Are bookkeeping systems ruining retailers’ ability to serve customers?
Retail transaction solutions adhere to the rules of accounting, as the name Merchandise Stock Ledger indicates. Even solutions such as enterprise data warehousing (EDW) need to tie to this “transactional system of records” to be considered accurate. The unintended consequences of this often inhibit retailers from supporting their omnichannel shoppers. The impacts range from the inconvenient to the absurd.
Start with BOPIS. For most, the sale is credited to online, although the inventory is relieved and journaled out of the fulfilling store. The most productive associate, in terms of sales per hour, is probably in-store picking/shipping for online. Stores wage expense, however, is based on direct store sales, so there are no hours available to support this function — without another workaround. That’s where things go from bad to worse.
Want to track what is bought online for curbside pickup? Easy. Set up virtual curbside numbers so the sale can be credited and inventory can be journaled between the website, the physical and virtual stores. Adding this creative workaround? That’s no problem, presuming all solutions can accommodate more store numbers, that the books will still close at month-end and that production reports don’t explode due to store-count doubling.
Things can similarly go sideways in the warehouse. Need to move inventory from online to a store? That inventory has been purchased, received and put into the stock (ledger) ownership of the online business. A creative workaround — send an RTV (return to vendor) to a phantom supplier, drive the boxes around the DC to a different door where a new order awaits the receipt, which can then be picked to a store. This is a real-life example. You just can’t make it up.
Most retailers have problems like this. Aged merchandise transaction systems will never keep up. Don’t even try. Use your data lake. Need to credit sales to two, maybe three channels? You can do it. Sell stuff from locations that never hold or book inventory if it makes the customer happy. Give yourself permission to add a non-accounting record to the lake. And lastly, reconnect your allocation/replenishment solutions to the data lake so you can actually send the right product to the right location on time. You deserve to be happy, too.
DISCUSSION QUESTIONS: Do you agree that accounting conventions have created a transactional mess that gets in the way of making the best decisions to serve omnichannel customers? Can you cite examples where actions have been taken to address these SNAFUs?