Who Will Decide The Fate Of The Convenience Store Industry? Part 6

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February 5, 2014

The company ‘dunnhumby’ (the ‘d’ is not capitalized) employs more than 2,000 people in offices across Europe, Asia and the Americas, and includes social marketing experts BzzAgent, as well as merchandising analytics software company KSS Retail. A recent survey by dunnhumby showed that price, even more than convenience, was the most important factor determining where…

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Automated Store Replenishment – Volume XXVI

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June 15, 2012

Suppliers have several major issues that will be obliterated by implementing an Automated Store Replenishment (ASR) relationship with their customers. Here are but a few, with a brief explanation of each: Excessive Warehouse Stock: I readily admit and humbly confess one of my previously, flawed assumptions. After years of watching excess inventory pour into stores,…

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Automated Store Replenishment – Volume XXV

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June 15, 2012

We have talked about 12 and 13-digit UPCs, but before leaving the issue behind, there is one other I would like to tell you about—the 8-digit UPC. This UPC is nothing more than a 12-digit UPC converted to a compact size to fix neatly on smaller items. Using our previous example, a Snickers UPC can…

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Automated Store Replenishment – Volume XXIV

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June 12, 2012

(Continued from previous page) Two items wrapped together to make a single product is not as common as it used to be, because retailers learned the hard way, in many cases, the clerk can never figure out which of the three barcodes to scan. Occasionally, suppliers will use part of the UPC code to create…

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Automated Store Replenishment – Volume XXII

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June 12, 2012

Suppliers take heed! Things are about to change. If small to medium-sized retailers go under, suppliers will be competing for business from smart, well financed, ‘take-no-hostages’ monsters like Walmart, 7-Eleven, Target, Alimentation Couche-Tard, and Costco. What happens when it becomes too expensive for smaller companies, the ones that make up the backbone of America find…

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Automated Store Replenishment – Volume XXIII

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June 12, 2012

What can your suppliers do to help you? I would like to be able to tell you that your suppliers are ready and willing. They may be willing, but they probably won’t be ready. Someone will need to help them help you. The main difficulty your suppliers will have is ADDRESSING & fixing their problems…

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Automated Store Replenishment – Volume XXI

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June 12, 2012

Are you getting the idea that I feel controlling inventory is a key element in running a profitable retail business? Good! It is you know. My reasoning is this: ‘He who controls the inventory, controls the cash flow’. By default, most retailers assume their store managers are controlling their inventory. Others assume suppliers are in…

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Automated Store Replenishment – Volume XX (continued)

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June 12, 2012

Divide you store(s) into sections. After a period of being a ‘Clerk’, promote employees to ‘Section Managers’, assign sections to each one and make that person solely responsible for managing their sections. Their responsibilities should be: a   Keep their sections clean and organized. Remove bent cans, broken boxes, torn wrappers, dust and trash. Pick…

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Automated Store Replenishment – Volume XIX

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June 12, 2012

AUDITS – Category Management is a practice that can be used in association with, but not in lieu of item-level TRACKING. Auditing inventory by item is far less complicated than calculating inventory by value. Either way, auditors still have to count the items. When adding inventory values instead of items, auditors must enter the retail…

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Automated Store Replenishment – Volume XVIII

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June 7, 2012

Have you ever wondered why people you work with ‘just don’t get it?’ Things that are an absolute certainty to you, ‘those stupid people just don’t get it.’ I hear it a lot when observing the way retailers talk about their employees. “I can’t delegate responsibility to those people, they’re just stupid.” It is very…

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Automated Store Replenishment – Volume XVII

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June 7, 2012

Key Performance Indicators, once referred to as ‘Critical Success Factors’ (CSFs) are the backbone of every enterprise. I prefer the term Critical Success Factors because it has a better meaning to me—things that MUST occur in order for a business to survive. CSFs are the results of Critical Assumption Sets. These are things that you…

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Automated Store Replenishment – Volume XVI

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June 4, 2012

The term Enterprise Resource Planning (ERP) is as much a process as it is a system. Like so many terms coming out of the information technology industry, ERP is one born to be bastardized, and the retail industry receives more than its share of wild claims and hyperbole when it comes to issues involving data…

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Automated Store Replenishment – Volume XIV

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June 4, 2012

Reducing your inventory and rearranging the shelves accordingly, may give you the opportunity to expand your product lines, but be careful; don’t give your customers more than six choices of a similar product. Items that should be, but can’t be returned to vendors should be marked down and scattered within the category. DoN’t set up…

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Automated Store Replenishment – Volume XV

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June 4, 2012

Holding the data at local stores for a time and then shipping it to the office periodically is a common practice fraught with errors and inconsistencies resulting in decisions being made from untimely and oftentimes inaccurate data. Going through an audit at the store leaves you with the decision of “Where do I insert the…

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Automated Store Replenishment – Volume XII

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June 4, 2012

In the past, the question of Automated Store Replenishment (ASR) has been studied in the context that the entire process was to be managed by the supplier without the participation of the retailer (Vendor Managed Inventory—VMI). However, researchers obviously based their decisions on the assumption that retailers had become lazy, and suppliers and retailers would…

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Automated Store Replenishment – Volume XIII

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June 4, 2012

Issues regarding data integrity affect the performance of an Automated Store Replenishment (ASR) system dramatically. With current inaccuracies falling somewhere near 70%, we simply cannot get there from where we are today. Drastic changes in the way we handle sales, replenishment, and audits are necessary. With SKU’s numbering in the tens of thousands, a great…

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Automated Store Replenishment – Volume XI

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June 4, 2012

Over the past three decades, the emphasis has been on purchasing computer software and using it to cut cost and improve efficiency. Decisions made based on gut feelings and wild guesses driven by flawed assumptions. Kmart knows a great deal about this. Your racecar sits in the pole position. It’s a bright sunny day at…

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Automated Store Replenishment – Volume IX

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May 28, 2012

Experts in the field of Supply Chain Management (SCM) like to claim that creating an Automated Store Replenishment (ASR) system without the use of computers is impossible. However, this is not true. People can do anything a computer can do; you only need the space and time in which to do it. The process itself…

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Automated Store Replenishment – Volume X

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May 28, 2012

Typically, grocery stores require the person in charge of inventory to order-up to the amount printed on a shelf tag. This may be a store employee or a supplier’s representative. Oftentimes, retailers do not receive what they order; instead, they receive something else they did not order and they have to go and find a…

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Automated Store Replenishment – Volume VIII

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May 28, 2012

Studies have shown a reduction in storewide inventory of 25% delivers 2-3 percentage points better levels of service. Using these figures as a yardstick, one could extrapolate a 70% reduction in inventory might result in 8-9 percentage points increase. In addition, several years ago, a major beer distributor did a controlled study that proved, reducing…

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Automated Store Replenishment – Volume VII

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May 28, 2012

The line between ‘choice’ and ‘confusion’ is a thin one. So how much choice is enough? Psychologists have conducted studies that have proven, at some point when confronted with more than six choices of similar items, shoppers’ minds tend to enter a state of confusion and doubt; even guilt that they might make the wrong…

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Automated Store Replenishment – Volume VI

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May 28, 2012

Never losing sight of the tendency for most retailers to place having a ‘full store,’ as their primary consideration, we can still consider other non-conflicting alternatives. We could re-section the gondolas to hold the proper amount of inventory and still make it look full, but as it is now, your space requirements for candy and…

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Automated Store Replenishment – Volume V

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May 28, 2012

Now, some of you still reading this are thinking, “This guy doesn’t know what he is talking about.” Well that may appear to be true, because I am thinking outside the box, and anyone who dares to think outside the box is definitely suspect. One thing three decades of experience in this industry has taught…

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Automated Store Replenishment – Volume III

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May 28, 2012

Supply Chain Management (SCM) is a move from push-based systems to pull-based systems with the process beginning with the consumer. SCM will never work for retail store operators until they fully understand the following: Managing inventory from the middle of the supply chain is like taking a position between two competitors in a rope-pulling contest;…

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Automated Store Replenishment – Volume IV

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May 28, 2012

Automated Store Replenishment (ASR) is by its own definition “an environment in which a computer is responsible for ordering and maintaining the proper levels of inventory within an organization involved in the process of handling goods for its own use, or for resale to a third party.” In a retail environment, the goal of ASR…

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Automated Store Replenishment – Volume II

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May 28, 2012

Theoretical Sources of Out-Of-Stocks In my book, “Retail is Detail,” I quoted a conversation in which Dee Biggs, Director of Customer Logistics at Welch Foods was present. Mr. Biggs said, “The industry needs some type of third-party company that identifies out-of-stocks with the aid of the retailer, and then finds solutions to get the item…

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Automated Store Replenishment – Volume I

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May 28, 2012

Over the past eight years, we have been involved in a series of exercises involving thirty-two convenience stores in three, different companies operating in separate states—Mississippi, Texas and California. The purpose of this project was to investigate the feasibility of creating an “Automated Store Replenishment System” for our convenience store customers. In the initial years,…

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Critical Success Factors In Buying and Running a Store #5

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May 22, 2012

Professor Hoch’s fourth critical success factor is ‘Service’. This is the most difficult topic to write about because from our experience in this industry, ‘service’ went the way of the old gasoline station. At the same time, it is likely the most important topic in our list, because we are so deficient in it. Service…

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Critical Success Factors In Buying and Running a Store #4 – Part 1

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May 22, 2012

Professor Hoch’s next Critical Success Factor is child’s-play, IF you have the right decision-support tools. This topic is ‘Out-Of-Stocks’ (OOS). The definition of OOS is simply this: A condition that exists when available product is not sufficient to satisfy demand. You can’t sell what you ain’t got! A good system helps forecast future product needs…

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Critical Success Factors In Buying and Running a Store #2

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May 22, 2012

Stephen Hoch is a professor in the Wharton School, University of Pennsylvania, Marketing Department. Professor Hoch is internationally known for research on retail merchandising, assortment, pricing, and promotion strategy. He consults extensively with leading consumer goods manufacturers and retailers around the world, assisting them in focusing retail strategies and improving pricing and merchandising tactics via…

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Critical Success Factors In Buying and Running a Store #1

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May 22, 2012

With regards to data processing, Dr. James Martin* warned us: “There are backlogs of several years; it takes too long to build systems and the cost is too high; the difficulties of maintenance are outrageous; management cannot obtain information from computers when needed; tape and disk libraries are a mess of redundant, chaotic data; many…

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Thirty Years of Jobbers – Chapter 4-3

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July 8, 2011

One of the effects of technology has resulted in the compression of time.  For example, in Ernest Thayer’s poem, published in 1888, “Casey at the Bat,” he described, in nerve-racking detail, a fictional event which later became known as ‘the world’s most famous baseball poem.’ ‘And now the leather-covered sphere came hurtling through the air,…

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Thirty Years of Jobbers – Chapter 4-2

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July 6, 2011

Several years ago, I attended a seminar in Hawaii featuring an American businessman who was operating in Tokyo, Japan. One of his topics was of course, why Japanese-ran businesses appeared to be more efficient and profitable than their American counterparts. He used a baseball game as an analogy when he said, “If we were to…

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Thirty Years of Jobbers – Chapter 4-1

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July 5, 2011

Thirty years ago, bookkeepers used to list all business transactions in books called “ledgers.” These transactions were accumulated in periods, usually quarterly, monthly and yearly; totaled, and used as yard sticks to measure a company’s progress over a specified time period. Occasionally, a “snapshot” of summaries derived from these transactions was taken, and it represented…

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Thirty Years of Jobbers – Chapter 3-6

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July 5, 2011

Relational technology is here to stay. Advanced analysis tools like Executive Information Systems (EIS) and Decision Support Tools (DST) are available now and they all require relational databases to function.  Jobbers and C-Store operators, whose information resides in a properly designed, relational database, already have a strategic advantage over their competitors. Nowadays, if someone asks…

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Thirty Years of Jobbers – Chapter 3-5

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July 3, 2011

This is the kind of material computers were made for: Redundant analysis of millions of pieces of valuable data on a continuing basis. All you need is access to your information and the proper analysis tools and you can accomplish wonders. Data you can’t get to is worthless. Before analysis can be performed on information,…

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Thirty Years of Jobbers – Chapter 3-4

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July 1, 2011

When customers switched from ‘Balance Forward’ to billing by invoice their collection periods dropped dramatically. If you bill by invoice, try to avoid giving customers more than ten days to pay and on the eleventh day, if you haven’t received their payment, give them a friendly call. I once had a client with an accountant…

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Thirty Years of Jobbers – Chapter 3-3

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June 29, 2011

The previous story took place when diesel was selling for about $0.775 a gallon. (Can you remember that far back?) Federal taxes were $0.243, and state taxes were $0.20 a gallon. Then there was a $0.012 loading fee, a 1% discount, and about a penny freight. That put the actual gross price of diesel at…

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Thirty Years of Jobbers – Chapter 3-2

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June 28, 2011

I never really understood how dangerous float could be until I got a call from a frantic customer in 1986. I could tell by Carl’s voice that he was beside himself. “Bill,” he shouted over the phone. “Something’s wrong with your computer system.” “What’s the problem,” I asked, trying to calm him down. “Your computer…

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Thirty Years of Jobbers – Chapter 3-1

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June 27, 2011

If you’re sending out monthly statements there is a good chance you can make minor changes in your operation that will create $100,000 or more in additional working capital within three months or less. That’s what this chapter is all about. There’s gold in them there receivables, my friend. All you’ve got to do is…

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Thirty Years Of Jobbers – Chapter 2-5

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June 27, 2011

Now you may be thinking, ‘How did they pay their fuel bills if they were never entered into the system?’ Here’s a clue: A week later the Feds were in the building auditing the jobber’s books. This resulted in the Feds taking over the business. Back then you paid your fuel taxes in arrears and…

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Thirty Years Of Jobbers – Chapter 2-4

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June 27, 2011

When somebody doesn’t show up to do their job, the warhorse will make sure the job gets done; but, the warhorse doesn’t know his or her own limits and can quickly get overloaded, in which case they rarely complain. Your first indication might be when other employees are unable to perform their jobs. After all,…

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Thirty Years Of Jobbers – Chapter 2-2

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June 27, 2011

It takes years to get a good warhorse trained, and they are highly protective of their position in your company. Warhorses tend to stay until you walk in one afternoon and find them staring at the wall with their favorite pen clutched tightly between their fingers, drooling about the lips and mumbling to themselves in…

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Thirty Years Of Jobbers – Chapter 2-3

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June 27, 2011

Backing up two weeks prior to that meeting, and what led up to the events which prompted the meeting; the first day I was there, they were getting ready to send out customer statements. I watched this poor woman pull out two, thick ledger books and six, six mind you bottles of Liquid Paper. And…

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Thirty Years Of Jobbers – Chapter 1.14

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June 27, 2011

By November of 1983, many companies had been cheated by unscrupulous computer vendors and computer sales started to suffer because of it. While calling on prospective buyers, two said they would buy my system, but only if I could guarantee it would work. Imagine that! They expected me to buy a computer using my money,…

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Thirty Years Of Jobbers – Chapter 1.13

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June 27, 2011

Ralph had committed the ‘cardinal sin’ of computer procurement. First you must select the software you like, then you buy the computer to run it. Even today, there are still many questions to be considered: How much memory does the software require, do you need an unusual amount of disk storage, will you be networking,…

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Thirty Years Of Jobbers – Chapter 1.12

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June 27, 2011

NCR announced a new computer that was manufactured by a company in California called ‘Convergent Technologies’. It was still a microcomputer, but it had the capability of allowing 64 users to be on the computer at the same time. Later we called it “multi-user networking.” The time seemed to be right, so we purchased one…

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Thirty Years Of Jobbers – Chapter 1.9

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June 27, 2011

In the few cases where customers tried to keep a parallel set of books, in an attempt to test the computer, the practice always ended up in disaster. Attempts at parallel bookkeeping never worked because no one but David ever ran their manual books the way a computer does. It’s too time consuming. A computer…

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Thirty Years Of Jobbers – Chapter 1.11

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June 27, 2011

Back in the early eighties, our typical computer installation consisted of the computer, a terminal and a printer, all located in one ‘computer room’, and everybody took turns posting their stuff. At the end of the day, all the day’s business would be processed. My routine consisted of supplying my customers with a numbering stamp…

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Thirty Years Of Jobbers – Chapter 1.10

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June 27, 2011

On the subject of hardware problems, here’s an amusing story that occurred at jobber number two: One day I got a call from the computer operator who was ranting and raving that every time he touched the keyboard the computer would shut down. Then he would have to wait until the computer restarted before he…

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Thirty Years Of Jobbers – Chapter 1.8

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June 27, 2011

This particular jobber had one rather large account that accounted for over a million gallons a month in fuel sales. Fuel was being sold at one-quarter of a cent per gallon over the rack price, and I discovered when the price of fuel was dropping, they experienced substantial losses; but the supplier offered an attractive…

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Thirty Years Of Jobbers – Chapter 1.5

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June 27, 2011

One thing I have learned the hard way over the past thirty years is computer programming requires that you get a complete overview of the entire picture before you begin writing the code. It’s rarely done this way; partly because it cost too much, and partly due to the fact you need to show some…

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Thirty Years Of Jobbers – Chapter 1.6

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June 27, 2011

Due to the limited amount of space in a typical microcomputer, when the lady from the labor board wanted to know how much overtime Joe Smith worked during the last five paychecks, you had to go digging through the paper files and pull out the stubs. Those kinds of request came more and more frequently,…

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Thirty Years Of Jobbers – Chapter 1.7

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June 27, 2011

I had already envisioned my scrawny carcass dangling from a grotesque, mesquite tree in a West Texas sandstorm; so, taking that skimpy ledger book back to my room at the Holiday Inn, I spent the next three days and nights trying to figure out how all of those pieces had to fit together to form…

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Thirty Years Of Jobbers – Chapter 1.4

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June 27, 2011

David’s office was the kind where if you dropped your keys on the floor, you had to crawl under the building to fetch them. When you carried on a conversation, you either stood at the counter or sat on several cases of Rotella. On a typical day in a small town like McGehee, Arkansas, the…

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Thirty Years Of Jobbers – Chapter 1.3

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June 27, 2011

After receiving his blessing, my then current boss agreed to let me go, but only after he made it clear that I would most surely fail. I was just too ignorant to know any better. One customer I had called on seemed ideal to be my first customer. David Powell had recently dropped his law…

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Thirty Years Of Jobbers – Chapter 1.2

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June 15, 2011

In the late 70’s, there were three kinds of ‘business’ computers on the market: Mainframes, minicomputers, and microcomputers. Mainframe computers started in the $500,000 area, minicomputers began around $45,000, while microcomputers could literally be built in your garage with a micro-processor purchased from Intel or Zilog and a handful of electronic parts acquired in a…

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Thirty Years Of Jobbers – Chapter 1.1

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June 14, 2011

Barry Markel sat in my office squirming in a metal, folding-chair as he tried to make himself comfortable. The young fellow had recently been assigned the awesome responsibility of finding a computer system to automate his dad’s oil jobber business and assist him in carrying on after his father’s retirement. His predicament was made more…

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The Case Against Category Management – Exercise 5 -2

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June 6, 2011

I have gathered some information regarding costs and profits, tracking the costs and markup rates from suppliers, through retailers, to the consumers. For this exercise, I have chosen a Snicker’s bar (UPC 040000001027). IMPORTANT: You will have to take my word that this can easily be done with our current technology and read to the…

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The Case Against Category Management – Exercise 5 -1

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June 5, 2011

The ability for interested partners to manage inventory from a variety of locations and sources changes everything; the main one being the real possibility for ‘Vendor Managed Inventory’. In the years leading up to today, we have seen suppliers attempt to assist retailers out of necessity, but the results have been appalling and frustrating for…

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The Case Against Category Management – SRDC and Suppliers -3

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June 4, 2011

For this article, please refer to http://www.cstorepod.com/html/srdc_-_supplier.html In most cases, SRDC’s connection to suppliers is slightly different due to the fact that most suppliers have their own wholesale distribution systems and data processing capabilities more akin to SRDC’s. Nevertheless, ‘The Cloud’ makes it appear retailers, stores and suppliers coexist in the same virtualized network with…

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The Case Against Category Management – SRDC and Suppliers -1

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May 31, 2011

Suppliers can be connected to the SRDC computers in the same fashion retailers and stores are connected; however, because most suppliers operate in an environment identical or similar to SRDC’s, the connection can be equally efficient. NOTE: Our retailers are using our computers, so they are already integrated. In our book “Turning Convenience Stores Into…

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The Case Against Category Management – A Radical New Idea -3

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May 27, 2011

For years, retailers have been focused on the out-of-stock issues that plague the industry, but ‘out-of-stocks’ is only one small symptom of the ‘supply chain problem’. I found an excellent article entitled ‘Out-Of-Stock’ at Infosys.com that goes a long way toward pointing out the problems that exists even today, but it falls short of coming…

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The Case Against Category Management – A Radical New Idea -1

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May 24, 2011

In my three decades of providing data processing services to the retail industry, nothing has brought more controversy and ridicule than the suggestion we allow a store’s employees to take on the responsibility of maintaining and auditing the store’s inventory. For the life of me, I have never understood the logic behind this wide-spread conspiracy…

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Claustrophobic Evaluation

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May 23, 2011

After reading “Turning Convenience Stores Into Cash Generating Monsters,” a local retailer asked me to stop by his store and give him some advice. His store was unbranded and I estimated it as having about 1,300 square feet of selling space. It had two shopping lanes, one cashier position and four pumps with two facings…

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The Case Against Category Management – SRDC and Stores -2

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May 23, 2011

http://www.cstorepod.com/html/flow_chart.html After purchase orders are created for headquarters’ approval and flagged for payment on the due date, the SRDC can send an ACH bank transfer to your supplier for the value of the invoice. No paper, everything is handled electronically. The last time I heard, 60 percent of supplier invoices contained errors, each error cost…

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The Case Against Category Management – SRDC and Stores -1

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May 22, 2011

http://www.cstorepod.com/html/srdc_-_stores.html The second one-third of the infrastructure, is the relationship between the StoreReport Data Centers (SRDC) and the retail stores. I will repeat there is no direct connection between a company’s retail headquarters and their stores. There are usually three connections to the stores, one being SRDC-POS, the SRDC and a handheld device, and the…

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The Case Against Category Management – SRDC and Retailers

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May 21, 2011

Note: SRDC is an acronym for StoreReport Data Centers. I have broken the diagram from the previous post into three sections. SRDC-Retailer, SRDC-Stores, and SRDC-Suppliers. You can view the SRDC-Retailers diagram at http://www.cstorepod.com/html/srdc-retailer.html. In a pure Cloud environment, the location of software and hardware is unclear; but in our case, our retailers have no software…

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The Case Against Category Management –Pricing -2

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May 18, 2011

Take a look at the two simple diagrams located at: http://www.cstorepod.com/html/exercise__4_-7.html. The one at the top is a simple, graphical explanation of the workings of a gasoline engine: Gasoline is processed by a carburetor, affected by air flow and the pressure applied to the accelerator, causing the engine to produce power to turn the wheels…

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The Case Against Category Management –Pricing -1

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May 17, 2011

The manufacturer’s suggested retail price (MSRP), or the supplier’s suggested retail price, or even the cost, should be only a reference in determining the price you should put on an item. Why? Because it’s obvious, neither the manufacturer nor the supplier has the required knowledge to know how that product will perform in your store……

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The Case Against Category Management –Exercise #4 -5

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May 16, 2011

This process is both an art and a science. There are far too many variables involved to make it a purely scientific exercise. Experimentation, based on intelligence about the products and your market is the best option.  In order to do this, you must collect the data and develop, or somehow acquire the tools to…

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The Case Against Category Management –Exercise #4 -4

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May 11, 2011

From exercise #4 -2, leave the top producing category alone for the time being. First concentrate on the second group, because this is the most promising area where hidden profits can be found. I chose ‘Milk Products’ because its average turns fall between 25 and 40 a month. Something or some things in that group…

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The Case Against Category Management –Exercise #4 -2

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May 9, 2011

Note: Forums such as LinkedIn do not allow the use of tables. The complete table for this page of the exercise can be found at: http://www.cstorepod.com/html/exercise__4_-2.html By using the data from Exercises 1-3, I now have a spreadsheet of all items sold in one of our test stores during the past 31 days (March 2011)….

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The Case Against Category Management –Exercise #4 -1

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May 8, 2011

Unfortunately, we can’t use all of George’s tricks (nor would we want to) to get people to buy products in our stores, but we CAN be a lot more selective as to the customers we attract. There are many well documented approaches for getting to know your customers better; customer relationship management (CRM) being only…

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The Case Against Category Management – Prelude to Exercise #4 -2

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May 5, 2011

Another thing you should keep in mind before you venture into Exercise #4, is just as there are profitable and unprofitable items, there are profitable and unprofitable customers, suppliers, employees, promotions, managers and locations… and yes, even CEOs. In fact, every company may have a mixture of all of these. Once you’ve accepted these principles,…

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The Case Against Category Management – Three Current Scenarios

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April 30, 2011

1.       In a category management environment, a supplier may assign a Category Captain to help make decisions regarding the makeup of a retailer’s categories, consisting of not only the supplier’s own products, but of the products carried by other vendors. The Category Captain may receive proprietary information from the retailer. In the past, Category Captains…

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The Case Against Category Management – CM vs. Item Level Control -1

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April 25, 2011

Beginning on page fifty-eight of our book, “Turning Convenience Stores Into Cash Generating Monsters,” available at Amazon.com, Jim and I talked about the advantages ‘Item Level Inventory Control’ offers over ‘Category Management’. We will touch lightly on just a few of those advantages here. You may be able to find your ‘Last Cost Paid,’ but,…

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The Case Against Category Management – Exercise #3

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April 22, 2011

In exercises 1 & 2, I suggested you create a spreadsheet consisting of an inventory list and sales transactions from your POS, sorted and subtotaled by UPC and re-sorted by turn rates. In exercise 3, I would like you to re-sort you turn rates from highest to lowest. Format the turn rates to at least…

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The Case Against Category Management – The Suppliers – 1

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April 20, 2011

By March 3, 2000, we had converted our software to run on the Internet and started what must have been one of the first ‘Cloud Computing’ ventures in the retail industry. The following July, IBM published a press release announcing our plans to automate 180,000 convenience stores and gasoline stations by connecting their stores and…

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The Case Against Category Management – Escape from CM – 4

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April 19, 2011

CM has been, and always will be about supplier control over their retailers. Large retailers like Walmart, Target and Kroger, through their tremendous buying power and brute strength, have turned the tables and forced their suppliers to make unheard of concessions that serve only to increase the supplier’s buying power. It’s an old ploy: If…

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The Case Against Category Management – Escape from CM – 3

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April 17, 2011

When we began setting up stores for just-in-time inventory back in 2003, I had no idea how critical the situation really was until I discovered HALF the inventory in every store is either dead, unprofitable or creating an overstock situation. In store after store, we consistently found $30,000 worth of inventory at cost that fell…

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The Case Against Category Management – CM Defined

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April 9, 2011

Since there are multiple definitions of Category Management, I did a little research and found the following descriptions: 1) Neilsen – CM is a process that involves managing product categories as business units and customizing them [on a store by store basis] to satisfy customer needs. 2) IGD – The strategic management of product groups…

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The Case Against Category Management – Overview

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April 8, 2011

Category Management (CM) is a retailing concept in which the range of products sold by a retailer is broken down into discrete groups of similar or related products; these groups are known as product categories (examples of grocery categories might be: tinned fish, washing detergent, toothpastes). It is a systematic, disciplined approach to managing a…

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Advantages of Cloud Computing– Part XXX – Summary

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April 7, 2011

There is no correct definition for Cloud Computing, because its definition is dependent upon what you’re doing right now. For me, it was an escape from the cramped environment I was forced to operate in, to a world of infinite possibilities. On March 3, 2000, we migrated from being a software sales company to becoming…

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Advantages of Cloud Computing– Part XXVII –Flexible Mobility

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April 3, 2011

I sell “Turning Convenience Stores Into Cash Generating Monsters” and other books on Amazon, where I compete with millions of titles from ‘A’ to ‘Z’. Amazon has fifty-one warehouses located in the USA, Canada, England, Scotland, Wales, France, Germany, Japan and China. I don’t know how many books Amazon sells each day. At any moment…

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Walmart CEO Expresses Serious Concerns Over Inflation

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April 1, 2011

Bill Simon told USA Today’s editorial board on Wednesday, “There’s a lot of the places showing up now in dairy, and we’re starting to see it come into things that are transportation-related, like paper.” He cited working more closely with suppliers as a way of helping to keep cost down. Here are some tips and…

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Advantages of Cloud Computing– Part XXIV – Flexibility III

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March 30, 2011

Regardless of the pros and cons we hear about cloud computing, the advantage of having the flexibility to collaborate with trading partners and service companies in real-time, solves so many problems, anything bad you might say about it pales in comparison. It’s as simple as comparing writing letters back and forth with working in the…

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Advantages of Cloud Computing– Part XXIII – Flexibility II

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March 29, 2011

I’d like to dig a little deeper into the ‘flexibility’ issue regarding cloud computing as it best supports small business’ ability to change rapidly in the face of overwhelming odds. Business practices are not keeping up with technological changes as they are occurring at an ever-increasing pace. A ‘wait and see’ attitude is no longer…

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Advantages of Cloud Computing– Part XXI – Integrated Marketing

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March 27, 2011

Cloud Computing isn’t just about putting everything you have on the Internet. Having your data and programs integrated at one secure, remote site, allowing trading partners operating on the same computer to integrate their data and processes with yours is the payoff. Since transactions are occurring in real-time, it provides a common thread – running…

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Advantages of Cloud Computing– Part XVII – Highly Automated

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March 20, 2011

As we mentioned in TCSICGM, according to the ‘Encyclopedia of American Business History and Biography,’ the four-foot, eight-and-a-half inch width between railroad tracks has not always been the standard in the U.S. Prior to the Civil War, there were twenty different widths of railroad tracks ranging from three feet to six feet. In railroad language, they…

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Advantages of Cloud Computing– Part XVI – Increased Data Storage and Security

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March 19, 2011

Actually, there are many advantages to cloud computing, but one stands out above all others. It amazes me the experts at CloudComputing.sys-con.com don’t mention ‘security’ as one advantage, because security may be the most profound advantage of them all; nevertheless, security certainly belongs near the “Increased Storage” topic, because if you have no storage there…

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Advantages of Cloud Computing– Part XV – Forecasting

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March 18, 2011

The three major components of deciding what to put in your stores and how to price it are usually based on historical data, math and judgment made up of product influences, item relationships, store influences, business influences, store layout, and corporate influences; resulting in order determination, category management, labor scheduling, planograms, merchandise planning and allocation….

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Can Walmart make Express work?

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March 12, 2011

Walmart’s business model is one that evolved from a tiny retail store in Bentonville, Arkansas to becoming the world’s largest retailer. Consequently, the corporate structure of the company, from top to bottom, thinks big, acts big and they are exceedingly good at being big. If a small company were to attempt to implement Walmart’s business…

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Advantages of Cloud Computing– Part XI – Increased Storage

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March 11, 2011

The experts have it backwards. The Cloud is not about ‘increased storage’. It’s about ‘less storage’ and I’ll tell you why. One thing about history… it keeps growing. I have some customers who have computerized records dating prior to 1996. If you’re system is running on Windows-based PCs, you’ve probably lost all that data by…

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Advantages of Cloud Computing– Part X – The Innovators

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March 10, 2011

In Part VIII we talked about the future. Now we’re going to talk about how we’ll get there. To demonstrate how new technologies follow along similar stages, from initial vision to market acceptance, I have chosen to explore the period from 1972 to 1982, the evolution of the personal computer; but you may choose just…

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Advantages of Cloud Computing– Part VI – Disruptive Technologies

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March 5, 2011

At this point, we would like to deviate from the subject of ‘Reduced Cost’ to introduce ‘Disruptive Technologies’, because it falls within the framework of demonstrating how Cloud Computing is already affecting ‘costs’, creating both strategic opportunities and competitive threats. As expected, we are seeing more interests coming from smaller operators than from companies with…

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Advantages of Cloud Computing– Part V – Reduced Cost

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March 4, 2011

The next time you’re out and about, make a stop at one of your competitor’s stores, go inside and buy something, pay for it, get back to your car and ask yourself, “What exchange occurred during that experience that would encourage me to come back?” Quite honestly, there is nothing we can think of that…

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Advantages of Cloud Computing– Part IV – Reduced Cost

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February 26, 2011

Now the subject of interfacing vs. integration might not seem important to you at the moment, but think about it. Walmart ‘integrates’ with their suppliers in their on-going commitment to provide their common customers with ‘everyday low prices’. The key phrase here is ‘common customers’, because Walmart sees themselves as a conduit for their manufacturers…

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Advantages of Cloud Computing– Part III – Reduced Cost

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February 25, 2011

As we have stated in other articles, Cloud Computing has its roots in “time sharing” incorporating the latest technologies that have evolved over the past three decades. All technology we have used and will use in the future is ‘transitional’ in nature. It is ridiculous to assume that desktop computers using Windows, Linux, Unix and…

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Advantages of Cloud Computing– Part III – Reduced Cost

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February 25, 2011

As we have stated in other articles, Cloud Computing has its roots in “time sharing” incorporating the latest technologies that have evolved over the past three decades. All technology we have used and will use in the future is ‘transitional’ in nature. It is ridiculous to assume that desktop computers using Windows, Linux, Unix and…

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Advantages of Cloud Computing– Part II – Reduced Cost

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February 23, 2011

In every marketing situation, COST always wins. Not long after we began working in the convenience store industry, we quickly learned the three most important ingredients for operating a successful c-store are location, Location, and LOCATION! After a few years in the business things changed, and we decided IMAGE was as important as, or maybe…

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Advantages of Cloud Computing – Part I

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February 22, 2011

Sometimes swapping explanations for advantages can be a better way to get a point across.  Such is the case with a recent article that appeared at CloudComputing.sys-con.com. The site lists the six advantages of Cloud Computing as:  Reduced Cost Increased storage  Highly automated Flexibility More Mobility Allows IT to shift focus These advantages are meaningless…

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New Book

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October 16, 2010

Jim and I just published our new book, “Turning Convenience Stores Into Cash Generating Monsters” and you can find a link to order to the right of this blog. The theme is “this is best time ever to be in the convenience store business” because of the enormous opportunities that are being missed by almost…

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The Future of Retailing

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September 26, 2010

The necessity for better inventory control in retail operations is a given. We cannot continue to shove $60,000 worth of inventory in a convenience store and wait till the end of the month to see if it has produced a profit, and we have come to a standstill given the current environment. We need to…

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A Brief History of Convenience Stores

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September 26, 2010

Some of you may have arrived here from the Convenience Store News Magazine discussion. I want to be clear that it is not my intention to sell any product or service through these discussions, nor will I tolerate anyone else using our discussion to sell anything. This is a discussion of ideas revolving around the…

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Developing a Supply Chain Environment

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September 25, 2010

Developing a SCM environment for one small segment of an industry, say between a convenience store and one supplier, does not constitute a supply chain. It’s only one small part of a much larger picture that spans the life cycle of everything you do and each product you sell or use internally. It’s doubtful that…

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Supply Chain 101

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September 23, 2010

The next time you buy a loaf of bread, think of John Holbrook. He’s a guy in Richland, Washington working on new ways to fertilize wheat crops. For consumers, the supply chain goes no further than the retailer where they bought the bread, but without men and women similar to John, bread might be a…

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Couche-Tard The Northern Invasion

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September 23, 2010

Every now and again something comes along that affects an industry in such a way that it creates a paradigm shift within that industry. In my new book, I talk about ‘Tears (holes) in the environment’ that are natural reoccurring phenomena that generally go unnoticed – like when American Airlines created the Sabre System and…

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How Our Supply Chain Works

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September 17, 2010

A customer comes to your counter and purchases a drink and a bag of chips. Within seconds, the transactions are on their way to a leased data center located in Colorado, Wyoming and California, decrementing the quantities of each item in your store. The Re-order Level of each product is checked. At the data center,…

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Marketing the Supply Chain

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September 12, 2010

“The undirected worker spends more of his time walking about for materials and tools than he does in working; he gets small pay because pedestrianism is not a highly paid line.” – Henry Ford With regards to any discussion involving Supply Chain Management (SCM), the above quote seems appropriate to all of them. Henry Ford…

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First Run at Forecasting

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September 10, 2010

This is the first in a series of articles discussing the art and science of forecasting. A ‘science’ with regards to the mathematical formulas used in determining needs, and the ‘art’ of applying assumptions that defy all attempts at computerization. Forecasting may consists of multiple systems addressing multiple objectives. For example, merchandise planning, labor management,…

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Collaboration in Supply Chain Management

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September 10, 2010

Measuring performance to select and evaluate suppliersContributed by Patricia Guarnieri   When we consider, in a supply chain environment there are two or more independent companies working jointly to align their processes, in order to create more value to end- customers and stakeholders, we realize it only works if companies involved act as a single…

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The Importance of Price Control

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September 10, 2010

If you’ve been following along, I think most of you will agree, the key to increasing profits in your store is to increase profits on the items you sell. This involves 1)getting more ‘valued’ customers to shop in your store, 2)using ‘specials’ and ‘deals’ to bring an aura of excitement to the shopping experience, 3)having…

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Push versus Pull

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September 4, 2010

Does it make good sense that convenience store retailers should order what they can sell and not order things they cannot sell? That’s a dumb question, right? Who orders stuff consumers don’t want? Well, I’m sad to say… just about everybody. One purveyor of unsellable products in your store is called a ‘shipper’; but the…

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Logistically Speaking

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August 19, 2010

The greatest problem retailers, especially convenience store retailers face today involves logistics. You may have heard the idiom, “You can’t manage what you can’t see.” If you have from two to eight locations you may have a problem. If you have more than eight locations you’re probably sitting on a powder keg. It’s virtually impossible…

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Little things mean a lot

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August 12, 2010

We’ve all heard the favorite political joke from the eighties – “A billion here, a billion there — pretty soon it adds up to real money.” Well, there’s a lot to be said about that. In the convenience store business, I’ve seen ‘a penny here, a penny there add up to big profits’. Did you…

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The more things change, the more they stay the same

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August 12, 2010

In 1965 I had my first meeting with a convenience store executive. ‘My God has it been that long?’ It was at the Southland Corporation (7-11) offices on Fairfield Avenue in Shreveport, Louisiana. I was in my early twenties, green behind the gills and trying to sell the guy some radio advertising for KJOE, a…

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Disruptive Technologies

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August 11, 2010

In 1978 IBM viewed small computers as electrical toys, a fad that would never be accepted by the mass market. Edison clung to his direct current (DC) model for electricity as he claimed Telsa’s alternating current (AC) model was too dangerous to be accepted in the market. The above are two examples of ‘disruptive technologies’;…

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Critical Success Factors (CSF)

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August 6, 2010

“What can we be doing here that isn’t already being done well elsewhere?”From “When you’re up to your a** in alligators … It’s hard to remember you’re original objective was to drain the swamp.” —Mark Stairwalt, 3-12-2010 Politics I ran across this quote strictly by accident, but I think it rings true with just about…

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Goals and Problems

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August 6, 2010

“Everybody talks about the weather, but nobody does anything about it.” Charles Dudley Warner – Hartford Courant of Connecticut – August 27, 1897 The analysis of goals and problems is probably the most exciting and fulfilling exercise in business reconstruction. Goals are a basic element of the human psyche and we simply cannot get along…

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Thinking About the Corporate Structure

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August 5, 2010

Departmental activities tend to expand with no knowledge of what is occurring in other areas, resulting in redundant and oftentimes conflicting procedures and processes. Before computerization it really didn’t matter much as each department was responsible for its own paperwork. But when departments begin to share information it can become a real problem. This problem…

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Departmentalizing and Functional Decomposition

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August 5, 2010

An important step is to create a spreadsheet, departmentalizing your business. For example: XYZ Convenience Stores   – Corporate Division   – – General Accounting – – – Accounts Receivable – – – Accounts Payable – – Legal     – – Marketing   – – Personnel   – – – Human Resources – –…

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Prioritizing Business Areas for Study

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August 5, 2010

The building of the overall information architecture can take years and you should get started as soon as possible. Obviously, you can’t do everything at once. The first step is to prioritize business areas and work on them one at a time. The decision on where to start should be obvious. It is the department…

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Organizational Restructuring Techniques

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August 5, 2010

Information is power. Without it you’re running a ship without a rudder. With the tools available to us today, there is no longer a valid excuse as to why critical data cannot be made available in a timely fashion at everyone’s desk. Don’t take the previous statement lightly. If your people are telling you otherwise,…

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Studying the Enterprise from a Management Perspective

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August 4, 2010

Most companies are far too complicated to study as one entity. Think of a wristwatch. A watch is a single entity that functions through the operations of many moving parts; each part being directly linked to another, which is linked to yet another, and so on and so forth. A business can never be understood…

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Enterprise Restructuring – Step One

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August 4, 2010

This is the first in a series of articles aimed at the reinvention of retail business for the 21st Century. It goes beyond computers and technology and offers insights as to why many retailers have failed and why they will continue to fail unless they take action to reinvent themselves while there is still time….

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Auditing Inventory

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July 22, 2010

One of the secrets of keeping an accurate perpetual inventory is to maintain an on-going audit of every item in the store. This requires the use of store employees to do these audits and I think all store employees should be incorporated into the auditing process. Many operators may hold a skeptical view of using…

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Misunderstandings

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July 20, 2010

Recently, I was explaining to an ‘expert’ about the necessity of tracking inventory. At the point where I emphasized the importance of knowing how many units of a given item a retailer had on his shelves, he stopped me. “They already do that,” he insisted. Then he jumped up to his chalkboard and wrote the…

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What we really need is a helicopter

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July 20, 2010

I had a friend once that told me the story of how he was caught in a trough while swimming in the ocean off the Venezuelan coast. If you’ve ever surfed, you know it takes a great deal of energy to break out of a trough as the waves keep you stationary and impede your…

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Your suppliers’ environment

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July 19, 2010

The explosion of convenience retail outlets came at a time when suppliers needed it the most. The only problem was the majority of the new retailers weren’t retailers at all … they were gas station owners and oil jobbers. For the right person, opening a new store was a no brainer. You simply identified a…

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Analyzing inventory can be a blast!

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July 18, 2010

We all know beer sells better on a hot weekend, don’t we? And sticky-buns sell better in the AM, than in the afternoon and evening. Depending on your area, Coca Cola 16 ounce may be the best seller, Marlboro Light 100’s — you can’t keep enough of those products on the shelf; but, other than…

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Stagnation!

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July 17, 2010

There is an old saying that goes something like this: “If an infinite number of monkeys were left with an infinite number of typewriters for an infinite period of time, sooner or later, one of the creatures would type something profound.” While there’s much to be said about possibilities when you use the word ‘infinite’,…

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Cigarette Deals

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July 3, 2010

I have often wondered why cigarette manufacturers insist on contracts. So I have been conducting studies to determine the real value of cigarette deals. Below, I have accumulated one month’s data from one store to determine if the space allocated for all brands from a single manufacturer is justifiable. My conclusion after several years of…

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Pricing Inconsistencies

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July 2, 2010

If you are old enough to remember the year 1979, you might recall the horrendous period of hyperinflation as prices were going up so fast, Americans were actually hoarding food. Many leading economist believe it will happen again, and soon. It means, in order to stay profitable, you may need to change your retail prices…

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Network Setup

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July 2, 2010

Since both the back-office PC and the Passport must be on different WANs, we have to get them to work on the same LAN. These are the steps we take to accomplish this. INTERNET routers have a LAN which has an address of 192.168.1.???, with a subnet mask of 255.255.255.0. The Internet needs to be…

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Programming the Scanners

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July 2, 2010

We use Metrologic MS7120 Orbit scanners because of their small size and superb performance. They can be obtained from various sources starting at $256 to $337 depending on where you buy them. It is very important that you do not skimp on the quality of the scanners because if they don’t work properly you’ve just…

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Dealing With Suppliers

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June 8, 2010

In the fall of 2000, I received a call from Nabisco. We had not even thought about working on our scanning service yet, but they read in some of the trade magazines about how Scott Systems Inc. and StoreReport had teamed up with IBM to create a cloud computing environment for convenience stores, and they…

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Competitive Cooperation

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June 4, 2010

There are two major classes of retailers. The first includes companies like WalMart, K-Mart, Target and Costco, and the second is simply everybody else. An independent retailer such as a convenience store operator cannot compete against the first class. The ‘big boys’ compete against each other in their own class and create a hostile environment…

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Finding the Perfect Price

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June 3, 2010

You can sell anything if you put the right price on it, and that doesn’t always mean the lowest price. For example, if I put my JC Penny watch on sale for $50,000, I most certainly will not have success. If I price it at a penny, I won’t have much better luck, because potential…

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The Barebones Store

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June 3, 2010

Seven years ago, I stopped at a convenience store that was owned and operated by an Indian family here in Mississippi. The clerk was a Hindu woman dressed in traditional Indian garments. As I approached the register I was surprised to see her husband stretched out and sleeping on the floor behind her. It occurred…

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The True Value of an Item

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June 3, 2010

The true value of an item is determined by how much someone will pay at a specific point in time. There are all sorts of idioms supporting that theory, but, my favorite is, “One man’s trash is another man’s treasure.” I have often wondered what would happen if retail stores operated more like garage sales….

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Managed Supplier Partnerships

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June 2, 2010

When WalMart created RetailLink in 1986, they required their suppliers to participate. In the beginning, the purpose of RetailLink was to provide suppliers with online access to WalMart sales data and projections. Suppliers began to take an active role in managing WalMart’s own inventory. Later, WalMart expanded their relationships with their suppliers to include a…

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JIT means Just-In-Time

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June 2, 2010

You jobbers out there will remember the time when the majors decided to skim all the profits off of fuel, causing the greatest crash in the fuel business in recorded history. Well, unfortunately, it’s time for convenience stores to experience some of the same medicine. You have cut every expense you know how and the…

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Welcome

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June 2, 2010

Welcome to the Convenience Store Forum blog. The purpose of this blog is to assist independent retailers in competing with very large retailers like WalMart, Target and Costco. The plan is to magnify our strengths and attack their weaknesses. I sincerely hope that you can learn from my thirty two years of experience in the…

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