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Increasing Efficiency
In Your Merchandise Handling Processes

Successfully operating a busy store requires a combination of skills, including a strong orientation toward organization and the ability to efficiently coordinate multiple processes. When studying key store tasks, it can be helpful to classify those tasks as being either selling or non-selling related. Performance improvement can typically be achieved in either category; however, the approach required differs quite significantly. Following is a discussion on how to better perform the non-selling tasks: receiving, processing, and merchandising.

As soon as you have ordered new merchandise, planning for its arrival should begin. Make sure you request a delivery date from the vendor - and that you have a way to correspond with the vendor that you ordered from so you can accurately expect when the goods will arrive. It is very common for vendors to supply their customers with a "receipt of goods" date.

Once the merchandise does arrive, you will need to receive it (physically bring it in your facility and store it), process it (open the carton, verify quantity (optional) and check the condition of the contents, strip off the plastic or paper packaging and unwanted tags, hang/fold/or steam the merchandise), and finally, merchandise it (move it to the sales floor for presentation or into a storage area).

There is significant variance in how these functions are performed by retailers both large and small - and how productive they may be. In order to assist your firm to optimize the productivity of these three key functions we would like
to offer the following recommendations.

Keep in mind that the size of your facility and the layout you employ may affect how you perform these tasks; however, the general concept of each recommendation should be considered.

• Make sure you are fully prepared for any large deliveries and have planned how you will handle them in advance
• Ensure you have all the right conveyance and processing tools available and the area you will use to store and process the goods is clean, organized, and available
• When the goods arrive, bring them in as efficiently as possible and utilize as many of your employees as are available to unload the truck quickly and begin processing immediately
• If it is necessary to store the incoming merchandise and process it after store hours, make sure the cartons are stored on an organized manner
• Arrange your processing area to facilitate an organized and productive flow from one function to another. The more an item stops and starts during the processing flow, the less productive the process may be
• Utilize appropriate work tables to process the merchandise and do not process off the floor or other cartons
• Once processed, hang or place the merchandise on movable hanging racks or movable carts with shelves (for folded or hard goods) for efficient movement to the sales floor
• Clean up the area once all the goods are processed to make it ready for the next truck receipt
• Observe how many units your team can unload, process, and deliver per man-hour so that you can use those statistics to plan your labor needs for future receipts based upon the anticipated receipt volume

Here is an example of an efficient backroom receiving and processing area: The time employed for all three functions
should approximate the following:

• Receiving: 10% of total team time used
• Processing: 20% of total team time used
• Merchandising: 70% of total team time used

In order to properly "manage" these activities, one of the simplest and most valuable tools you can create is a list of
business benchmarks that can be used as productivity goals. This process is accomplished with the following steps:

Measure the time it takes to perform those tasks. Assume it took 3 hours in total and you used three people to perform the total work for those three hours. That means your team used nine total man-hours (or 540 minutes) to perform those tasks. Now, divide the number of items that were received, processed, and merchandised (let us assume 2000) by the 540 minutes used in order to calculate your productivity ratio for those tasks 2000/540 = 3.7 . That means your team averaged receiving, processing and merchandising 3.7 items per man-minute (for each person).

Now that you know the productivity number, you can do a few things with it. First, use it to calculate the amount of time you will need for future receipts and the related processing /merchandising. If you have been scheduling too much time for your team to get the job done, then consider scheduling less time. Second, look for ways to improve the efficiency of the tasks and measure them again, to see if you used less, or more, time per item. If the time consumed increased, the process change you tried is not of value. You may be able to reduce the total time needed by implementing variations on your idea for improvement - and then you would be able to calculate how much time you were able to save by doing so.

Consider creating productivity benchmarks for the following store non-sell tasks by tracking the following types of units:

• Receiving - use cartons received per minute (or hours - for large shipments)
• Processing - use items per minute
• Merchandising - use racks or carts moved/unloaded per minute
• Price changes - use prices changed per minute
• Floor recovery - use aisles or store zones (areas) recovered (neatened up) per minute

Editorial provided by Pat Fitzpatrick, President of Atlanta Retail Consulting Inc at www.atlantaretailconsulting.com. Retail Performance Improvement Seminars is an operating unit within Atlanta Retail Consulting Inc. Pat has provided Management Consulting services to retailers and consumer products firms since 1982. His current practice provides deeply experienced retail consulting services to a broad variety of retail and consumer products organizations with a team of consultants chosen based upon their demonstrated retail experience base and success in consistently delivering premium consulting assistance to the industry.