AQIP Bookstore Team Fall 2009
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AQIP
Bookstore
Team
Fall 20092|Page
Team members and sponsors ……………………………………………….……………………………………………… 3
Project Statement ………………..………………………………………………………………………………………………. 4
Operational Definitions .……………………………………………………………………………………………………….. 5
Background of Project Development …………………………………………………………………………………….. 8
Defining the current process …………………………………………………………………………………………………. 9
Flow charts of the current process………………………………………………….………………………………. 12
Analyze the current situation ………………………………………………………………………………………………… 17
Price comparison chart for MBS vs. Alpine ………………………………………………………………..…… 19
Line Graph‐ profit over time………………………………………………………………………….………………… 20
Analyze cause for current outcomes ……………………………………………………………………………………….. 22
Force Field Analysis ………………………………………………………………………………….……..…………….. 22
Fish‐bone diagram ……………………………………………………………………………………………..………….. 25
Improvement Theory & Implementation Plan ………………………………………………………………………… 27
Cost to Implement Improvement Theory ……………………………………………………………………….. 28
Financial Reports ……………………………………………………………………………………………………………. 29
Anticipated results ………………………………………………………………………………………………..……….. 32
Forecast ………………………………………………………………………………………………………………………….. 33
Customer Impact ………………..………………………………………………………………………………………….. 34
CLT Feed Back Form ………………..……………………………………………………………………………………… 35
Gantt Chart ……………………………………………………………………………………………………………………. 36
Alignment with AQIP Criteria and Engrafting into the College System .………………………….......... 37
Studying Results‐the future Plan ………………………………..…………………………………………………………. 38
Next AQIP Team ……………………………………………………………………………………………………………………. 39
Thank You ……………………………………………………………………………………………………………………………. 40
Appendix I – Category Sales.………………………………………………………………………………………………….. 41
Appendix II – Student Survey ..………………………………………………………………………………………………. 463|Page
TEAM MEMBERS
Annabelle Butler (Team Leader) ‐ Bookstore Manager, Alpine Campus
Paige Lillie (Scribe) ‐ Bookstore Manager, Spring Valley Center
Mary Lehrman – Budget/Finance Analyst
Linda Shoup ‐ Accounts Manager, West Garfield Campus
TEAM SPONSORS
Steve Boyd ‐ Purchasing Manager
Linda English ‐ Chief Financial Officer4|Page
To maximize the improvement of college wide bookstore financial performance as
measured by net bookstore income, specifically by implementing good financial
reporting and sound purchasing practices.5|Page Auxiliary Fund: Provides services such as bookstores, residence halls, food service, and non‐credit courses to students and staff. Activities in this fund operate on a break‐even basis; revenues being generated from the sale of inventory or services equal or exceed expenses. Under Amendment I this fund meets the criteria of an enterprise fund. Balance Sheet A statement that compares assets, liabilities, and owners equity in order to indicate the financial condition of an organization at a specific point in time. Buyback Service provided to students where they can sell back their textbooks after they are done using them. Various buybacks are done throughout the semester. This is outsourced to a wholesale company to insure that all books that are current can be bought from students even if the bookstore does not need them. Buying Group An organization that allows retailers to join together so that they increase their buying power thus lowering the cost of resale goods to everyone involved. CAMEX The annual Campus Market Expo, which is an educational event and trade show solely for school bookstores (K‐college). The educational sessions help improve knowledge about trends in the industry. The trade show provides a one‐stop buying experience with show specials that save the COGS for the bookstores. More than 1,110 college stores and more than 700 exhibiting companies attend the event in a given year. Cash Drawer Summary Report Report that gives detailed information about sales for a specified length of time including sales by category, total by transaction type, non taxable sales, and gross sales. Also facilitates the closing and reconciling of the cash drawer prior to taking the money to the bank. Central Services Bookstore Store that is run by the Purchasing Department of the college to help the smaller sites order logo merchandise. Also has a retail store that sells to the general public and faculty and staff. Commuter Site Bookstore Non‐residential campus sites where limited merchandise is available for sale. Students at commuter sites order their books directly through MBS Direct, which results in a monetary rebate to the site.
6|Page Cost of Goods Sold (COGS) The total cost of goods sold for resale, including freight. The calculation of COGS is Cost of Goods Sold = Beginning Inventory + Purchases ‐ Ending Inventory. Cybercafé The bookstore business model that is currently utilized at the Leadville Campus. The bookstore also serves as a café where customers can sit and enjoy free wireless network while being able to purchase specialty drinks and food. End Column Pricing When purchasing merchandise from a wholesale company, the end column price is the most steeply discounted price for purchasing the maximum quantity. Gross Profit on Sales The difference between sales and the cost of the products, before deducting overhead costs such as payroll, travel, etc. To calculate gross profit, you must subtract Cost of Goods Sold from Net Sales. KayCee Software Point of Sale (POS) software used by residential bookstores and the Central Services bookstore to manage the cash register, inventory levels, and book adoption process. Inventory Valuation Report Report that gives the current value of inventory in latest cost, average cost, or retail worth. It is broken down by sales categories. List Price Suggested retail price of a product. Margin The amount of gross profit made when an item is sold. Expressed as a formula, Margin % = (Retail Price ‐ Cost) / Retail Price. For example, if a shirt is acquired for $2 and sells for $3, it has a margin of 33.3%. Markup A percentage added to the cost to get the retail selling price. For example, if a shirt is acquired for $2 and sells for $3, it has a markup of 50%. MBS Direct A branch of MBS Textbook Exchange, Inc. that provides a virtual bookstore to students. Currently, CMC’s commuter site and distance learning students order their books directly from MBS Direct. Net Price Wholesale price of an item (what we pay for it). Profit and Loss Statement A business report that shows net income as the difference between revenue and expenses. When revenue exceeds expenses, a profit is shown. When expenses exceed revenue, a loss is shown. The report is also known as an Income Statement.
7|Page NACS (National Association of College Stores) A professional trade association that serves higher education retailers. They conduct research, provide education, advocate on behalf of their members, and help them foster strategic partnerships so that retailers can better serve their customers. New Textbooks Brand new books purchased from the publisher at their full cost or from a wholesale company at a slight discount off the publisher cost. Typically 25%‐50% more expensive than used textbooks. Residential Bookstore Bookstore that is operated at all three residential campuses. The bookstore carries everything from textbooks, to school supplies, to logo merchandise, to over‐the‐counter medications, to food and drinks. Sodexo A world leader in Food and Facilities Management services. This company manages the food services at all three residential campuses and the Cybercafé at the Leadville campus. Sundries Miscellaneous items sold in the bookstore. Does not include textbooks or food and drinks. Used Textbooks Textbooks that have already been sold at least once. They were purchased either directly from students at buy‐back or from a wholesale company. Typically 25%‐50% less than new textbooks.
8|Page
When the Bookstore Team originally met we discussed various ideas to be analyzed for process
improvement. We used a cause and effect relations diagram to determine how the various factors in
bookstore profitability relate to each other in an effort to determine our specific “5 Acres” of attention.
The diagram is below:
Textbooks
(0:5)
Non‐Residential Sites Financial Reporting
(2:2) (5:0)
Improve
Bookstore
Profitibility
Floor Space Purchasing Practices
(1:3) (4:1)
Other Revenues
(1:4)
As a result of this diagram, we discovered the two largest causes to focus our attention on are Financial
Reporting and Purchasing Practices. Therefore, each section of this report will be divided into two
separate sub‐sections in order to enhance the focus and attention on each specific “cause.”9|Page
Financial Reporting
The current process for financial reporting varies from campus to campus. There are four common
reports that are currently produced at all campus stores; however, they are run in different intervals:
1) CREN sessions, cash drawers
2) End of Year Inventory totals
3) Accounts receivable end of year tally
4) Summary Budget Report
Monthly Reports:
Timberline Alpine Spring Valley
Cash Drawer Summary Report / Cash Drawer Summary Report / Cash Drawer Summary Report /
CREN‐ Monthly CREN‐ Daily CREN‐Weekly
Monthly Cash drawer summary Monthly cash drawer summary Accounts Receivable Summary
report
Profit and Loss Statement Staff account statements
Budget Report Interdepartmental charges
Forecasting report
Accounts Receivable statement
Semester Reports
Timberline Alpine Spring Valley
Weekly financial report during Semester Cash drawer summary Datatel Budget Reports
rush report
End of term financial report Accounts Receivable Statement
Year End Reports
Timberline Alpine Spring Valley
Inventory Valuation Report Inventory Valuation Report Inventory Valuation Report
Accounts Receivable valuation Accounts Receivable valuation Accounts Receivable valuation
report report report
Revenue & Expense Datatel Budget Reports Datatel Budget Reports
Profit & Loss Statement Profit & Loss Statement10 | P a g e
Cost of Goods Sold End of Year cash summary report
Fiscal Year Comparison
The District Office Store does not run any additional reports. They run their CREN sessions monthly.
The Spring Valley Center currently does not run interdepartmental charges through its KayCee Software.
Rather, they charge the departments directly in Datatel via a Journal Entry against the account numbers
they have provided. During the initial switch over to Datatel, there were some questions regarding
whether the bookstores were double charging with IC’s that ran through KayCee. However, the result of
not running IC’s through KayCee is that the inventory system is not kept up‐to‐date as a result. At the
Alpine campus they run IC’s through KayCee, and then do a Journal Entry in Datatel, followed by a
balanced adjustment in the KayCee system, a very time intensive process. To combat both sides of the
issue, our group determined that it would be best to change the policy so that anyone making
department purchases would have to do so with a P‐Card, as Timberline is currently doing.
Departments would be able to leave a card number on file, in the event that a certain employee within a
given department did not have a P‐Card, they would still be able to make a purchase for their
department.
Purchase Practices
There are two primary categories with regards to the different practices that the bookstores use when
purchasing:
‐Textbook purchasing
‐All other merchandise purchasing
After the bookstore summit that occurred from December 2008‐July 2009, rules and parameters for
textbook ordering were adopted and integrated with Instructional Services.
For all three residential campuses textbook orders are due at least thirty days before the buy‐back at the
end of each semester, and no changes are allowed to be made after this date without Instructional
Services, (IS), being liable for costs incurred by the bookstore. After the bookstore receives the book
orders they check to verify the information given by IS is correct and is the current edition of the
textbook needed. They then adopt the textbook into KayCee, they create a list of books that they want
to buy‐back from students at the end of the semester, and a list of books that they will need to buy from
wholesale companies and publishers. Next, they send the list to wholesalers that will look for the books
needed in used condition. After the end of semester buy‐back and the wholesalers are done looking for
used books, the bookstores place orders with publishers to ensure that they will have enough books on
hand to satisfy the class. They pay attention to enrollment throughout this process so that they know
how many books they will need for each class. After the semester begins and book sales are exhausted,
the bookstores send back unsold books to the wholesalers and publishers. While they usually get most
or all of their money back for the book itself, there is still a large amount of freight cost involved in
returning books.
At Spring Valley and Alpine, the majority of retail items available for sale are purchased once per year at
the National Association of College Stores convention, CAMEX. Specifically, approximately 80% of all11 | P a g e items sold in the Spring Valley Bookstore are purchased during this buying show. The show is a place to see new items and vendors that we would not normally see, since we are too “remote” for many vendor visits. It also allows us to take advantage of free freight specials and receive show discounts on items ordered at the show. Furthermore, it allows us to order items together (Alpine & SVC) that have minimum quantity requirements that we would not be able to meet separately. All this merchandise is ordered in late February or March and arrives in our stores in July and August, after the End of Year close out of inventory. Merchandise is checked into our KayCee Software, priced with a 40% margin and then displayed in the bookstore. The remaining merchandise purchased is done on an ongoing as needed basis with certain established vendors. These items typically include photo supplies, school supplies, and food and beverage items. Most of our purchases are made with established vendor accounts where we pay the invoice when it is received. We purchase with and use a College P‐Card when necessary, usually with first time account orders or one time only purchases. Inventory information is stored in KayCee. Currently, at the end of each fiscal year the bookstores print out a report that itemizes every item in the bookstore and then the employees of the bookstore count each item and make changes to the database by hand. This manual process affects the time needed to conduct inventory thus closing the doors of the bookstore for a week and impairing their ability to make sales during this time. It also affects the accuracy of the inventory as human‐error can make writing the incorrect number for a given item an easy mistake. The following flow charts give a visual of each of the purchasing processes, at each of the Residential Bookstores.
12 | P a g e
Start
Book orders received in Bookstore at least 30 days before buy‐
back
Adopt book orders in to KayCee. Create Buy‐back list and Want
list
Search for books at wholesalers
Conduct Buy‐back
Purchase any quantities of books that Reference enrollment numbers to
were not satisfied from buy‐back ensure correct quantities of books
are ordered.
Sell Books
Send back a minimal number of books to
wholesalers and/or publishers for a credit
Stop13 | P a g e
Start
Receive Datatel Spreadsheet
Check & Verify ISBN’s
Adopt book into KayCee
On going Create Want list
Following up
on orders Send Want List to Wholesalers
Order textbooks from publishers
Locate missing textbook orders
Pull and charge advance textbook orders
Sell Textbooks
Return textbooks not required for next semester
Inventory Textbooks
Conduct Buy‐back
Add buy‐back to inventory
Stop14 | P a g e
Order Fall Textbooks
First Week of June
Cyber Café/Bookstore closed for
summer session Inventory Set-up for Fall
Semester
Fall Semester Opening
Weekly Financial Reports
Census Date (1st – 3rd weeks ’08 –‘09 to date)
• Books not sold, inventoried
• Books determined to be kept or
returned
Spring textbooks ordered 1st
week of October End of Term Financial Report
(’08 –‘09 to date)
Book Buy Back (last week of
term)
Closed for Winter Break
Inventory Set-up for Spring
Spring Semester
Opening
Census Date
• Books not sold, inventoried
• Books determined to be kept or
Book Buy Back (last week of
returned
term)
Final Inventory Report
Provide MBS with list of summer
textbooks
Yearly Profit/Loss Statement
Closed for Summer
Session15 | P a g e
Start
A
Identify need Search for vendor
that is not being that can fulfill need Cannot find
vender
met.
Not Cost
effective
Contact Vendor to Cannot meet Conduct cost/need
A
see if they can meet A
the need
analysis
Not cost
Conduct effective Purchase Product
A
cost/need that will fulfill need
analysis
Purchase Stop Look for a different
way to meet the
Product
need.16 | P a g e
Start
Place Orders
80% of all sundries ordered at CAMEX
CAMEX orders arrive
Order remaining merchandise from specific
vendors
Unpack and enter inventory into KayCee
Set selling price and display merchandise
Re‐order as necessary
Pay and Process Invoices
Conduct Physical Inventory
Stop17 | P a g e
Financial Reporting
The primary goals of the CMC bookstores had been to breakeven and be a service to their students. Up
until 2001‐2002, the bookstores were able to maintain themselves and generate a small profit that went
to help the college purchase much needed things. Since then, the higher education bookstore industry’s
environment has changed. The growth of the Internet and websites that cater to higher education
students for textbooks has had a huge impact on bookstore sales and thus profits. A graph displaying
the profit trends at the Residential Bookstores and Central Services Bookstore during this time period, as
well as a similar graph displaying the profit trends at the Commuter Bookstores is at the end of this
section.
Purchasing Practices
Beginning in November 2008, a team was formed to discuss the future of the CMC bookstores because
of losses incurred by the bookstores since 2001‐2002. It has since been determined that the bookstores
need to shift their focus from trying to break even to becoming profitable. The team talked about
leasing out all of the bookstores including distance learning and commuter sites to an outside company
such as, Follett or Barnes and Noble. The team decided that CMC did not want to go in this direction
because of the following reasons:
‐CMC is right on the edge of an acceptable size for this solution;
‐this solution represents a radical change from CMC’s current situation;
‐the “Business First” approach does not fit as well with the ‘Learning College’ philosophy or the
first choice for leadership portion of CMC’s Strategic Plan;
‐minimal and uncertain profit potential exists with Follett, and internal management of the
bookstores may provide more financial upside;
‐current employees would be replaced by the outsourced company and thus no longer be
employees of the college;
‐outsourcing would sacrifice the individuality of the bookstores and may not cater to the target
markets of each location’s students; and
‐services that are currently offered at the bookstore may not be possible if they were
outsourced.
As a result of these many reasons, the team decided that the bookstores will focus the next twenty‐four
months on improving financial performance internally. Hence, the forming of this AQIP team.
After meeting with each campus’s deans of instruction, the Bookstore Summit Team also came up with
the following policies that are now being used in the bookstores.18 | P a g e Common Book Order Due Date A common book order due date was established that is supported by staff as well as the faculty at all campuses. This additional time has allowed the bookstores to increase the number of used books purchased, hence saving the students money and increasing sales. Specifically, the Alpine Campus sold $20,000 more used books for Fall 2009 than they did for Fall 2008. Meanwhile, Spring Valley was also able to purchase 100 more used textbooks than in the previous fall semester. Furthermore, there is now greater accountability for departments who make changes to textbook orders after the deadline. This helps to encourage faculty to use and require the textbook that they order and have the students buy their books from the bookstore instead of online. Since departments have been responsible for any and all costs associated with changing a book order after the deadline, it has resulted in < 1% of order changes at the Alpine Campus, and Spring Valley had no changes to book orders for the first time in the past two decades. Non‐returnable Vendors and Trade Books In the past, some faculty have requested books that are only available through vendors with a no‐return policy. Furthermore, they used trade books that were available at numerous other businesses, at the campus library, or were easily shared. For example, novels required for a literature class, or scripts for a theater class. By placing books that are not returnable and trade books off limits for textbook orders, the bookstores have already seen an improvement in their inventory, since they no longer get stuck with books that are obsolete. Other Suggestions Great emphasis is being place on receiving realistic ordering numbers from faculty based on previous year’s enrollments so that the bookstore has a better idea of how many books they are going to need. Also, campuses are considering if custom manuals are a viable way to move to in the future. The advantages of these custom manuals are that they would be less expensive for the students, and the students will not be able to purchase the book from an outside source. Additionally, the Bookstore Summit suggested that faculty use the same book for a given class, even if they are offered by different instructors. Similarly, they suggested that full‐time faculty select the books for use by the adjunct faculty. Distance Learning and Commuter Sites Textbooks On June 20, 2005 MBS Direct was awarded RFP 326‐05 to handle CMC’s Distance Learning and Commuter Site textbooks. MBS Direct has been a vendor of CMC since October 24, 2000. CMC also entered into a contact with MBS Direct to provide books for our virtual campus. In that time the college has logged a relatively high number of complaints about both service and pricing. The market for these services has evolved since CMC entered into this contract and as a result we believe the timing is good to launch a current solicitation. After talking to the Purchasing Department they have concurred that going out for a new RFP is the right direction to go in. The following chart displays how the prices at MBS Direct compare with the prices in our Residential Bookstores.
19 | P a g e
Book ISBN MBS CMC‐ Alpine Cost difference
New Used New Used New Used
Nutrition 978049565635 $152 N/A $154.25 N/A ‐$2.25 0
World of Art 9780132221861 $124.25 N/A $111.31 $83.25 $12.94 $41.00
Nutrition 9780495240125 $152.00 N/A $141.25 N/A $10.75 $0.00
PHYSICS FOR SCIENTISTS & ENGINEERS VI 9780132273586 $124.50 $93.25 $111.42 $79.64 $13.08 $13.61
Laboratory Manual in Physical Geology 978013600771 $81.75 N/A $82.28 $54.75 ‐$0.53 $27.00
Accounting: Tools for Business 9780470377857 $198.75 $149.00 $202.50 $133.00 ‐$3.75 $16.00
Intro to Physical Anthropology 9780495187790 $122.75 $92.00 $132.50 N/A ‐$9.75 ‐$40.50
Art Across Time 9780072965254 $140.00 $105.00 $135.35 $93.75 $4.65 $11.25
Essentials of Pathophysiology 9780781770874 $95.00 $71.25 $78.95 $67.75 $16.05 $3.50
Managing Housekeeping Operations 9780866123365 $81.50 N/A $87.25 N/A ‐$5.75 $0.00
Managing Front Office Operations 9780866123389 $81.50 N/A $87.25 N/A ‐$5.75 $0.00
Humanistic Tradition books 1 and 2 Various $72.00 $54.00 $70.00 $47.84 $2.00 $6.16
Roots of Wisdom 9780495094854 $131.75 $98.75 $113.51 $79.00 $18.24 $19.75
Psychology 9781429201438 $122.75 N/A $131.42 $100.00 ‐$8.67 $22.75
Developing Person Through Lift Span 9780716760726 $140.00 $73.14 N/A $94.00 $46.00 ‐$20.86
Average Price new/used and cost difference $121.37 $92.05 $117.09 $83.30 $5.82 $6.6420 | P a g e
20,000.00 Bookstore Profit & (Loss)
Commuter Sites (2000‐2009)
15,000.00
10,000.00
Chaffee
5,000.00
Glenwood
Carbondale
Vail‐Eagle
‐
Breckenridge
Dillon
Aspen
(5,000.00)
West Garfield
(10,000.00)
(15,000.00)
Year Year Year Year Year Year Year Year Year
2000/2001 2001/2002 2002/2003 2003/2004 2004/2005 2005/2006 2006/2007 2007/2008 2008/2009
Central Begin College Central Internet Change in
(20,000.00) Stores begins Outsourcing begins to Stores Sales book
selling DL and implement started a competition adoption
merchandise Commuters use of website strengthens process
to MBS Datatel store21 | P a g e
80,000.00 Bookstore Profit & (Loss)
Residential Sites and Central Services (2000‐2009)
60,000.00
40,000.00
20,000.00
‐
Leadville
(20,000.00) Steamboat
Spring Valley
(40,000.00)
Central
Services
(60,000.00)
(80,000.00)
(100,000.00)
Year Year Year Year Year Year Year Year Year
2000/2001 2001/2002 2002/2003 2003/2004 2004/2005 2005/2006 2006/2007 2007/2008 2008/2009
(120,000.00)
Central Stores Begin College Central Internet Sales Change in
begins selling Outsourcing begins to Stores competition book
merchandise DL and implement started a strengthens adoption
Commuters use of website process
to MBS Datatel store22 | P a g e
The following Force Field Analysis table lists a variety of driving forces and restraining forces that play
into the desired outcome of the bookstores becoming profitable. Many of the restraining forces have
impacted the bookstores over the last decade and can be directly related to the current outcomes. As
we focus more on the driving forces, we will be able to move toward our implementation plan.
FORCE FIELD ANALYSIS
Desired Change: Make the Bookstores Profitable
Driving Forces Restraining Forces
Competition Competition/Pricing External
Leadership Support/Desire Competition/Pricing Internal
Student Need/Demand Small Shops/Critical Mass
Internet Student Computer Skills (Internet Savvy)
Cultural Change – 1 College/Collaboration Resistance to Change
Others Colleges can do it – Models Available Faculty Cooperation w/Book ordering
Informer Time & Staffing
Textbook Prices
Inventory System
Software
Training
First and foremost, an increase in competition has entered the scene during the past decade. In 2001,
the residential campus bookstores first experienced internal competition. Prior to this time, they were
meeting the bookstore needs of most of the college, even taking care of many of the commuter sites.
However, in 2001 Central Services began selling bookstore items from the District Office to both the
general public and to the commuter sites. Then, the following year, the commuter sites and Distance23 | P a g e Learning began using MBS to order textbooks for their students. During a similar timeframe, the World Wide Web began growing exponentially. Although online shopping was invented in 1979, Amazon.com did not post their first yearly profit until 2003. Within a couple of years, the CMC Bookstores began noticing a huge hit to their sales as students were becoming more and more internet savvy. Rather than being limited to the bookstore for their textbook needs, they now were able to search an Internet that could sell them that same textbook from any seller in the world. Of course increased supply resulted in lower price options for these students. Within a matter of a few years, a small town bookstore entered a worldwide market. As both internal and external competition increased, textbook prices continued to soar. In fact, the NACS Foundation used data from the NACS' College Store Industry Financial Report, 2008 edition to help explain these ever increasing costs, as is seen below (www.nacs.org). With so many demands on a given dollar of a new textbook's price, coupled with a limited amount of publishers, it is not surprising that many books run in the $200 and up price range. On another front, the bookstores battled internal resistance from their own campuses, as the instructional side seemed unwilling to make some changes that would keep the bookstores on track. They tried getting instructors to place their book orders on time, they encouraged faculty teaching the same class to use the same book, and so forth, but little response was received. It was not until the Bookstore Summit brought all the necessary parties together that they were able to garner the buy‐in from their campus that was necessary to make these changes. Now that top management has required such changes, the response has improved greatly.
24 | P a g e A cultural change within CMC resulted in an evolution of the auxiliary fund. By CMC definition, an auxiliary fund is supposed to “operate on a break‐even basis; revenues being generated from the sale of inventory or services equal or exceed expenses.” However, with a decentralized approach from Central Services, the campuses interpreted this to mean that as long as all of their auxiliary funds as a whole have revenues equaling or exceeding expenses, then they did not need to worry about the specific departments within their auxiliary fund that were not meeting this requirement. This led to a handful of cost centers, in addition to the bookstores, with extremely large cumulative deficits. It seems that time froze as a result of this leniency. Campuses had been saying for years that the bookstores “haven’t made a profit in the past three to four years.” However, in reality what seemed “rare” was actually close to a decade worth of not breaking even. In recent years, the college leadership has shifted in favor of all cost centers breaking even within a campus, even if it requires an actual transfer from a more profitable cost center. This one‐college collaborative approach is a major reason that so much attention has suddenly been paid to the bookstores and reversing this negative profit trend. Another result of the decentralized approach was that the bookstores were each running their financial reports differently, and were using different pricing standards. The only standard reports that were used were the yearly inventory valuation, yearly accounts receivable valuation, and Cash Receipt (CREN) sessions. However, even the CREN sessions were done at different intervals at each campus. Furthermore, the sales categories were lumped all into one line, making it hard to decipher the amount of gross profit in each area of sales. The majority of training for new bookstore managers centered on the way things had been done in the past, rather than focusing on what needed to be done in the future. There was never a standard operating plan for the bookstores and the financial reporting was lacking as a result. Additionally, each of the campuses was left to price their goods however they wished. One of the downfalls of switching to Datatel in 2004 was that the system was not designed for a retail report system. While the bookstores began using the KayCee Point of Sales software in 1997, they experienced difficulty in 2004 and beyond because the two systems did not work well together. Specifically, all of the purchasing is done through Datatel, and all of the sales are done through KayCee. As a result, the bookstores have had problems evaluating and measuring their financial performance. Despite all of these restraining forces, there is still strong evidence that the students value the services the bookstores provide. As a part of the Bookstore Summit, a student survey was conducted that confirmed this belief. The survey and the results can be found in Appendix II. The bottom line was that most students choose to purchase their textbooks in the bookstore because they like the convenience and accuracy of the service they receive. They also enjoy the other items for sale, especially given the “up‐on‐a‐hill” locations of each of our residential campuses. With this in mind, the bookstores are determined to overcome the restraining forces and focus on the driving forces in order to achieve a level of profitability in the bookstores that is sustainable. The following fish diagrams show what environment, methods, people, and equipment need to be in place in order for this to happen:
25 | P a g e
Financial Reporting:
Environment Process/Methods
Manage excessive responsibilties Define standards
Revise expectations for profit Optimize use of Datatel,
Informer, Excel & Kaycee
Desired Results:
Consistent use of
f inancial data amongst
bookstores
Optimize use of limited staf f Provide access to Excel and QI Macros
Ensure access to Datatel, Inf ormer & Kaycee
Provide necessary training f or staf f
Purchase Inventory guns
People Equipment26 | P a g e
Purchasing Practices:
Environment Process/Methods
Keep tabs on what Internet has to offer Join buying group
Share orders to take advantage of
Collaborate with Distance Learning and
price breaks and split shipping
Commuter sites
Leverage book buyback and Online vendor Desired Results:
Create more time f or implementing methods
Consistent use of Best
Purchasing Practices
Garner cooperation f rom f aculty on order
time and non-returnables Utilize computer & internet ef f ectively
Use the Purchasing Department as a
resource Don't be afraid to use the phone
Leverage rep and brand loyalty
People Equipment27 | P a g e Financial Reporting The first part of our improvement theory is to institute a college wide financial reporting system. This will include an expectation of closing out the cash drawer at least once a week and completing a CREN report for every deposit. New account lines have been created and NARD codes added to enable the Bookstore Managers to record their sales in greater detail within Datatel. A standard CREN session spreadsheet was created to incorporate these new codes and simplify the process, so that all the stores can get on the same track. In an effort to help the accounting department keep the bookstores deposits separate from their campus’s deposits, they should have their own bank accounts set up. Additionally, an Excel profit and loss statement has been created that will easily take data from Informer, and display it in an easy‐to‐read financial statement. The statement will also include gross profit analysis, as well as balance sheet information. This report will be run monthly and will keep everyone affected by the bookstores’ performance updated. Examples of the financial statements can be found at the end of this section. The bookstores will also begin generating a quarterly inventory valuation report, which has never been done in the past. Although the physical inventory will still only be done once a year, this estimate report will provide more up‐to‐date information for the gross profit analysis, as well as provide more timely information on inventory levels. The stores will continue running their yearly report on accounts receivable; however, the financial statement mentioned above will provide a snapshot of the accounts receivable level at the time the report is run. With the use of these reports it will give the bookstores and their campuses an in‐depth look at how they are performing year round and allow the stores to make needed changes to their spending, sales, and expenses. This improvement will not cost the college any money but will require the bookstore managers to spend time training on how to run these reports. Purchasing Practices As part of our improvement theory, the bookstores will change their margins, so that all stores will be using the same margins for the same categories of their business. Specifically, sundries and food and drink will remain at a 40% margin. However, new textbooks will be sold at a 28.5% margin, and used textbooks will be sold at a 35% margin. This will be a decrease in the current margins for new textbooks, and an increase in the current margins for used textbooks. The standardized margins will allow the stores to increase their profit and forecasting effectiveness. From the outcomes of the Bookstore Summit, all stores should be able to accumulate more used books and can therefore conform to the industry standards for setting the selling price from margins instead of mark‐up. Increasing the margin
28 | P a g e on used books and in some cases decreasing the margin on new books should allow the bookstores to increase their profits. It would also be best for all stores to offer the same discounts to the college so that they are not competing against each other. To give all an even chance we propose there no longer be a staff and faculty discount for retail items, (items that are not special order), for personal or college use. There will however be a 20% margin over cost on all special order sales that are internal for the college. As a team it was talked about doing more group‐buying, all stores creating one large order, to decrease the cost of the goods, but we found that higher minimum orders did not decrease our costs significantly. It was decided that joining Connect2One, the largest buying group in the bookstore industry, would allow the bookstores to cater to their unique target market which is different at all of the bookstores and take advantage of Conect2One pricing specials. The stores will also make an effort to buy as a group when the items are things that will sell at different campuses and can be split shipped. Since the current inventory system is so time intensive and allows so much room for error, we suggest that each of the Residential Bookstores, as well as the Central Services Bookstore have access to inventory guns. The inventory guns have to be KayCee compatible, and run approximately $400 each. This equipment would cut down on the time taken to accomplish the counting and there will be less errors as the employee will scan the item and then insert the correct count directly into the inventory gun. Employees will then load the information from the inventory gun to the computer and the inventory gun will make the necessary changes to the inventory automatically. Another improvement would be that all of the bookstores will conduct inventory in the same way. The bookstores will use the zero count. This will allow a streamline process at all the bookstores. Issuing a new RFP for distance learning and the commuter sites will allow us to take better care of our students and may provide some incentives for our bookstores as well. Changing the policy for Interdepartmental Charges from doing Journal Entries in Datatel to requiring the use of P‐Cards, will enable accuracy in the inventory levels of the bookstores and save the bookstore staff much needed time. We are requesting the following one‐time costs from the AQIP Teams Reserve account. If the Connect2One Membership proves valuable during the first year trial period, then the Central Services Purchasing Department would cover the cost in future years in order to continue this membership. Costs Expected Implementing the Improvement Theory 4 Inventory Guns (one for each location)………………………………………………….$1,600.00 Connect2One Membership (as a college)………………………………………………….…$850.00 Total Cost requested ………………………………………………………………………………$2,450.00
29 | P a g e
Steamboat Bookstore Financials
Net Income Statement 2008‐2009
Totals YTD: July August September October November December January February March April May June
Sales $362,725.33 $2,702.77 $155,083.55 $26,957.50 $9,034.29 $4,839.07 $7,440.60 $117,262.00 $10,162.75 $5,625.29 $8,679.60 $4,247.48 $10,690.43
Personnel ($105,637.47) ($5,788.60) ($7,503.04) ($7,171.48) ($8,098.01) ($9,821.70) ($9,507.38) ($10,411.10) ($9,647.84) ($9,422.08) ($9,422.08) ($9,422.08) ($9,422.08)
Advertising $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Utilities ($4,200.00) ($350.00) ($350.00) ($350.00) ($350.00) ($350.00) ($350.00) ($350.00) ($350.00) ($350.00) ($350.00) ($350.00) ($350.00)
Professional Services $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Travel ($2,372.75) $0.00 $0.00 $0.00 $0.00 ($170.00) $0.00 ($808.50) $0.00 ($323.50) ($1,070.75) $0.00 $0.00
Supplies ($3,927.84) ($1,200.00) $0.00 ($131.54) $0.00 $0.00 $0.00 ($636.71) ($265.44) ($442.44) ($15.75) $0.00 ($1,235.96)
Bad Debt ($220.19) $0.00 $457.21 ($964.70) $24.89 ($7.76) $301.70 ($32.44) $17.61 ($20.15) ($9.38) $13.08 ($0.25)
Other ($411.51) $0.00 $0.00 $0.00 $0.00 ($29.26) $0.00 $0.00 ($32.25) $0.00 $0.00 $0.00 ($350.00)
Training $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Resale Goods ($307,713.82) ($371.78) ($90,669.89) ($71,432.22) ($17,770.16) $7,716.53 ($13,981.19) ($98,636.46) ($13,170.60) $15,738.44 ($1,179.94) ($103.28) ($23,853.27)
Capital Expenses & Transfers $313,802.69 $0.00 $0.00 $148,771.35 $0.00 $0.00 $0.00 $0.00 $0.00 $111,009.75 $0.00 $0.00 $54,021.59
Net Income (Deficit) $252,044.44 ($5,007.61) $57,017.83 $95,678.91 ($17,158.99) $2,176.88 ($16,096.27) $6,386.79 ($13,285.77) $121,815.31 ($3,368.30) ($5,614.80) $29,500.46
Gross Profit Analysis 2008‐2009
Sales ‐ Books Taxable $336,213.79 Sales ‐ Sundries Taxable $0.00 Sales ‐ Food & Bev Taxable $0.00 Sales ‐ MBS Books Taxable $7,819.97 Sales ‐ Non‐Taxable $13,792.39
Sales ‐ Books Non‐Taxable $0.00 Sales ‐ Sundries Non‐Taxable $0.00 Sales ‐ Food&Bev Non‐Taxable $0.00 Sales ‐ MBS Books Non‐Taxable $185.13 Sales ‐ Interdepartmental $732.71
Resale Gds ‐ Books ($207,919.90) Resale Gds ‐ Sundries ($59,325.76) Resale Gds ‐ Food & Bev ($17,721.82) Resale Gds ‐ MBS Books ($8,280.55) Miscellaneous Income $3,981.34
YTD Gross Profit on Books: $128,293.89 YTD Gross Profit on Sundries: ($59,325.76) YTD Gross Profit on F&B: ($17,721.82) YTD Gross Profit on MBS: ($275.45) Freight In & Out ($14,465.79)
YTD Gross Profit ‐ Other: $4,040.65
Total Sales $362,725.33
Less: Cost of Goods Sold
Inventory 07/01/08 $1.00
Total Resale Goods $307,713.82
Less: Inventory 6/30/09 ($1.00)
Net Cost of Goods Sold ($307,713.82)
TOTAL Gross Profit on Sales: $55,011.51
Asset and Fund Balance Information
Accounts Receivable $1,325.18
Inventory (as of 7/1/08)
Fund Balance (Rollover) as of 7/1/0 ($259,781.10)
Rollover + Net Income (Loss) ($7,736.66)30 | P a g e
Leadville Cyber Cafe Financials
Net Income Statement 2008‐2009
Totals YTD: July August September October November December January February March April May June
Sales $127,734.56 $0.00 $40,388.37 $23,428.41 $8,625.06 $3,013.83 $2,739.23 $36,967.98 $4,355.68 $3,126.20 $3,720.06 $1,151.38 $218.36
Personnel $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Advertising $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Utilities $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Professional Services ($38,660.31) $0.00 $0.00 ($6,715.91) ($3,417.08) ($3,349.38) ($1,568.44) ($5,993.48) ($4,774.80) $0.00 ($5,915.15) ($5,927.14) ($998.93)
Travel $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Supplies ($2,458.12) ($1,200.00) $0.00 $0.00 ($8.23) $0.00 ($36.87) $0.00 $0.00 $0.00 $0.00 $0.00 ($1,213.02)
Bad Debt ($1,425.09) $0.00 $14.72 $22.00 ($37.09) ($2.76) ($1.75) $3.79 $45.15 ($1.64) ($0.52) $0.00 ($1,466.99)
Other ($897.30) $0.00 ($19.95) ($92.70) ($1,921.27) $1,704.44 $0.00 $0.00 ($116.58) ($383.10) $0.00 ($200.00) $131.86
Training $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Resale Goods ($93,317.13) $477.13 ($6,275.05) ($43,535.56) ($19,463.46) ($11,612.59) ($4,263.18) ($20,641.00) ($2,412.21) ($2,764.89) $3,825.79 ($1,096.17) $14,444.06
Capital Expenses & Transfers $170,113.81 $0.00 $170,000.00 $0.00 $0.00 $0.00 $0.00 $113.81 $0.00 $0.00 $0.00 $0.00 $0.00
Net Income (Deficit) $161,090.42 ($722.87) $204,108.09 ($26,893.76) ($16,222.07) ($10,246.46) ($3,131.01) $10,451.10 ($2,902.76) ($23.43) $1,630.18 ($6,071.93) $11,115.34
Gross Profit Analysis 2008‐2009
Sales ‐ Books Taxable $83,238.75 Sales ‐ Sundries Taxable $35,773.37 Sales ‐ Food & Bev Taxable $0.00 Sales ‐ MBS Books Taxable $3,183.71 Sales ‐ Non‐Taxable $4,964.96
Sales ‐ Books Non‐Taxable $0.00 Sales ‐ Sundries Non‐Taxable $0.00 Sales ‐ Food&Bev Non‐Taxable $0.00 Sales ‐ MBS Books Non‐Taxable $137.72 Sales ‐ Interdepartmental $0.00
Resale Gds ‐ Books ($62,746.78) Resale Gds ‐ Sundries ($11,570.23) Resale Gds ‐ Food & Bev ($10,526.90) Resale Gds ‐ MBS Books ($3,612.33) Miscellaneous Income $436.05
YTD Gross Profit on Books: $20,491.97 YTD Gross Profit on Sundries: $24,203.14 YTD Gross Profit on F&B: ($10,526.90) YTD Gross Profit on MBS: ($290.90) Freight In & Out ($4,860.89)
YTD Gross Profit ‐ Other: $540.12
Total Sales $127,734.56
Less: Cost of Goods Sold
Inventory 07/01/08 $1.00
Total Resale Goods $93,317.13
Less: Inventory 6/30/09 ($1.00)
Net Cost of Goods Sold ($93,317.13)
TOTAL Gross Profit on Sales: $34,417.43
Asset and Fund Balance Information
Accounts Receivable $0.00
Inventory (as of 7/1/08)
Fund Balance (Rollover) as of 7 ($178,513.69)
Rollover + Net Income (Loss) ($17,423.27)31 | P a g e
Spring Valley Bookstore Financials
Net Income Statement 2008‐2009
Totals YTD: July August September October November December January February March April May June
Sales $281,163.95 $6,049.85 $25,376.15 $125,075.29 $5,044.76 $2,957.11 $2.91 $83,372.51 $7,173.45 $7,244.87 $2,504.17 $10,693.74 $5,669.14
Personnel ($93,046.52) ($8,364.25) ($8,072.67) ($7,983.50) ($6,067.33) ($7,220.36) ($7,585.35) ($7,744.25) ($7,948.25) ($8,132.19) ($7,881.38) ($8,182.33) ($7,864.66)
Advertising $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Utilities $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Professional Services $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Travel ($2,703.00) $0.00 $0.00 $0.00 ($485.00) $0.00 $0.00 $0.00 ($285.40) ($594.70) ($1,337.90) $0.00 $0.00
Supplies ($2,654.56) ($1,200.00) $0.00 ($254.56) $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 ($1,200.00)
Bad Debt ($4,760.74) ($7.73) ($17.88) ($67.66) ($18.55) $3.66 $74.99 $30.45 $0.81 $32.54 $1.63 ($6.65) ($4,786.35)
Other ($661.49) ($50.00) $0.00 $16.00 ($377.49) $0.00 $0.00 $0.00 $0.00 $0.00 ($250.00) $0.00 $0.00
Training $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Resale Goods ($196,567.94) ($6,138.51) ($161.18) ($139,690.07) ($3,837.60) ($843.29) ($81.40) ($46,721.45) ($21,802.38) ($888.33) ($21.20) ($4,925.04) $28,542.51
Capital Expenses & Transfers $119,747.74 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $119,747.74
Net Income (Deficit) $100,517.44 ($9,710.64) $17,124.42 ($22,904.50) ($5,741.21) ($5,102.88) ($7,588.85) $28,937.26 ($22,861.77) ($2,337.81) ($6,984.68) ($2,420.28) $140,108.38
Gross Profit Analysis 2008‐2009
Sales ‐ Books Taxable $248,011.30 Sales ‐ Sundries Taxable $0.00 Sales ‐ Food & Bev Taxable $0.00 Sales ‐ MBS Books Taxable $0.00 Sales ‐ Non‐Taxable $20,914.56
Sales ‐ Books Non‐Taxable $0.00 Sales ‐ Sundries Non‐Taxable $0.00 Sales ‐ Food&Bev Non‐Taxable $0.00 Sales ‐ MBS Books Non‐Taxable $0.00 Sales ‐ Interdepartmental $9,993.26
Resale Gds ‐ Books ($166,183.59) Resale Gds ‐ Sundries ($20,350.91) Resale Gds ‐ Food & Bev ($3,518.89) Resale Gds ‐ MBS Books $0.00 Miscellaneous Income $2,244.83
YTD Gross Profit on Books: $81,827.71 YTD Gross Profit on Sundries: ($20,350.91) YTD Gross Profit on F&B: ($3,518.89) YTD Gross Profit on MBS: $0.00 Freight In & Out ($6,514.55)
YTD Gross Profit ‐ Other: $26,638.10
Total Sales $281,163.95
Less: Cost of Goods Sold
Inventory 07/01/08 $1.00
Total Resale Goods $196,567.94
Less: Inventory 6/30/09 ($1.00)
Net Cost of Goods Sold ($196,567.94)
TOTAL Gross Profit on Sales: $84,596.01
Asset and Fund Balance Information
Accounts Receivable ($154.96)
Inventory (as of 7/1/08)
Fund Balance (Rollover) as of 7 ($106,292.84)
Rollover + Net Income (Loss) ($5,775.40)32 | P a g e Financial Reporting Having accurate financial reports will enable the bookstores to have a better idea of where they stand and be able to compare current month/semester/year data to previous month/semester/year data. This will enable them to make adjustments to their marketing plan as needed to ensure that they are staying on track to make money. The reports that they will generate will also make it easier to show their supervisors how they are progressing. Making the margins and discounts uniform across the college will eliminate competition between bookstores. Changing the textbook margins will allow the book stores to maximize the profit on the biggest sales the stores have while not over charging the students. Their target is to gain 10% in textbook revenue at all the locations. Discontinuing staff/faculty and interdepartmental discounts at all sites except for special orders will also increase the gross sale and profit at all locations. Specifically, they should see a 5%‐10% increase in internal gross sales for sundries. Changing the policy on Interdepartmental Charges to using P‐Cards will allow all the location to have a more accurate inventory, save them valuable time, and improve the accuracy of the charges. Implementing a standard inventory system and the use of inventory guns will increase the accuracy of inventory and once the system is in place should cut down the time needed to conduct inventory by at least one day. Purchasing Practices Joining Connect2One will result in a decrease in COGS at all locations. This savings will be at least the cost of joining Connect2One, but is anticipated at being $700 per location. Issuing an RFP for distance learning and commuter sites textbooks will increase the commission that the college gets by increasing sales from the new vendor. By investigating other vendors we will be able to find a company that will have better customer service and prices for our students. They may also offer other incentives that could be profitable to the bookstores, as with most companies the bookstore does wholesale business with them as well.
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