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Operational Level 3 - Variance Research
Both Operational Level 1 - IRA and Operational Level 3 - Shrink are hard to achieve without good initial inventory counts and tight inventory procedures. Variance research provides critical feedback into the quality of your inventory counters, cashiers, and store procedures. In most stores, the inventory coordinator handles this responsibility where he/she acts like a detective, selects a handful of variances, and tries to find the root cause. When a root cause is found then he/she will work with the store manager or owner to resolve the issue. Variance research goals:
Quantity-on-hand variance research is the most important accuracy process in your store. PIP research is typically performed by your inventory coordinator where he/she diligently scrutinizes variances in the Physical Inventory Posting (PIP) viewer before variances are finalized. You should set dollar thresholds $15.00 (for example) that trigger mandatory research when the variance dollar amount is exceeded. Stores employing good variance research can quickly find and fix the root cause of inaccuracy. 1. Get a good first count It all starts with a good initial count. Our How to Count video will help your team understand the importance of counting better. Folks giving you frequent bad counts need to be identified and trained! If additional training fails then counting may not be the best task for that individual and their counting responsibility reassigned. 2. Research variances in PIP before RPI is run Variance research is the cornerstone of inventory accuracy. It's how you figure out and fix the process or person causing issues, and once fixed, the accuracy of your store increases. 1) Sort PIP by the Shrinkage column you created in Level 0 - Completion (Step 1), or the Repl Cost Varinace column if it's available in your PIP viewer. 2) Verify each variance over/under your mandatory research policy threshold ($15.00 for example) Recount the SKU Look in nearby bins hooks for the item Look in top stock and back stock Look in return and defective bins. Look in special order shelves Look for multiple locations (clip strips, end caps, etc.) 3) Try to determine the variance root cause Was it a bad count? A count correction? Cashiering error? Receiving error? Theft? 4) If the variance was a result of a cashiering or receiving error then fix it in MPO or POS and delete the entry in PIP. Do not use PIP to correct cashiering or receiving errors as this will skew shrink, purchasing, sales and order points. 3. Perform deep variance research You can follow the Shrink Report - Variance Research help dig even deeper.
Quantity-on-hand variance research is the most important accuracy process in your store. PIP research is typically performed by your inventory coordinator where he/she diligently scrutinizes variances in the Physical Inventory Posting (PIP) viewer before variances are finalized. You should set dollar thresholds $15.00 (for example) that trigger mandatory research when the variance dollar amount is exceeded. Stores employing good variance research can quickly find and fix the root cause of inaccuracy.
1) Sort PIP by the Shrinkage column you created in Level 0 - Completion (Step 1), or the Repl Cost Varinace column if it's available in your PIP viewer.