CASE
Bill’s Hardware
It had been a very busy week at Bill Murton’s hardware store. A storm had blown through early in the week, and sales of tools and repair parts had been brisk. This morning was relatively quiet, however, so Murton was using it as an opportunity to look over his shelves to get an idea of inventory levels. Some items had sold much less than he would have expected; others had sold out completely.
I sure wish I could predict what will be sold each week, he mused. It seems like I always have too much of some things and not enough of others. I wonder if the POS system that our cooperative is considering would help me deal with this uncertainty.
Bill’s Hardware is a member of a hardware store cooperative, a group of more than 300 independently owned hardware stores that banded together for greater buying power and better merchandise distribution. Many of the items carried by a typical hardware store are similar. By buying these items as a group and storing them at a few centrally located distribution centers, individual stores can achieve economies of scale, allowing them to compete better with large nationwide chains. The cooperative is member owned. An annual membership fee and a service charge are applied to the cost of the items that a store purchases through the cooperative. Any revenues generated beyond the cooperative’s operating costs are returned to members as a dividend.
Typically, a member store reviews inventory once a week and places orders that will bring stock back up to a target level. That level is the quantity of an item that, based on the time of year, the store owner wants to have on the shelf. Owners place orders by using a PC-based software program and a modem over a dial-up telephone connection to the cooperative’s computer. The cooperative leases a fleet of trucks to deliver goods weekly to member stores from one of three distribution centers. Each geographic area receives shipments on a designated day. Surges in...