Item Cost in Real Time

[RollerBall]

When received stock is added to the stock file, only Part # and number of items is asked for to create the 'Read' file. This means that item costs in the stock file are never updated once they have initially been created unless you go back in and do them manually. This could become quite a job in an environment where you have quite a few items and sales are pretty brisk.

I wonder if it would be possible to add an extra column in the 'Read' file to include cost(s) of item(s) being added. Then as part of the add to stock file process, to update item costs in real time (ie new cost = average of old cost * number already on file + cost of item being added*number being added).

I think that would be a really useful feature. Waddayou think??

[ToPS]

RollerBall,

couldn't agree with you more.
This would help a lot and when all values and stock quantities are correct the total value of stock on hand could be easily calculated/reported.

Some time ago I mentioned something along these lines to Dale but you expressed yourself a lot better.

Calculation:- # in stock X current unit value = A
# received x new unit value = B
A + B devided by total items = new unit value

or something like that.

We will definately use such a feature.

Regards

ToPS

[Dale Harris]

Well that might work for a store where the manager / owner is the person who receives the merchandise shipments. However if you are a larger operation do you want management to determine the prices for the items you sell in your store or the receiving clerk?

[RollerBall]

Doesn't come into it - sure, selling prices are decided by management but cost is a given. This is all about giving you a bit more of a handle on your inventory. If it could be done all your costs in your stock file would be real costs so you'd always know exactly where you are and could make much better pricing decisions.

Here's an example. I have 100 items in stock costing $10 each and my stock file shows the $10 figure. I buy in 200 more at $5 each but the stock file figure stays at $10 unless I do the math and change it. I want to do an in-store promo and would be happy to sell my promo stock for $7 each. However, if I'm really successful and sell right out I look to be making a loss on the last 100 (ie the ones that were in stock at the original price).

However, if the system did the math for me when I added the promo stock, checking the stock file afterwards would tell me my new real cost is actually $6.67 so if I want to I can afford to shift the whole lot at $7 - but in fact I'd be making hardly anything at all on each sale.

Anything that does that kind of job for me and saves me having to grab my calculator I'd find real handy

PS

Just because you buy in stock at a lower price doesn't mean you automatically then lower the price to keep the same % margin. But if as is more likely my supplier raises the price I'd sure like my costs in my stock file to reflect that and not just stay at the original (lower) figure. Then if I can't be bothered as a manager to regularly check my stock file to make sure I'm making the sales margins I need to that's up to me (I'd be a crappy manager but that's a different issue) but I'd at least like to know that the info it contains is correct.

[Dale Harris]

RollerBall,

Still the same deal, you are trusting your receiving clerk to enter the cost. As you pointed out the cost for this particular item may be a one time promotion. Does he lower the cost now even though the cost will be back to normal next time?

There may be math involved. One of my suppliers prints the manufacturer's price on each line and then adds 10% to the total at the bottom for his profit, none of my other suppliers does this. Do I trust my clerk to know which is which?

And even if you change the cost what about the price? It is fine to say that you have a standard markup but many shops will not have the same markup on hundreds or thousands of different things. Plus what if your price times markup comes out to 25.62? Do you want to round that to 25.98, or 25.99, or 26.00, or give the customer a break and charge 25.00?

Plus if cost and price are on autopilot does that mean that management is out of the loop? Since management no longer is in the process will they even know if some whack-o supplier decides to double his price or there is an error on the packing slip and you are being charge 10 times the correct price? Particularly nasty if there is a 30 day time limit to correct errors from your supplier.

So price and cost are not a cut and dried thing, there are options and it is management that needs to choose those options, not the receiving clerk.

[RollerBall]

Sorry Dale, I don't follow. I precisely didn't say cost and price are on autopilot. I said price is a management decision (ie not a receiving clerk one) that is based (mainly) on cost. But cost is a given - whether someone types it in correctly or not (ie it's decided by your supplier, not you). But for management to make the right decision about price they need to know what the actual cost is.

As for trusting my receiving clerk, I'm already trusting him (or her) to type in the correct amount received (ie 100 and not 1000 where an error would have a huge effect on my stock file) so why shouldn't I trust them to type in the actual price paid as well? And if I'm asking them to do that it's MUCH more likely that we will pick up if a supplier charges the wrong price by mistake on a delivery invoice.

But at the end of the day it's all about having correct data. You MUST have that to run a business properly. And a cost figure that I put into a stock file 18 months ago and have never changed is BOUND to be wrong today. And it so needn't be if the system could update costs every time an inventory receipt was made. I just can't see how anyone could argue against it - whether the system can be made to do it is obviously another matter though

(Edit)......

Sorry to keep popping in and out adding bits Dale, but I'm doing other stuff as well. You said

the cost for this particular item may be a one time promotion. Does he lower the cost now even though the cost will be back to normal next time?

The whole point is that once the system is running in this way nobody, the clerk, you or anyone else has to change the cost ever again. The reason is the system ALWAYS shows the true cost of the items you have in stock.

The fact is that if you have 100 in stock that cost you $10 ea and you buy in 200 more at $8, the TRUE cost of your whole stockholding is $8.67 and it's totally unrealistic to keep the stock file cost at $10.

Dale, this is important for a small company. They need to know how to realistically price slow moving items (stock reduction) and as I've already shown, how to price items on promotion. Also, they have to produce data for their annual accounts which must include their total stock value. For cost reasons, DHPOS may be the only system they have that can do this for them without doing a full manual stocktake.

Plus of course, this is how all stock control systems work and if DHPOS could as well it helps to advance it a little bit more towards the next level.

[Dale Harris]

Rollerball,

Well I see I cannot convince you what a horrible idea this is and in keeping with my policy of no longer saving users from themselves I will add this to the "think about it" pile.

Sometime in the far distant future, when I have added all the features that are actually useful, and I haved not received a donation in like forever, and am feeling particularly nasty toward users in general, I may punish you all by adding this feature.

Don't wait up.

[RollerBall]

Heyyyyy..... that reminds me. Don't forget my little Paypal donation a little while back that wasn't for anything in particualr (obviously now have to fall back on blackmail to get this)

Aw heck just remembered - it was for a new ink cartridge after you said you'd used about 10 printing off the BIG graphics - although I never believed you then and I'm not sure that I still do

SHOUTS LOUDLY.....

ToPS and all you other sensible users out there. Cmon in here and give me a hand. This guy can always be overwhelmed by numbers. It's a bit like Gullivers Travels except he gets a bit more violent when he's pinned down

[Dale Harris]

Well that is true. If you can get the local villigers to storm my house with pitchforks and firebrands to ask for this feature that will positively get my attention. However there will have to be a LOT of them.

[Sulk]

I have an idea that I posted before about storing the invoice#, items, etc. of the items that were received for reference purposes particularly by comparing various suppliers' cost price. I believe it goes along with the subject matter of real-time cost.

After putting in a lot of thought, I am divided about Rollerball's idea since giving the receiving clerk the full power of inputting the cost can cause some major problems in the long term with the trust issue and all.

One possible solution is by having a narrow column (in addition to "Cost") at the "View File" that can be ticked if the cost of the items in it has been verified (c/o an administrative password) by the boss when he has the time. After it gets ticked, the boss or other authorized personel can now update the price. This doesn't mean that the inventory will have to wait for the boss' tick before getting updated. The inventory will still be updated. It's just that the new cost will have to remain in stasis at receive.exe until approval for deployment to the registers.

As you can see, this isn't real-time but it's in the middle ground on where Dale and Rollerball stands.

Any comments regarding this solution? What are the downsides?

[RollerBall]

Glad to see we've got an interesting discussion starting here.

From my experience, DHPOS is used predominantly by what we in the UK call SMEs (small and medium size enterprises). Have to say that this idea of 'input clerk trust' just doesn't arise over here. People do the job they are paid to do or they don't and if they don't they ship out, especially in small firms. You can't afford hangers-on. Having said that, because small firms mean close-knit teams who all know each other, you can usually trust the folks in smaller firms to do a good, reliable job more than you can folks in big companies who identify far less with the workings and results of the business.

And what is also clear is that in small firms the 'Boss' doesn't have the time to 'check the costs' and 'change the prices' manually. He has to be talking to suppliers (and maybe customers) because he's the 'Buyer', arranging advertising and promotions (because he's the 'Marketing Manager'), making sure that stocks are moving off the shelves and not sitting for years in the stock room (because he's the 'Stock Controller') - you get the drift? But he still has to have accurate, reliable data on which to base decisions. That's why anything that will help him save time and effort is GOOD. Come on - if you think it's a good use of time to be manually working out what your real stock costs are every time there is a delivery you are an AMATEUR hanging out here for fun and you're NOT running a proper business. Sorry. *

I also happen to think that this feature would considerably enhance DHPOS and make it far more of a proper stock control system which must also be a good thing in my book.



* Just reread this - sounds 'stronger' than it was meant to be. No intention to offend anyone - hope it's OK. You know how it was meant I'm sure.

[Dale Harris]

Did you ever think of bring up this topic in the chat room. I am there about 2 hours every day.

http://www.home-nets.biz/chat/