Strange ReTales: Something Doesn’t Add Up
I’ve got no real point to this anecdote this week. I just wanted to reminisce and allow readers to bask in some corporate schadenfreude.
I dislike legacy systems. In fact I may have already mentioned my feelings about them upon occasion.
At one job I had the company’s sales processes were burdened by not one legacy system but two.
There was the point of sale system, through which you booked your customer’s orders, collect payment, and set up delivery.
And then there was the inventory system, which of course let you know what was in stock to sell, and what was on order from suppliers.
Naturally, the two silos were incompatible, and POS and inventory couldn’t communicate in real time.
That meant that sales invoices needed to be manually reconciled against inventory, so that on-hand inventory could balance against goods sold.
Consider that this was a national retailer, with hundreds of locations, and a dozen regional warehouses. Consider the potential for inventory shrinkage and error, reconciling sales invoices to inventory, AFTER the sale.
It almost goes without saying that, in a company this poorly run, they decided that the people best suited to doing reconciliations wasn’t back office staff. After all, more office personnel would increase overhead.
No, they thought the best people to reconcile invoices were the salespeople.
Needless to say, this wasn’t popular with people who work 100% on commission. In part because many salespeople see back office work as somehow “beneath them,” but mostly because that meant it cut into their time on the sales floor.
Do you know what happens when you give a directive to commission salespeople that impedes their sales efforts?
They don’t do it.
Now contemplate the domino effect of poor compliance with reconciliation on a national level.
You don’t have to just contemplate it, I can put a number on it. For one fiscal year the discrepancy between goods invoiced and inventory booked out of the warehouses was $200 million.