Big Store Business Methods
( Originally Published 1912 )
Big stores are the result of organization, made possible by the concentration of capital.
Such organization would not be effective, or possible, without the modern systems, which permit all the operations to be directed from one head.
The object of this chapter is to so describe and explain and illuminate these modern systems that the whole business world will more clearly under-stand them. When they are understood, the principle on which they are operated can be used more successfully by all.
Thirty Stores in One
If a merchant who has a small store thinks that he has difficult problems, what would he think if he had thirty stores, with thirty heads like himself, and thirty delivery systems, and thirty bookkeeping departments, and thirty sets of employees, and thirty sets of charge customers, and thirty sets of cranky cash customers, and thirty sets of kickers, and thirty different styles of shoplifters and deadbeats—all to look after, all to whip into shape, and show the stockholders a profit?
Big Store Difficulties
Carefully analyzed, the big store has its disadvantages, as well as its advantages. In reality, the modern big store is twenty, or thirty, or forty stores combined. Some people might think that with the combination of so many stores, the problems of each would be lessened. The contrary is true. The problems are multiplied in an increasing ratio.
The small store, by itself, is free to act independently. But each department in a big store must act in unison with all the other departments. It is hedged about by the customs, policies and traditions of the whole store. Its space is fixed, its methods of doing business are fixed, its style of advertising is fixed.
Each department in a big store has to pay its pro-portion of light, heat, rent, clerk hire, delivery, bookkeeping and advertising, and has to pay its percentage of big salaries to big men.
Then in addition, if a department makes a big success, it does not keep the profits itself. It turns them into the main office. The directors dispose of the profits as they think best, either turning them over to the stockholders, in dividends, or using them to bolster up weaker departments.
Another important thing may handicap a department in a big store. The head of the department may find something exceptionally good to buy. If he were in business for himself, he might buy it and make a big "killing," but his purchasing order must be countersigned by the head purchasing agent, usually called "the Merchandise Man." His superior knows • that several other departments are overstocked, and therefore he holds this department down.
The Eight Sub-divisions
The modern big store is a marvel of organization.
Its operation can be subdivided into eight parts:
1. The buying of goods which are to be sold.
2. The buying of supplies for own use.
3. The receiving and distributing of such goods and supplies to various departments.
4. The actual selling of the goods. This includes not only the work of the sales people, but of the decorating department and advertising department.
5. The delivery of goods to the customers.
6. The collection and handling of moneys.
7. The management of employees.
8. The detection and correction of the causes of losses.
If the reader will bear these eight subdivisions clearly in mind, he will be able to realize the importance of what may otherwise seem like "red tape" in the following explanation of the origin and reasons for the use of modern big store methods.
Accurate Records Necessary
The basis of all successful organizations is accurate records. The many different kinds of record books used in a department store are a matter of general interest to the whole business world.
In order to make the whole subject clearly under-stood, we will begin at the very beginning. We will suppose that the store building is completed, that the show cases and counters, carrier system, tubes, etc., are all installed.
Staff of Buyers
The first employees secured by the proprietor or directors is a staff of buyers, together with book-keepers. Now, a buyer cannot buy a stock of any kind without a buyer's order book. Here comes the first problem. Each of these buyers may be an expert in his line, but who will pass upon their combined purchases? Who will balance and be responsible for all of the different purchases of all of the different buyers, so that the store, as a whole, will be run as a unified, harmonious institution, and not as an amalgamation of separate units? This immediately brings forth the need of a chief Merchandise Manager.
The Merchandise Manager
Naturally an old hand in the business would select a merchandise manager first. This manager, in turn, would select his buyers, with the approval of the proprietor or directors. He is sometimes sup-plied with formal purchasing orders, which represent the house.
These purchasing orders soon become familiar in the channels of trade frequented by the house. In modern business, many big firms adopt a form purchase order, which becomes familiar to the houses selling to it. Consequently, any irregularities of buying can be quickly detected by the one who sells. In some modern businesses they have a purchasing committee, instead of a single individual, to pass upon the weighty questions of buying.
Buyer's Manifold Order Forms
Each buyer has a manifold order book, in which he makes out the order for the goods which he desires. Each order, if above a certain amount of money, which varies in different stores—must go to the Merchandising Manager or Purchasing Commit-tee, for approval. It is the usual custom for the buyer in a department to take his orders in person to the Merchandising Manager, so that he can answer questions in regard to his stock and the advisability of making each purchase. If the Merchandising Manager approves the order by signing it, then the buyer takes it back to his own department, and either gives it to the travelling salesman, or mails it to the house from whom he is buying.
Usually there are three copies of each order. The original copy goes to the seller. The first carbon copy remains in the order book, which is kept in the respective department. The second carbon copy goes to the accounting department, which properly enters it and then passes it on to the receiving department, unless the "Blind Tally" is used.
Petty Purchase Book
For small purchases, in some stores the head of each department is allowed to use a Petty Purchase Book without approval. In other stores even these incidental purchases have to be approved by the Merchandise Manager or Committee.
There are two ways of receiving goods on a "blind tally." One is to furnish the receiving clerk with a duplicate of the order, minus quantities and prices. When he has filled in the quantities received, his order is then compared, in another department, to the original order. The other way is to have him make, on blank record forms, a complete, itemized record of all goods which he receives. This record is then compared, in another Department, with the original order. The principle in both is the same, namely, to make it necessary for the receiving clerk to actually examine all goods received.
The "blind tally" principle prevents carelessness, collusion, dishonesty and price leaks. When inaugurated it very frequently shows at once where some of the profits are going.
"Special Order" Receipt Book
Since most goods come by freight, if any arrive by express, it is natural to suppose that it is a special order or part of an order. Hence it is receipted by some stores in a special book kept for that purpose.
Short Ticket Book
Some receiving dep'ts do not check the contents of cases, boxes, etc. They merely receive them, and make a careful record of the bulk goods, cases, boxes, or containers. Some receiving departments have what they call a "Short Ticket Book." This is a duplicating book, in which is recorded all short-ages, broken cases, damaged goods, etc.
Most stock rooms are divided into two parts: active stock and reserve stock. The reserve stock department has a set of receiving books corresponding to each department in the store. This is especially true of stores which fill many mail orders out of reserve stock.
From the receiving department the goods go to the stock room, followed by the invoice. In the stock room the goods are checked over in turn and signed on the stock book, and a memo. made of the quantity in a book called the "Stock Room Book."
The Stock Room Book
Naturally, when any goods are taken from the stock room, the quantity, date, description, etc., must be entered in the "Stock Room Book," so that at any time the head of the stock room can make a report on the quantity of goods, the kind he has in stock, and how long he has had them.
Before goods can be sold, they must be taken out of the stock room and put in the regular departments. Also before they can be sold they must be marked properly. Hence there are "Markers' Instruction Books."
Markers' Instruction Books
These are for markers, telling them just how to put tickets on the various goods in the stock room.
The uninitiated might think that, with so much complication, it would be like "hunting for a needle in a hay mound" to get anything out of the stock room. Not so.
When a department wants goods out of the stock room, it makes out a requisition in triplicate, sends one copy to the stock room, one copy to the office, and keeps the third copy itself. The head of the department signs this requisition. Every store has its own style. Some one is designated to receipt for the goods when they come from the stock room to the counter or department.