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Profitable Times Newsletter

Product Sharing

Like most interactions things go better when there is an understanding of process. To set the stage it would be best if museum management defined the role of the store and clearly stated, preferably in writing, that it is a department like others in the museum with a mission, budget, financial responsibilities and performance expectations. This understanding could go further and make it clear that while one of the expectations is cooperation with other departments it is not an open communal resource.

Codifying the process is part of making sure interaction flows smoothly and is well documented. Managers who are too casual about the process, often in an attempt to demonstrate full cooperation, send the wrong inventory management signal and inadvertently assist the deterioration of inventory control. By setting parameters you can define the interaction.

How do you want the request for product and fulfillment of those requests to flow? To control the process it should be made clear that nobody can simply come into the store during, before or after hours and take product for another department's use… or for any other reason. For the transfer of product on-hand (not special orders) the forms to be used can be available at the cash-wrap so the manager doesn't have to be involved in every transaction. These completed forms then become part of the support documentation for inter-departmental transfers and charges. The form includes:

  • Description/title of the product
  • Number of units requested
  • Quantity on hand (before the transfer)
  • Retail price
  • Information required by the accounting department
  • Department and person requesting the product, signature and date
  • Store staff person processing the request, signature and date

I'd like to elaborate on two pieces of information on the form. The quantity on hand is recorded in order to quickly identify if the requested number of units will too greatly impact the inventory level. The goal is to facilitate a simple processing of requests without requiring the manager's attention for routine transactions. However, a parameter for requests should include a percentage of quantity on-hand trigger point above which store management approval is required.

If there are too few items available to satisfy the request or the request severely depletes the quantity on-hand for store customers the conversation may be able to be moved to the advantages of having advance notice of needs. From the opposite perspective, a large on-hand inventory for museum published books and catalogs, for example, may also highlight that the retail staff should be consulted when initial publication plans are made to make sure quantities, especially if they are primarily to be sold through the store, are reasonable.

The retail price is listed on the form because it is recommended the cost to the department requesting product is a percentage off retail not just cost or cost plus. One advantage of using retail is that cost is kept confidential. If cost is revealed to anybody it should be assumed that it will become public knowledge. There are few people outside retail that understand the costs associated with running a museum store that must be covered by the mark-up. To most, the retail price for a product or product line that you spent a great deal of time researching, negotiating and processing will not be understood and seems excessive. Exceptions to this approach can always be made but the store is in a stronger position to be compensated for its work when starting from the retail price which is affected by a host of post-purchase (cost) input. Unfortunately, there will always be people in museum management who will not appreciate that you are trying to run the store like a business and will challenge or violate the guidelines you have established.

Onsite sales by third parties, including groups not associated with the museum or other museum departments, especially if the store helped to secure the products being sold, should either be run through the store or have part of the income credited to retail. Although crediting the store with some of the sales made through other museum departments is like transferring revenue from one museum pocket to another it helps to properly reflect comprehensive retail activity. This is also important because, using an old retail adage, a customer will only open their wallet once. Although not exactly true, this adage reflects the fact that sales made outside the store will often erode sales within the store.

A benefit of processing transactions directly through the store is that the retail staff knows how to do it right and have established standards for the customer experience and accountability.

 
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