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Data Processing vs. Management Systems For Retailers

Furniture World Magazine


Data processing is good, but an industry-specific system is much better.

A good data processing system records all the facts and presents these facts in such a way, that with some analysis of these facts, management can make decisions. Most systems, and particularly those that are custom designed, are usually data processing systems. That's because the programmers and systems designers don't think in the same terms as a merchant or operations manager.

An industry-specific system that is really designed by furniture merchants who are accustomed to having specific tasks to accomplish, integrates important additional programming. This allows the computer to analyze information and present it in such a way that retail managers do not need to further manipulate data to put it in usable form. For example, if your database has information about an item... current inventory, rate of sale, lag time to acquire, economic order quantity, days in stock, days out of stock, and existing back orders with scheduled deliveries...it becomes a purely mathematical task to place the reorder. This can be done much faster and more accurately by a computer than by an individual.

As another example, the typical furniture merchant reviews his bedding first thing Monday morning or when the rep comes in. He could spend several hours analyzing his inventory and back orders. Conversely, with an efficient Purchase Advice Report the computer could have worked out the purchase order in just minutes. In just a few minutes more, the merchandiser could review this report and make changes based on his or her knowledge of advertising plans, or seasonal factors. A simple little report like this can mean that you are in stock when you need to be and so minimize lost sales due to being out of stock on best sellers.

The same type of management assistance can be applied to slow sellers. Your inventory should be reviewed continuously for periodic markdowns and other actions to clear it of nonproductive items. Some merchants have to scan their entire inventory to determine reorders and markdowns. Sometimes it takes weeks to do what a computer could have done in minutes.

Anyone knows that the more information you have, the more effective your decisions become. But acquiring that information in a timely manner is most important. If it takes you a week or more to scan through these reports before you can mark down an item that could have been ordered or marked down 3-5 days earlier... how much difference might that make in your sales and costs? In many operations these delays are a matter of weeks and months, not just days. What would a 10% increase in sales and a 10% reduction in overhead do to your bottom line? Utilizing a management system rather than a data system could more than double your profits.

Acquiring computer hardware and computer software doesn't mean you're installing a Management System. And the price of the system is not necessarily an indication of its completeness. Obviously a data processing system is better than no system at all. Just be sure that when you're shopping for software, it provides you with 'state of the art" methods of management.

Sid Levitz is the founder and CEO of Sid Levitz Furniture Marketing systems and former president of Levitz Furniture Corporation. Questions on any aspect of computer automation can be directed to FURNITURE WORLD at editorial@furninfo.com.