Cycle counting as a foundation to exceptional shrink performance

2. Cycle counting as a foundation to exceptional shrink performance Tim Fisher Best Buy

3. Best Buy Consumer electronics store 1,023 stores domestically Over $40 billion in revenue 140,000+ associates Family of Brands

4. Why cycle counting is important to Best Buy Awareness/ Communication Best Buy’s “Shrink” Program Leadership engagement Inventory Integrity accountability

5. Why cycle counting is important to Best Buy • Physical Inventories only provide insight once a year • Cycle counting provides the how behind inventory integrity on a weekly basis • Cycle counting creates transparency • Gives visibility to losses which provides motivation for stores to act • Provides not only insight into losses but drives in stock • Allows count corrections to adjust inventory

6. How Best Buy cycle counts • Counts are done weekly and reconciled against current on hands • Stores have a dedicated “counter” to perform counts and reconciliation • Focused on high loss and high turn items • Eighty percent of counts are centrally driven based on actual physical inventory trends • Twenty percent are locally driven based on market and individual location identified needs • Anticipated shrink rate is calculated and published weekly • Down to the department and subclass level

7. Cycle counts

8. National Shrink Barometer

9. What Best Buy get from cycle counts • On a dollar for dollar basis the night of Physical Inventory we have already identified between 90% and 96% of our shrink. • Benefit in in-stock/inventory integrity • Creates confidence for assume receipt of DC trailers and approved drop ship vendors • Facilitates PO/invoice matching to speed reconciliation and vendor payment • Reduces chargeback's and invoice disputes

10. In stock position