It is a known fact in retail that service department management is challenging, but if well managed with regards to input costs, preparation efficiency and pricing, these departments contribute significantly to the overall profitability. On the other hand, left uncontrolled or improperly managed it will lead to high wastage levels, inaccurate costing, allow room for pilferage and significant losses to the operation. In the development of Arch Retail (in-store management solution) and Arch Enterprise (central merchandise management system), care was taken to address these service department challenges.
This article presents a case study where an Arch User, operating four full services stores in an African country using both Arch Retail (in-store solution) and Arch Enterprise (centralised management), applied Arch Service Department Functionality in the Take Away, Butchery, Bakery and Deli at three of their stores to tighten control and improve operational efficiency and allow for:
- Inventory accuracy, by department, by ingredient used in production;
- Inventory visibility and production item control;
- Waste measurement (historically wastage was valued at zero cost);
- Production by item, thus real margin.
Comparing January to September 2018 results to the same period in 2017 (Arch recipes functionality implemented 1 January 2018) the results of which are:
* Note: 10% production tax is payable in this country on everything produced in-house.
From the case study it is evident that implementation of Recipes in the service departments of this has Arch User reduced the unknowns in production cost management significantly, tightened controls, thus reducing wastage and pilferage and overall, increased profitability.