Monthly Accuracy Cadence

There are a lot of pieces to achieving and maintaining Inventory Accuracy and trying to put them all together at one time is too overwhelming. Therefore, we have created a monthly cadence to help you control and plan your store’s accuracy strategy. Stores may choose to adjust their cadence to fit their specific seasonal schedule and some stores may wish to increase the frequency of some items. However, we think it is always better to do things less often but with higher attention to detail.

Purge Back Stock

One of the top causes of Inventory Inaccuracy is Back Stock. Many times SKUs with Back Stock will sell out on the shelf and then be zeroed out when doing routine shooting outs thereby creating false shrinkage and permanent overstock. To counteract this, we recommend a periodic purge of back rooms and top stock.
This purging process involves bringing all Back Stock (and/or Top Stock) to the sales floor, fill any holes and then account for its accuracy. Once you are confident you have found every item for a SKU then get a total count, enter it into PIP, fill the shelf as much as possible and then take the remainder back to its back stock location. Don't be surprised if you discover a lot of items with wrong counts! Use the link below to print "Additional Product Available" tags to help identify SKUs in a Back Stock condition.

Advanced: consider limiting Order Points (ROP Protect) or increasing shelf space to reduce back stock. The typical store has over 300 SKUs in a back stock condition, however, with a little control we think it can be halved. Less back stock helps reduce out-of-stocks, increases labor efficiency, reduces storage requirements and increases accuracy.

Additional Product Available.pdf tags are great to help employees and customers know that product might be located in back stock or other areas of the store. They can be ordered through Ace Brand Place: Ace Brand Place > Order Supplies > Store Environment > In Store Signage/Misc. Components > Product Name: Additl. Product Peg Hook Tags (#109726) and Additl. Product Shelf Edge Tags (#109727))
Delete Report

The Excel Delete report lists all "safe to delete" candidate SKUs in your store. These are SKUs with quantity-on-hand equal to zero and no activity (sales, purchase, or shrink) for two years or more. For multi-store organizations, there is a column indicating if the SKU meets the criteria for all stores, and therefore safe to delete (for those organizations who like to keep a consistent SKU set for all stores). You can use this worksheet along with your Eagle inventory viewer to manage the size and relevance of your inventory file. We recommend using Mango's delete process on an annual basis (February is our recommended month).

Not comfortable processing the delete report on your own? We offer a service where we'll remote into a PC in your store and do it for you. $100 per store, billed on your Ace Statement. Schedule a time here!

Deleting inventory SKUs is permanent. Please talk over your delete strategy with your owner, manager or system manager. Keep an eye out for very slow-moving SKUs like fasteners (cap screws, grade 5 fine thread, etc.) where you may occasionally (once every 5 years) sell a box.
- Option IDs
  - 3037 - Allow deleting items in Inventory Maintenance if QOH is not zero = No. (we should never delete SKUs with QOH because this leaves a gap in shrink accounting).
  - 8617 - Allow Delete in Inventory Viewer = Yes.
  Security Bits
  - 224, 777 enabled ("Yes" for your user for this process, then set to "No" after all deletion is finished). For security and accountability reasons, deleting should only be done periodically in a controlled way, and then disabled for all users.
- You can download Mango’s Delete Report by logging into your online report directory.
  1. Locate your Action Report email from the start of the month.
  2. In the body of the email you'll find a link, username, and password.
  3. Click the link and enter your credential information.
  4. Click on your Store's folder.
  5. Click on the Excel Folder.
  6. Locate the file named " - Delete Report - " e.g. "7205 - Delete Report - 0221.xlsm".
  7. Download and then open the file.
- Once you have downloaded and opened your Delete Report, you can use the headings to sort (keep from using filters as the filters will not be retained when saved for export). The idea is to keep an eye out for very slow-moving SKUs like your Fasteners (Cap Screws, Grade 5 Fine Thread, etc.) where you may occasionally (once every 5 years) sell a box. If you find a SKU you want to save, delete the row from the file. Keep in mind, once the file has been imported into your viewer, you will have another chance to further manipulate the SKUs selected for deletion.
  
  Note: for multi-stores looking to keep SKUs synchronized, you can sort by the ‘can_delete_from_all_stores’ and then delete all rows where this value is “No”.
  1. Important! These next steps are going to build the file necessary for your Eagle system. Depending on how many SKUs need to be deleted this process may build up to 7 individual files.
  2. In the column header, click Export SKUs for .txt file.
  3. A save window will appear, defaulting to the Desktop, but you can choose where you'd like to save.
  4. Click Save.
  5. Another save window may appear, repeat steps 3 - 4 until the save windows stop appearing.
- 1. Open Inventory Maintenance (IMU).
  2. In the top ribbon, click on Viewer (F9).
  3. A new window will appear. In the top ribbon, click on Misc. Kpad (-).
  4. Click on Custom SKU list (2).
  5. Click on Import from CSV file (6).
  6. Locate the file you saved in Step C (Ex. Mango_Delete1, Mango_Delete2, etc.), click Open.
  7. A box will appear asking to clear the grid, select Yes.
- You may need to answer Yes to continue loading if there are any SKUs in the Excel list which have already been deleted or RCIN’ed from your system so check back every 15 minutes. The import process can take some time depending on the number of SKUs being added to the viewer.
  1. Wait for the SKU listing to finish loading.
  2. Right-click in the SKU heading and select Check Boxes.
  3. Right-click in the Check Box heading, click Select All.
  4. Scroll through the listing. This is your final opportunity to spare SKU deletion.
  5. If you find a SKU you want to save, click its checkbox to deselect it.
- Now comes the easy part!
  1. In the top ribbon, click Delete (F10).
  2. A new window will appear, answer Yes if you are ready to delete.
  3. Eagle will prompt you one more time confirming you are ready to delete, click Yes.
  4. MULTI STORE: click No to only delete SKUs from one store at a time.
- If you have more than 15,000 SKUs to delete, 2 or more files were generated in Step C. If that's the case, you'll need to repeat steps D, E, and F for each .txt file.
- Set security bits 224 and 777 to back to No for all users.
  
  Set Option ID 8617 to No.
Cashier Testing

Cashiers are hugely responsible for quantity-on-hand accuracy (Operational Level 1 - IRA) in our stores—affecting quantity-on-hand 280,000 scans a year. We depend on accurate quantity-on-hands to generate orders, calculate financial metrics, and detect shoplifting. Because of this, we cannot tolerate inaccurate cashiering.

Cashiers have two accuracy requirements: 1) ensure the customer is charged the correct dollar amount, and 2) ensure quantity-on-hands are being affected correctly. The importance of this last item is sometimes lost in the rush to get customers through the line quickly. A cashier can easily satisfy the first point (charging the right amount) without satisfying item 2 (and mess up inventory accuracy in the process) by taking shortcuts. Fortunately, with a little help and practice, you can develop a habit to be accurate every time.

We understand mistakes do happen and they can be corrected easily as long as you let your supervisor know when a mistake is made. You hold the accuracy of your store's inventory in your hands! If you see other cashiers shortcutting then please remind them of the helpful hints below.

Cashier Training

1) Scan EVERY ITEM - even when items look similar.

This sounds simple, but we all must fight the urge to short-cut a transaction by scanning one item and entering the purchase quantity or scanning the same item multiple times. Even though many items in a transaction may look identical and may be priced the same, the items can be different SKUs! For example, a gloss white spray paint may look just like (and have the same retail) as a satin white spray paint, a flood light may look identical to a spotlight or a galvanized plumbing fitting may look identical to a black fitting. Instead of taking the time to visually determine if SKUs are similar or not, just scan each one and let the computer figure it out. We owe it to our customers to scan every item as it guarantees they buy what they intend and it keeps our sales and quantity-on-hands accurate at the same time! It's simple, SCAN EVERY ITEM.

2) Complete VOID

If you start to mess up a transaction (it happens sometimes right?) then try not to fix the sale by voiding individual lines (this can make things worse); rather, get approval to void the entire transaction and start over.

3) Understanding Return Types: R and D
- R – Return. The item is being returned to inventory: it can be resold and will go in the Returns basket. R adds 1 to quantity-on-hand because the item is available to be put back on the sales floor and be sold again. R's are going to the Return bin and back on the sales floor to be Resold.
- D– Defective. The item is broken and is not being released to the sales floor. The item is not considered inventory, nothing is added to the SKU’s quantity-on-hand and the item should not be counted as inventory. D's are going in the Defective bin and to the Dumpster.
4) Take Your Time

spending a few extra seconds to scan every item and to review your transaction will save your store thousands of dollars in lost sales, out-of-stocks and labor to investigate and fix errant quantity-on-hands.

Testing Process

Although some stores employ mystery shoppers (relatives, etc.) to test cashiers, we think an Inventory Coordinator or Head Cashier can conduct the test. Yes, your results will be better than a blind test, but habits are hard to break and if a cashier habitually short-cuts then they will likely short-cut while being tested. After the cashier completes the transaction, take the receipt off the sales floor and diligently compare it to the master receipt; it is easy to get distracted when comparing; assume there is a mistake and take the time to find it. If a mistake is found, please follow up with the cashier, provide additional training and document the encounter. Test them again within the week. If a cashier is habitually incorrect then they need to find a different seat on the bus. We can not afford inaccurate cashiers, even if they were to work for free. Some of our nicest and best customer service employees are also terribly inaccurate cashiers.

Example Test Basket

The basket below is a good starting point for cashier testing. Many stores build more complicated baskets (including bulk items such as rope and wire, fasteners, etc.) with some stores creating 50-item baskets! We don't think the typical store needs to be so creative. The basket below is a good starting point and you can consider adding a few items of your own and then scan out a master receipt to use as a comparison. Hint: you can reverse a test transaction by going to your Point-of-Sale No Sale Menu, R (Reverse Transaction) button.

Example Testing Sheet

A Mango user shared with us the results and write-up from their cashier testing. The results were "humbling" and reiterated the importance of cashier testing.

You can use the sheet below to tally your testing results.
Purge Back Stock

One of the top causes of Inventory Inaccuracy is Back Stock. Many times SKUs with Back Stock will sell out on the shelf and then be zeroed out when doing routine shooting outs thereby creating false shrinkage and permanent overstock. To counteract this, we recommend a periodic purge of back rooms and top stock.
This purging process involves bringing all Back Stock (and/or Top Stock) to the sales floor, fill any holes and then account for its accuracy. Once you are confident you have found every item for a SKU then get a total count, enter it into PIP, fill the shelf as much as possible and then take the remainder back to its back stock location. Don't be surprised if you discover a lot of items with wrong counts! Use the link below to print "Additional Product Available" tags to help identify SKUs in a Back Stock condition.

Advanced: consider limiting Order Points (ROP Protect) or increasing shelf space to reduce back stock. The typical store has over 300 SKUs in a back stock condition, however, with a little control we think it can be halved. Less back stock helps reduce out-of-stocks, increases labor efficiency, reduces storage requirements and increases accuracy.

Additional Product Available.pdf tags are great to help employees and customers know that product might be located in back stock or other areas of the store. They can be ordered through Ace Brand Place: Ace Brand Place > Order Supplies > Store Environment > In Store Signage/Misc. Components > Product Name: Additl. Product Peg Hook Tags (#109726) and Additl. Product Shelf Edge Tags (#109727))
Flossing Your Store

It would be difficult to devise a more purposeless use of labor than counting a store where SKUs are scattered about. Compared to counting, putting everything back in its right spot is a more effective accuracy process; we call this "flossing." Although your aisles should remain relatively straight through routine department maintenance, scheduling a deep "flossing" once or twice a year can really help with accuracy and in-stock position. Done thoroughly, flossing can take 30 minutes on a SKU-dense aisle like electrical or plumbing or only a few minutes on a less SKU-dense aisle like cleaning chemicals.

Guidelines
- Inspect every bin and hook in the aisle.
- Inspect every item in each bin/hook to ensure it is the correct SKU (an RF Gun may be helpful for SKUs with multiple UPC's attached).
- Lift and look under base decks where applicable.
- Look for orphaned inventory laying on base decks and make a home.
- After a department has been flossed, you may consider shooting outs as the flossing exercise can expose new holes.
Cashier Testing

Cashiers are hugely responsible for quantity-on-hand accuracy (Operational Level 1 - IRA) in our stores—affecting quantity-on-hand 280,000 scans a year. We depend on accurate quantity-on-hands to generate orders, calculate financial metrics, and detect shoplifting. Because of this, we cannot tolerate inaccurate cashiering.

Cashiers have two accuracy requirements: 1) ensure the customer is charged the correct dollar amount, and 2) ensure quantity-on-hands are being affected correctly. The importance of this last item is sometimes lost in the rush to get customers through the line quickly. A cashier can easily satisfy the first point (charging the right amount) without satisfying item 2 (and mess up inventory accuracy in the process) by taking shortcuts. Fortunately, with a little help and practice, you can develop a habit to be accurate every time.

We understand mistakes do happen and they can be corrected easily as long as you let your supervisor know when a mistake is made. You hold the accuracy of your store's inventory in your hands! If you see other cashiers shortcutting then please remind them of the helpful hints below.

Cashier Training

1) Scan EVERY ITEM - even when items look similar.

This sounds simple, but we all must fight the urge to short-cut a transaction by scanning one item and entering the purchase quantity or scanning the same item multiple times. Even though many items in a transaction may look identical and may be priced the same, the items can be different SKUs! For example, a gloss white spray paint may look just like (and have the same retail) as a satin white spray paint, a flood light may look identical to a spotlight or a galvanized plumbing fitting may look identical to a black fitting. Instead of taking the time to visually determine if SKUs are similar or not, just scan each one and let the computer figure it out. We owe it to our customers to scan every item as it guarantees they buy what they intend and it keeps our sales and quantity-on-hands accurate at the same time! It's simple, SCAN EVERY ITEM.

2) Complete VOID

If you start to mess up a transaction (it happens sometimes right?) then try not to fix the sale by voiding individual lines (this can make things worse); rather, get approval to void the entire transaction and start over.

3) Understanding Return Types: R and D
- R – Return. The item is being returned to inventory: it can be resold and will go in the Returns basket. R adds 1 to quantity-on-hand because the item is available to be put back on the sales floor and be sold again. R's are going to the Return bin and back on the sales floor to be Resold.
- D– Defective. The item is broken and is not being released to the sales floor. The item is not considered inventory, nothing is added to the SKU’s quantity-on-hand and the item should not be counted as inventory. D's are going in the Defective bin and to the Dumpster.
4) Take Your Time

spending a few extra seconds to scan every item and to review your transaction will save your store thousands of dollars in lost sales, out-of-stocks and labor to investigate and fix errant quantity-on-hands.

Testing Process

Although some stores employ mystery shoppers (relatives, etc.) to test cashiers, we think an Inventory Coordinator or Head Cashier can conduct the test. Yes, your results will be better than a blind test, but habits are hard to break and if a cashier habitually short-cuts then they will likely short-cut while being tested. After the cashier completes the transaction, take the receipt off the sales floor and diligently compare it to the master receipt; it is easy to get distracted when comparing; assume there is a mistake and take the time to find it. If a mistake is found, please follow up with the cashier, provide additional training and document the encounter. Test them again within the week. If a cashier is habitually incorrect then they need to find a different seat on the bus. We can not afford inaccurate cashiers, even if they were to work for free. Some of our nicest and best customer service employees are also terribly inaccurate cashiers.

Example Test Basket

The basket below is a good starting point for cashier testing. Many stores build more complicated baskets (including bulk items such as rope and wire, fasteners, etc.) with some stores creating 50-item baskets! We don't think the typical store needs to be so creative. The basket below is a good starting point and you can consider adding a few items of your own and then scan out a master receipt to use as a comparison. Hint: you can reverse a test transaction by going to your Point-of-Sale No Sale Menu, R (Reverse Transaction) button.

Example Testing Sheet

A Mango user shared with us the results and write-up from their cashier testing. The results were "humbling" and reiterated the importance of cashier testing.

You can use the sheet below to tally your testing results.
Top Inventory Review

The Mango IVA (Inventory Value Analysis) workbook is a fantastic tool to understand and improve on your store's system inventory value. Many stores use this tool to help ascertain a realistic inventory value for the purposes of buy/sell and tax auditing. There are separate worksheet tabs which call out the SKU-level detail for each inventory value classification (Errors, Store Supply, Negative Value, Placeholder, Unproductive, Overstock) and a Top 500 tab detailing the top 500 inventory value SKUs. As your store processes its monthly Count Sheets and Exception Reports (completion is shown in cell Overview:C12), it is verifying and improving these classifications.

Your IVA report is located in your store's Excel directory online. Click here to learn how to get online (it's easy).

Steps to process this report:
1. Look at the Overview worksheet tab
2. If there is significant value in Cost Errors & Store Supply (Overview:C5) then fix the SKU-level detail in corresponding worksheet tabs: Errors, Store Supply.
3. Verify Placeholder value (SKU-level detail in Placeholder tab). If fastener value then change Placeholder SKU Class 580 in Inventory Maintenance.
4. Verify Fasteners, Keys & Bulk value (Overview:F5), use 8% of total inventory value as a guideline.
5. Look at Unproductive and Overstock values and underlying worksheet tabs. Correct any errors and/or devise strategy to reduce if above benchmark.
6. Review/correct SKUs listed in Top 500 worksheet tab. These SKUs should have a recent Last Physical Inventory Date (if your store is achieving high Count Sheet Completion).
- B5 RIV: Your store’s total inventory value (QOH times Cost for every SKU) excluding Kit Records and Negative Value.
  
  C5 Cost Errors and Store Supply: SKUs identified by Mango as either a Cost/QOH Error or Store Supply (These are also listed in your Store’s Exception Reports).
  
  D5 Placeholder Inventory: This column shows unclassified Placeholder inventory. Placeholder SKUs are large value SKUs (usually $10,000 to $50,000) which represent an entire class or department of inventory value for which individual SKU Stock Info is not kept. For example, many stores do not keep stock info (QOH's) in their Nuts and Bolts departments (fasteners). However, the entire inventory value of this department is represented using one "placeholder" SKU (usually HILLMAN or FASTENER). Ideally any placeholder SKUs in the fastener and other bulk departments will have a relevant (Ace Catalog) class attached in Inventory Maintenance (such as Class 580) so they can be classified properly into the Fasteners, Keys & Bulk section of this report. This column is for unclassified Placeholder SKUs. For example, an entire Radio Shack store within a store may be represented here with one SKU. Inventory value within this category will have to be independently verified as it is outside of Mango's Count Sheet process to account for the validity of this value.
  
  E5 Unproductive Inventory: Inventory value contained in SKUs that have not sold in two years or more (Obsolete) along with Overstock (more than two years of supply).
  
  F5 Fasteners, Keys & Bulk: Inventory value explicitly in fasteners, Keys or other bulk classes. Non-Ace SKUs must be in one of Ace's Catalog Classes, otherwise these SKUs will be tallied under Unproductive Inventory or Productive Non-Ace. Ideally, all non-Ace Fastener and Bulk SKUs will be classified according to their appropriate Ace Catalog classification:
  Key Class: 510
  Fastener Classes: 561, 564, 566, 578, 580
  "Bulk" Classes: 151, 152, 310, 404, 466, 478, 546, 570, 573, 575, 562
  
  G5 Productive Packaged Ace: This is the value of non-bulk, productive (sales within the last two years) Ace SKU'ed inventory.
  
  H5 Productive Non-Ace: This is the value of non-bulk, productive (sales within the last two years) Non-Ace SKU'ed inventory.
  
  I5 Lumber: The value of SKUs with Record Type "L" - Lumber.
Using the Baseline Inventory Value Worksheet to determine an internal ending inventory value

In this worksheet, adjustments to ending inventory account for errors, store supply, likely total shrinkage and discounts to overstock and unproductive inventory. The resultant value should be used for internal use only and should not be used for tax or other accounting purposes. The worksheet assumes good Count Sheet Completion (reported in C:12) which helps determine and verify shrinkage, overstock and unproductive inventory value.
- C14: Any SKUs containing negative inventory value (negative quantity on hands) are excluded from your starting inventory value.
  
  C15: This is your system ending inventory calculated by multiplying each SKU's quantity on hand by its cost.
  
  C16: The value contained within SKUs Mango has classified as a Cost/QOH Error or is Store Supply SKU (these items are not inventory).
  
  C17: Overstock is recent or recently selling inventory with more than two years of supply on hand. the entire value of your store's Overstock category is subtracted at this point.
  
  C18: Obsolete inventory value (SKUs that have not sold in over two years) is subtracted.
  
  C19: Inventory classified as Fasteners, Keys or Bulk which exceeds 8% of your store's total inventory value (C15 - C16) is subtracted here as it is unlikely the physical value exceeds 8% (it would need to be determined independently).
  
  C20: Totals the deductions from system inventory (C15).
  
  C22: Shows the resultant "baseline" inventory after the above deductions are taken.
  
  C23: Calculates the worst case expected shrinkage if the store were entirely counted down. It is based on your store's Count Sheet net dollar variance over the past 3 months. This is "worst case" because Mango's Count Sheets are focusing on the most risky classes of inventory and therefore your true shrinkage would likely be less when counting a less risky population of SKUs.
  
  C24: Here we are adding back in 1/2 of your store's Overstock value from C17. Effectively discounting this category by 50%.
  
  C25: Unproductive value (C18) is added back in at a discounted value of 25%
  
  C26: This is the net ending inventory value calculated by this method. In many cases, this value will be a reasonable starting point for obtaining a realistic inventory value.
  
  C29: SKUs trapped as unclassified placeholders need to be independently verified. If they are misclassified fastener placeholders then their value should be added into the Fastener, Keys & Bulk 8% threshold.
  
  C30: Contains the value in Lumber (record type "L") SKUs. This category is included in the above worksheet values but should be independently verified as lumber tends to be a fast-moving and noisy class of SKUs.