen "real" inventory systems, those that do have stock, which also handle a situation similar to yours for certain exceptional items which they call OTO (Order to Order). These OTO items, like yours, have no stock. When an customer order comes in for one of these items, they order the items from the factory or the vendor, and when they come into stock (momentarily) they immediately ship the items out to the customer.
The minor difference is that while these OTO items are pending receipt from the factory or vendor, the On-Hand-Balance in the inventory is not set to a negative. That is, the Order Entry System handles the pending receipts, and the actually inventory is not used for this purpose and sits with an On-Hand-Balance of zero, which is exactly what you have in stock right now.
Although I've never been involved with this type of item, I agree with the way you say POS handles partial counts, like selling material by the yard.
----------------------------------------
BTW, my favorite question regarding POS is: "What is the most important benefit of a POS system?"
Most people will answer Perpetual Inventory or Automatic Replenishment or Sales Statistics or Centralized Distribution, etc.
The actual answer is simply THE ELIMINATION OF UNDER-RINGS.
Under-rings are when a cashier rings up an item at a price which is under the price which the store intented to sell the item. In a store without POS this occurs for many reasons like the item is ticketed at 14.95 and the cashier enters 4.95. Of course, the customer says nothing and the store just lost money on this item. The error could also be that the item was ticketed wrong, or had no price and the cashier picked a wrong price, or the item was previously on sale and had an old sale price, or the customer switched prices.
Some years ago a major marketing firm did a survey of US stores without POS, and discovered that they were losing between 0.5 and 1.5% of their gross sales due to under-rings. That's very impressive because some supermarkets operate at a 2-3% profit margin.
The majority of large and small stores that have POS today have forgotten or were never aware of the main benefit of elimination of under-rings. Sadly, these businesses are trying to cut down on POS hardware and software costs, instead of rejoicing over this major benefit as well as many other business related benefits of a POS system.
Edward F. Moneo
*****
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