Serving in the unusual capacity of financial controller and head of the IT department at home improvement retailer Chase-Pitkin Home & Garden, Chris Dorsey fills the void between bean counters and techies to recoup $600,000 lost to shrinkage. “One of the areas of disconnect for retailers is between technology and accounting and financial departments, because they’re not in synch with each other,” he tells Internet Retailer. “We’ve been able to bridge the gap and focus on ROI.”
Dorsey, who arrived at Rochester, NY-based Chase-Pitkin several years ago to serve as its financial controller, came with computer networking experience that led to his dual role as controller and CIO in charge of the IT department.
With his combined skills, Dorsey and his financial and technological associates have improved operations, customizing ways to improve control over sales data and loss prevention techniques. Using the Showcase software suite from SPSS Inc., for example, they’ve customized web-based applications that can identify through inventory and financial records missing products down to individual SKUs. “In the past, we were only able to identify shrinkage by categories,” Dorsey says. “This is clearly a competitive advantage for us.”
The Showcase system has enabled Chase-Pitkin to reduce shrinkage over the past year and a half by $600,000, or 15% of total shrinkage of $4 million, Dorsey says.
In more typical loss-prevention technology applications, he says, retailers rely on IT experts who focus on inventory and basic POS data to identify where shrinkage is occurring within product categories or departments. Simply combining inventory records with POS data, for instance, can help to show discrepancies within categories or departments where sales don’t match changes in inventory.
Chase-Pitkin goes a step further, Dorsey says, by mixing in more in-depth financial data from general ledgers, for example, records on product transfers between departments or stores, on damaged products, on markdown prices. “As a bean counter, I understand that forward and backwards,” Dorsey says. “The challenge is to understand what should be on the shelf in terms of units and dollars.”
Before it implemented the ShowCase system, Chase-Pitkin had to rely on physically counting inventory in each of its 17 departments, with a total of more than 39,000 items, then comparing that to sales records and summarizing results at a department level.
But without a way to drill down into information on the status of inventory at the item level, it was nearly impossible to tell managers which SKUs had most likely been stolen, which had been debited from financial records due to damage, or which had been simply transferred to another store.
The lack of item-level data can leave store managers and loss-prevention managers guessing at which SKUs were being stolen, and which were accounted for by some obscure accounting entry, Dorsey says. “We didn’t want to be chasing accounting phantoms,” he says. “We wanted to know how shrinkage was tied to the general ledger.”
Back...
