Mooremans Hardware B

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Mooremans Hardware B

• Group 8
• Jeremy Archibald
• Catherine Angel
• Jerry Bell
• Alison Moss

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Introduction

• Privately owned hardware stores
• 7 rural locations
• Central IL and IN
• Based out of centralized warehouse

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Case Background

• Mooremans lacks standardized system for returns
• 30 days
• Full Refund
• Original Box
• Cash for cash, etc.
• Returned merchandise recorded in inventory
• IBM (POS) terminals
• Exchange defective merchandise

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Company Strategy
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Company Strategy

• Overall Strategy
• To build and maintain long-term customer
  relationships through quality customer service
• Merchandise Return Strategy
• Create customer loyalty through a practical and
  simple merchandise return system

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Merchandise Return Control Objectives
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Merchandise Return Control Objectives

• Reduce Total Amount of Returns
• Reduce Customer Loss
• Reduce fraudulent returns
• Keep track of returned inventory (POS)

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Risks Associated with Minimizing Returns
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Risks Associated with Minimizing Returns

• Merchandise may be damaged during delivery
  process
• Customer vandalism and accidental damage
• Customer dissatisfaction of product selection

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Controls for Reducing Amount of Returns
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Controls for Reducing Amount of Returns

• Pre-approved vendor list based on quality
• Warehouse receiver breaks shipments down into
  skus and inspects quality
• Inventory shipped directly to stores inspected by
  store managers

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Risks Associated With Reducing Customer Loss
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Risks Associated With Reducing Customer Loss

• Angering the customer by selling inferior goods
• Confusing customers with lack of specifics in
  return policy
• Inconsistent return policy due to employee
  discretion

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Controls for Reducing Customer Loss
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Controls for Reducing Customer Loss

• Refund the same type of payment as original sale
• i.e. cash for cash
• 30 days time period, giving customers ample
  chance to return

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Risks Associated with Fraudulent Returns
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Risks Associated with Fraudulent Returns

• Customers might return items not purchased at
  Mooreman locations
• Shoplifters may steal items and return them
• Customers may create defect themselves and then
  return them
• Ex Worn out drill bit

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Controls for Reducing Fraudulent Returns
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Controls for Reducing Fraudulent Returns

• Customers must return merchandise in same box
• SKU system keeps track of sold and returned
  inventory

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Risks Associated with Keeping Track of Returned
Inventory
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Risks Associated with Keeping Track of Returned
Inventory

• System crash
• Incorrect data entry
• Employee manipulation

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Controls for keeping track of returned inventory
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Controls for keeping track of returned inventory

• Password sensitive intranet
• Business management software
• POS System

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Similarities to Fashion Retailer
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Similarities to Fashion Retailer

• Both want to maintain customer relations
• Prevent fraudulent returns
• SKUS
• Updated inventory accounts

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Differences to Fashion Retail
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Differences to Fashion Retail

• Returns minimized through fitting rooms
• Fraudulent returns easier to detect with store
  specific designs and marked tags
• Fashion retail does not have different outside
  venders
• Inventory turnover rates
• i.e. seasonal fashion

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Recommendations
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Recommendations

• Receipt requirement
• In-store credit if no receipt
• Easily accessible return policy
• Return policy sign for customers
• Print return policy on receipt
• Sales staff knowledgeable of products
• Periodically check store for damaged inventory
• Cant return perishable products
• I.E. caulk, paint, oil
• Entering defect reason to keep track of problems
• Hard copy and backup drive for returns system

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FPC
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FPC
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Costs of Recommendations
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Costs of Recommendations

• Prevention
• Signs stating policy
• Printing policy on receipt
• Training employees
• Hard copy and backup drive
• Inspection
• Labors cost of periodic checks
• External Failure Costs
• Shipping products back to warehouse vendor

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Benefits

• PreventionFailure
• An ounce of prevention a pound of cure
• Our recommendations will help minimize total costs

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Questions?

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