cycle counting as a foundation to exceptional shrink performance

Loss Prevention, Auditing & Safety Conference 2009 Title Sponsor:

Cycle counting as a foundation to exceptional shrink performance

Tim FisherBest Buy

Best Buy

Consumer electronics store 1,023 stores domestically Over $40 billion in revenue 140,000+ associates

Family of Brands

Why cycle counting is important to Best Buy

accountability

Leadershipengagement

Awareness/Communication

InventoryIntegrity

Best Buy’s“Shrink”Program

Why cycle counting is important to Best Buy

Physical Inventories only provide insight once a year

Cycle counting provides the how behind inventory integrity on a weekly basis

Cycle counting creates transparency Gives visibility to losses which provides motivation for stores to act

Provides not only insight into losses but drives in stock Allows count corrections to adjust inventory

How Best Buy cycle counts

Counts are done weekly and reconciled against current on hands Stores have a dedicated “counter” to perform counts and reconciliation

Focused on high loss and high turn items Eighty percent of counts are centrally driven

based on actual physical inventory trends Twenty percent are locally driven based on

market and individual location identified needs Anticipated shrink rate is calculated and

published weekly Down to the department and subclass level

Cycle counts

National Shrink Barometer

What Best Buy get from cycle counts

On a dollar for dollar basis the night of Physical Inventory we have already identified between 90% and 96% of our shrink.

Benefit in in-stock/inventory integrity Creates confidence for assume receipt of DC

trailers and approved drop ship vendors Facilitates PO/invoice matching to speed

reconciliation and vendor payment Reduces chargeback's and invoice disputes

In stock position

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FY02

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FY09

0.00

0.50BBY Shrink