Working at T-Mobile I learned a lot about Operations. I learned that T-Mobile’s inventory has more items than just phones. It contains items such as handsets, covers, headphones, chargers, and other accessories. The inventory is counted at least once a month and the process involves manually counting each SKU (Stock Keeping Unit) in the front of the store and in the back of the store where the inventory is locked. After each count the result is compared to the inventory at the beginning of the month plus new-ordered inventory minus the sales and minus all the items that have been returned for various reasons. In theory the manual count should equal to the remaining inventory on file, but in real life it doesn’t happen.
In real life the store manager uses personal judgment when opening large business accounts and he is able to give some SKUs for free. Sometimes when the employees sell or return the SKU they may accidentally scan a different SKU (each color or pattern of the certain cover has its own SKU!). Sometimes the returns are not scanned correctly, and sometimes it happens that a phone cover falls under a closet. In real world there is a certain percentage for which the loss is acceptable.
When the loss of inventory is bigger than a set percentage it becomes an issue. That may indicate that there is theft in the store, or mishandling of inventory or perhaps just plain incompetence. The steps to fight the high “shrink” percentage include a weekly count of the inventory, daily reports, probations and write-offs for the employees who are caught for scanning wrong items at POS or not scanning them at all. The store managers are being judged by the “Shrink” metrics, their salary and performance reviews can be seriously affected by the higher percent of “Shrinkage”.
Another metrics that affects managerial performance is traffic conversion. It is measured on daily and monthly basis and it’s designed to measure sales productivity. Each store has a device mounted inside of the store, just above the door, and it measures the number of people who walk-in. Then the number of sales is divided by number of “walk-ins” and that ratio represents the sales conversion rate. A low conversion rate shows low productivity and it means that the store manager should step up his game.
One of the ways to fight a low conversion rate is to make sure that the sales associates talk about current promotions. That they look at the customer’s account to see if the customer has any type of need and that need has a solution in a form of a product they can offer. That the employees are asking the customer the right questions that may help discover other needs. So next time when you are paying your bill or buying something at your carrier’s store consider whether or not you think of the sales representative’s questions as product pushing or simply discovering customer needs.