As Of: 10/12/10 PHK BUSINESS (11E) VIDEO SERIES FINAL (10/11/10)

Page 2 of 4 Graeter’s Continuing Case Part 6

As of: 10/12/10 PHK BUSINESS (11e) VIDEO SERIES FINAL (10/11/10)

EDITOR: A. Grazioso
SEGMENT: Part 6: GRAETER’S (Use of Info Systems)
VERSION: Final (10/11/10)

Interviewees

Richard Graeter II

Co-Owner/Chief Executive Officer

Robert Graeter

Co-Owner/ VP Manufacturing

Chip Graeter

Co-Owner/ VP Retail Stores

Robin Guiler

Chief Operating Officer

David Blink

Controller

Paul Porcino

Business Consultant

George Demman

VP sales and marketing

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Paul: My name is Paul Porcino and I am a consultant to the leadership team here at Graeters. Our information systems are not where we need them to be. That is one of the things we’ have recently hired somebody who is going to be working with us to really build some of the information systems. But information, when you come into a small organization, an entrepreneurial organization there frequently is a very small amount of information and if it is there it hasn’t been pulled together in any meaningful way.

So we have done a lot of work up front to define what our performance measures that we are going to develop, what are the sales measures, how do we understand the data and information that is out there in terms of helping us run the organization from a strategic perspective. Where are we getting margins from? We needed to understand that first so we had to pull together a lot of information. We are going to be over the next year to two bringing in probably a variety of different information systems both point of sale in retail so we fully have an understanding of what we are selling as well as some other financial systems and probably some human resources information systems. I would say within the next year or two there will be a fairly radical transformation of that in terms of the software that we use.

In our stores in the Cincinnati market we know how much ice cream, how much bakery and how much candy we sell and how much merchandise and that is really the extent of the information we have. It is useful information but it is not really enough to run the company of the future in the professional company and the direction we are going. So really within, I believe, it’s within four months we’ll be in a very different place from store information systems. Our Columbus franchise has a system that they use that is very detailed that gives them a lot of information.

There are a lot of ways that we use that information that we get from the stores. Primarily, are we growing? Are we building our sales or reducing our sales? And if we see that there is a problem or a gap then from a store perspective what are the initiatives that we are going to have to work to close that gap and increase sales. Are there certain categories that are suffering? One of the things that we did early on, we noticed that for instance, bakery was not where we needed bakery to be from a sales perspective and we then looked at it and said why and we had to adjust. What we did is we actually reduced the number of products that we were selling in the store. It wasn’t very clear exactly how much we were selling but at least the good enough gut sense in terms of the ones that were not selling and we looked at our total inventory line and we adjusted the total inventory line. Every month that is one of the core things that we measure is sales and then some of the cost associated with those sales and what the implications are to the organization because small organizations tend to have very systems. They don’t have the understanding. They don’t have the sales data. They don’t have profitability understanding. They don’t have clarity in terms of performance, goals and processes and how to establish those and how to measure those. They don’t have any of those systems in place or an understanding of those systems. When they build them it is very powerful because now they have some of those best parts of a large organization. If you can help integrate them into a small operation, that organization can become very successful in a short period of time.

David: My name is David Blink and Blink like blink your eyes and I am the controller for Graeters. I’ve been here about two years now and my role is really all financial statements, all reports, payroll, any ad-hawk reports that any of the managers would need. I handle a lot of the reporting for the retail side as well as manufacturing side and all the payroll work, the pre-work. We have a payroll company that takes care of the actual cutting of the checks and that is really what I do.

I do the reporting work for the retail operation which is on a weekly basis we are really we are really tracking payroll right now. We are really working sales and payroll trying to get a real handle on that so I produce reports for all the managers dealing on a payroll biweekly so it keeps them current and up to date. Once I have the statements finalized and then they are passed on to an outside accounting firm, we deal with one of the local regional’s here, a fairly large regional and they oversee all of my work and from there they report directly back to Rich and if there are any outstanding items I take care of that and then the financial reports are taken care of from there. I’ve got what; three hundred somewhat employees so handling the HR duties for that group, it’s a pretty hefty role on top of the AR, the AP and the financial reporting. It keeps me busy.

The whole organization is biweekly payroll. All the payroll is punched in through the different stores and all through the internet then all the numbers come back to me - - well they go to the store managers and the store managers will approve everything then the numbers will come to me. I will make sure everything lines up. I will add the PTO, which is the vacation time or sick time and from there I will process the numbers and then forward them onto PayCore. PayCore is a local - - they are going national but they started here. But they are a local payroll company. They handle all of our payroll for us, all of payroll taxes, all of our payroll concerns we have.

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Submitted for review by NKP Media Inc.