How about earning Rs 50,000 more every month from your jewellery business without any further capital investment? Shaudhan Desai shows the way.
Do you know that just three mistakes per every 10,000 transactions (like sales, purchase, tagging, issue, receipt etc.) are enough for any jewellery showroom to lose Rs 50,000?
Yes, as the precious metal is getting more and more precious by virtue of escalation in prices, making mistake is getting more and more costly for the jewellery businessman.
Thus, if a proper error proofing or mistake proofing environment is created in your showroom, chances are bright that you may end up saving more than Rs 50,000 a month which are lost only due to avoidable petty and still genuine mistakes by people working in the organization.
I am not talking about theft or malpractices in the company. No. But even if the entire staff is genuine, the company can loose such a big amount only on account of genuine mistakes which could have been easily avoided by putting proper systems and IT infrastructure in the company.
Let us have a quick look at what kinds of errors are possible in a jewellery showroom?
Entering a wrong Net Weight at the time of Label/Barcode entry. For e.g. entering weight as 12.36 instead of 12.63
Entering wrong labor charges. For e.g. entering Rs 200 instead of Rs 300
Making mistake while adding/reducing of items. For instance, if a customer wants pendant from one set and necklace from another set, at the time of switching chances of errors in weight calculation, labor calculation etc are possible
Giving more discounts than applicable limits.
Errors made during issue/receipt of weight from the goldsmith/karigar/artisan.
Errors in reconciliation of stock (As once barcode tags are affixed, actual weight is not known unless they are removed)
Calculation errors in customer bills as well as goldsmith/artisan accounts
The list can simply go on and on. Business of jewellery retail is so complex that possibilities of errors/mistakes (both genuine as well as deliberate) are almost 150 areas in an entire day's working. Thus, if proper error-proofing arrangements are not made, it is easy for any showroom to lose up to Rs 2,000 per day which is equivalent to almost 70 mg of gold!
What is error-proofing?
Before going in further details, let me explain the concept of error proofing or mistake proofing. Error-proofing refers to the implementation of fail-safe mechanisms to prevent a process from producing defects. This activity is also known by the Japanese term poka-yoke.
Although this common-sense concept has been around for a long time, it was more fully developed and popularized by Shigeo Shingo in Japan. The philosophy behind error proofing is that it is not acceptable to make even a very small number of defects, and the only way to achieve this goal is to prevent them from happening in the first place.
In essence, error-proofing becomes a method with 100 per cent inspection at the source rather than down the line, after additional value has been added (wasted). Achieving extremely high levels of process capability requires this type of focus on prevention rather than detection.
What Causes Errors?
Most errors in business are caused by some form of human error. Often people may not even be aware that they are taking defective actions, or they may be aware, but fail to take any action.
The Cost of Errors
Although there may be an attitude in a business that the 'odd' defective item is not important, this can set an adverse business culture. Inspecting goods to check for faults can be seen as time consuming and time has a close bond with cost. However, the 'odd' defective item still remains unacceptable as it results in wasted material, effort and cost. In addition, each time a customer or client receives a faulty item, they lose a little bit of faith in your company and may even start to seek out other stores with more consistent quality.
Cost of errors in billing lesser weight or stock reconciliation can be very costly for any jewellery showroom in view of soaring metal prices.
You may not realize it, but you probably encounter many examples of error-proofing in your every-day life, as outlined below:
Everyday examples:
For some file cabinets, opening one drawer locks all the rest, reducing the chance of the file cabinet tipping.
Electronic door locks can have three mistake-proofing devices:
Ensures that no door is left unlocked.
Doors automatically lock when the car exceeds 18 miles an hour.
Lock won't operate when door is open and the engine is running.
A tennis ball hung from a screen in your garage can make parking easier, and avoid crashing into items stored at the front of the garage.
When you close a computer file, the operating system may ask you if you want to save your work first to prevent losing it inadvertently.
A patient about to undergo surgery for a problem on his right arm, concerned about reports of surgery accidents, wrote "Wrong Arm" with a magic marker on his left arm.
The spell-check feature on a word-processing program.
Categories:
You can see from the examples above that there are three basic categories of error-proofing:
At the simplest level are WARNINGS that provide quick feedback of a potential problem, like a smoke-alarm or the warning lights on your car instrument panel.
Automatic SHUTDOWN controls force the problem to be corrected before resuming production, such as the vehicle electrical test mentioned above.
AUTO-CORRECTION controls provide an integrated test-feedback-repair loop, such as the spell-checker in a word processing program.
Application:
Error-proofing is an excellent activity to involve the workforce in continuous improvement. Many poka-yoke ideas relieve stress from operators by eliminating the need to concentrate on mundane activities and by providing more capable tools to get the job done right consistently. And remember, operations that require more finesse, adjustment, judgments are not just a quality risk, they also take more time, and are therefore more wasteful than they could be in terms of productivity and quality.
Using a Failure Mode and Effects Analysis (FMEA) is a great way to get started, because the FMEA asks many of the same questions, and provides a prioritization of the potential errors. A Cause and Effect Diagram (Fishbone Chart) may also be a useful tool to organize your efforts.
Examples of error proofing in jewellery showrooms:
Weighing the items again at cash counter before delivering to clients at the time of billing insures from error at the time of tagging
Verification of piece wise stock at the end of the day before putting it in vault ensures quick action against loss of goods due to human error or shoplifting.
When you have trained your sales people to replace all empty slots with items as soon as any item is taken out for showing the same to customer, it saves lots of time at the end of the day in stock counting.
Taking photo-copy of ID proof of customers when customer pays by credit card helps from losing money in credit card frauds.
Using KARAT METER to verify the purity of gold before buying from customer, helps reducing losses from wrong judgment.
Other examples in jewellery retail:
Error proofing is highly sought for activity in jewellery retail business as there are many activities which are pro-error generating. For instance, goldsmith/karigar metal payments, physical stock reconciliation, losses due to incorrect making charges at the time of billing, losses due to calculation errors in billing at the time of complex situations like selling diamond, stone or jadau jewellery along with metal settlement by scrap purchase (which was sold by your own store) and adjustment of advance or gold schemes or gift vouchers.
In case of jewellery showroom management, a very good business management software written by people having expertise in jewellery business and having proper knowledge in how and where error proofing is required can make a huge difference in profitability of any showroom.
Such profits are not tangible at the first sight, but when looked over a period of two to three years, it makes lot of sense as it also sets a proper system of working for future. It is time to evaluate your IT investments (cost of hardware, software, networking etc) from the point of view of how much return on investment do they provide (in terms of error-proofing) instead of looking at them from the point of view of one more category of expenses!
Did you like the article? If more information is required on how to improve management efficiency of your showroom, please SMS "AOJ POKA-YOKE" on 09327450555. You can also mail me on shaudhan@ornatesoftware.com to let me know how I can make "Jewellery Business Mantra's" more enjoyable, informative and readable for you.
Blurb 1
There are many activities in jewellery retail which can generate errors. For instance, metal payments to karigars, physical stock reconciliation, losses due to incorrect making charges at the time of billing, losses due to calculation errors in billing at the time of complex situations like selling diamond, stone or jadau jewellery along with metal settlement by scrap purchase and adjustment of advance or gold schemes or gift vouchers.
Blurb 2
Evaluate your IT investments (cost of hardware, software, networking etc) from the point of view of how much return on investment do they provide (in terms of error-proofing). Don't look at them as one more category of expenses
How about earning Rs 50,000 more every month from your jewellery business without any further capital investment? Shaudhan Desai shows the way.
