Glitches, Miscounts, and the Prize
Inventory Miscounts - Tallies Matter
“I am gonna win this one!” boasted Sam, the number one salesman at BonnieBlue BarBell, affectionately known as B4, a robust sports equipment company.
Every quarter-end, there was a sales competition, and the prize was usually phenomenal. This quarter, the prize for the winning team would be an all-expense paid vacation to Hawaii. This was a prize worth fighting for, and the competition would be based on units sold.
It all rested on the units that could be moved by each of the two teams. One was headed by Sam and the other by John.
John was the most senior salesman with a decidedly milquetoast personality and was rarely noticed when he walked into a room. His team insisted that they were selling the ‘right way’ and that Sam’s team was heading B4 in the wrong direction. However, John’s sales were flat and mostly for items that had been in the catalog from prior seasons. Of course, this was good for moving the older products, and besides, John was one of the dearest friends of the CEO, having been with the company for 47 years.
Sam was the most successful salesman in the company even though he'd only come on board 4 years earlier from an unrelated industry. His hire had been a wild shot, but Bonnie, the CEO, had thought she’d give him a chance. He was boastful and confident and, although his style of speaking made everyone bristle, his whole team (and sometimes members of John’s team) showed up to join in his sales meetings. He made sales fun, and it seemed that all the new salespeople did better when Sam is around. Even the crude nicknames he conferred on the less successful salespeople became terms of endearment. His team was pumped and focused on selling the newer SKUs.
Meanwhile, Clarice, the CFO, was excited about the competition for her own reasons. Her new Inventory Management System (IMS) had a report on units moved that was even better than the one from the old Sales Order system. She would post the mid-quarter results and then the semi-final results a few days before quarter-end to keep the competition energy high. She had not fully-tested the IMS, thinking she would use these next few months to test out the new system.
Every day, Sam told his team that they were going to Win, Win, Win! John was more laid-back and went about matters little different from the usual.
Clarice, the CFO, kept the results of units sold thus far posted on her door to keep the salespeople leaning-in and making calls.
At mid-quarter, the teams were neck-and-neck. That was when Clarice noticed that the reports were looking slightly off. She mentioned the problem to Bonnie, the CEO, adding that Frank, the IT guy, had luckily found a way to make ‘manual corrections’ when the physical inventory didn’t sync with the computer tally.
There seemed to be a ‘glitch’ such that whenever the older SKUs were sold, the system counted 2 sold. But for the newer SKUs moved, the system worked correctly, counting 1 for each sold. It was odd, but not worth calling off the competition, Clarice decided, because the team selling the older units, headed by John, was not expected to win, anyway.
Three days before the final tally of the end-of-quarter competition, Sam’s team was hitting it out-of-the-ballpark with over 7,000 units of BarBells confirmed already.
Sam was confident that the prize would certainly be won and kept telling everyone that John’s team would be lucky to sell even 3,000 units.
At the ceremony, with all salespeople present, the CFO announced the winner. Sam’s team was filled with good cheer, wearing big smiles and ready to gloat over John’s team.
Clarice pulled out the blue envelope with the final tally. Sam had sold 7,400 units. John’s team had sold 8,000 units.
Was this 11th hour lead possible? Or was it a ‘glitch’ in the system?
Does your Inventory system sync with your Sales System and provide accurate counts?
It is important to test and validate the accuracy of your systems. Occasional testing ‘through’ the system builds confidence in the results.
Every quarter, perform a set of tests and add one additional test to the set. This occasional testing ‘through’ the system builds confidence in the results.
1. Develop “Test” Scripts
This is an exercise that an internal ‘systems analyst’ should be able to prepare because it is the blend of procedures with system processes. The “script” lays out the detail of the procedures and anticipates how the system will perform.
2. Develop “Test” Data
It is easy to validate a result when you know the answer in advance. By processing a set of controlled data through the system, the result from the system can be compared to the expected result to identify functions that work as expected and functions that are off. By isolating the problem areas, solutions can be crafted and applied.
3. Assign Team Members
Draw upon staff to have them follow the script using the test data. This will both educate the staff while challenging them to confirm that these procedures are the ones in use. It is possible that ‘user error’ might generate anomalies.
4. Evaluate the Results and Identify Operational Issues and Improvements
Gather the team together to evaluate the results of the test, comparing actual to the expected results. This is an opportunity to talk about how the system processes data and what additional reports and software are needed to further improve the company’s access to information.
Clarice looked at the results and shook her head.
Oh boy, Sam is going to challenge these numbers! Clarice thought. She immediately pulled Sam aside. “Keep your cool,” she said, “We'll recount the sales manually and have a confirmed tally in a few days. Keep the spirits high - it’s for the good of all the people in the office.”
Meanwhile, John started walking around like a peacock. He had never won one of these competitions, let alone by such a large margin, and he did not want to rock the boat by asking for a confirmation. He hoped that Sam would just let this one go so John’s team could enjoy the prize.
But Sam walked over to John and said loudly, “We are going to recount these numbers and my team is going to win.”
Bonnie sighed. Sam was brusque. But half of her salespeople wanted Sam’s team to win so, recount it would be.
The moral to this story? Test your systems and build confidence that the resulting numbers can be relied upon to be accurate.
Would you like to have improved test scripts? We can help.
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Rubenstein / Justman Management Consultants (RJMC) assists mid-market companies to evaluate, select, and implement ERP solutions including Financials, Manufacturing, Distribution, Warehouse Management, Supply-Chain Solutions, CRM, and Data Analytics. We are skilled and experienced consultants who provide the Project Management that gets the project done. To start the dialogue, give us a call at 310-445-5300
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