GL_ASR_Internal_Transactions DEC 2013

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Executive Editor: Administration Support (ASR) 1/17 Release: December 2013

Attachment to Rules & Guidelines General Demands

INTERNAL TRANSACTIONS

Contents

HOW TRANSFER CODES EFFECT SALES, STOCK AND GM ........................................................................ 3

TT310 DECO TRANSFER ............................................................................................................................. 5

TT310- DECO TRANSFER ............................................................................................................................. 5

TT315 INTERNAL USE ................................................................................................................................. 6

TT315- INTERNAL USE ................................................................................................................................. 6

TT320 CASH & CARRY RETURNS TO STOCK ...................................................................................... 7

TT325 CASH & CARRY RETURNS TO RECOVERY .............................................................................. 7

TT330+ QUALITY CLAIMS ............................................................................................................................. 8

TT330- QUALITY CLAIMS ............................................................................................................................. 8

TT390 INTERNAL DAMAGES ..................................................................................................................... 9

TT391 RECEIVED, DAMAGED ................................................................................................................... 9

TT431+/- POSITIVE/NEGATIVE SALES-& STOCK CORRECTION ..................................................... 10

TT440+ UNDAMAGED & Q-ARTICLE BACK TO STOCK ..................................................................... 11

TT440- UNDAMAGED / Q-ARTICLES TO RECOVERY ........................................................................ 11

TT441+ NEGATIVE STOCK ADJUSTMENT ............................................................................................. 12

TT441- POSITIVE STOCK ADJUSTMENT .............................................................................................. 12

TT450 RECOVERY – BACK TO STOCK ................................................................................................. 13

TT456+/- SPOT INVENTORY ......................................................................................................................... 13

TT457+/- ANNUAL INVENTORY (YEARLY INVENTORY) ...................................................................... 14

TRANSFER CODES, OVERVIEW ......................................................................................................................... 15

INTERNAL TRANSACTIONS, BEST PRACTICE AT RECOVERY ................................................................. 16

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GENERAL INFORMATION

To ensure Gross Margin (GM) and stock accuracy all internal transactions, Deco withdrawals, stock adjustments, returns of goods, damaged goods etc must be registered on a transfer code. A registration adjusts Stock, statistical GM and in some cases statistical sales. The internal transactions influence the GM with the purchase price, “CALC 52”, and are shown in GM follow-ups. Example: Sales price excl. VAT: 1000,-- Calc 52: 750,-- The “cost for example a deco withdrawal

Gross Profit: 250,-- For this transfer we have to sell 3 extra to reach break even (250:- (GP) X 3 = 750,--) Authorization Follow the country-/store’s authorization list for the different transfer codes.

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How transfer codes effect Sales, Stock and GM

Code Influences

TT Name Description Sale Stock Stat GM

310 Deco Used when an item is used for display and the reason is to sell the product.

0 - -

310- Deco Used if a correction of TT310 must be done.

0 + +

315 Internal use Used when an item is used for non-commercial use (e.g. office purpose)

0 - -

315- Internal use Used if a correction of TT315 must be done.

0 + +

320 Cash & Carry Returns to stock

Used when fresh goods are returned by customers

- + 0

325 Cash & Carry Returns to Recovery

Used when damaged goods are returned by customers

- 0 -

330 Quality claims Used to decrease stock on Q-articles (waiting for a decision). Used together with TT330-.

0 - -

330- Quality claims Used when a decision is made for a Q-article to increase stock and

allocate to the correct transaction, ex TT440

0 + +

390 Internal damages to Recovery.

Used when goods are damage in the store.

0 - -

390- Internal damages to Recovery.

Used if a correction of TT390 must be done.

0 + +

391 Received damages to Recovery

Used when it’s discovered that goods were damaged when delivered.

0 - -

391- Received damages to Recovery

Used if a correction of TT391 must be done.

0 + +

431 Sales & Stock Adjustments

Used if Calypso is off-line and to correct 89 sales (together with 431-).

+ - 0

431- Sales & Stock adjustments

Used to correct 89 sales (together with 431+). Used to correct Keying errors + for COD for display

- + 0

440 Undamaged & Q-art. back to Stock

Used to correct keying error done on 440-.

0 + +

440- Undamaged & Q-article to Recovery

Used if Q-art or last pieces/outgoing art are going to Recovery

0 - -

441 Inv adjustment - Used together with 441- to decrease stock. Set articles etc.

0 - -

441- Inv adjustment - Used together with 441 to increase stock. Set articles etc.

0 + +

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Code Influences

TT Name Description Sale Stock Stat GM

450 Recovery to stock Used when goods are recovered to stock.

0 + +

450 - Recovery to Stock Used if a correction must be done on TT450

0 - -

456 + Permanent inventory +

Used continuously throughout the FY to decrease the stock figure.

0 - -

456 - Permanent inventory -

Used continuously throughout the FY to increase the stock figure.

0 + +

457 + Annual inventory + Used once every FY to decrease the stock figure after the annual inventory.

0 - -

457 - Annual inventory - Used once every FY to increase the stock figure after the annual inventory.

0 + +

* Effect the selling store (selling and receiving store doesn’t need to be the same)

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TT310 Deco transfer

Manner of operation: Reduce stock and statistical GM, no effect on statistical sales. Used by: Sales departments and Deco. Use: Used when an item is used for display and the purpose is to create more sales of that specific product. The product should have a price tag etc. If a product is used in the store but the reason is not to increase sales of that specific product, paint, a floor with no price tag etc it’s an operational cost for the store. As the deco withdrawal influences the GM with its wholesale price it’s important to consider the effect of every item used for display, to save deco items when a product is temporarily out of stock and to let as much of it be sold as AS/IS as possible when it’s not used as Deco anymore. Routine: The registration for at least Full Serve Handout articles must be made before picking of the articles. Best practice: Transfer management Where possible, take goods from bargain corner and spare parts for display products. Dry-clean rugs, clean upholstery. Touch-up kits for minor scratches and blemishes. Repairing. All 310’s at end of service must pass recovery for re-use / re-cycling. Protect upholstered furniture. Proper maintenance of furniture. Basic actions are the foundation for this. Apart from

avoiding exchanges this will automatically increase sales. Ensure reasonable stock levels before transferring. When selling display items from the sales floor, consideration should be given to reversing

the original transfer and selling the product under article number at full retail price. Check spare parts area for marketplace displays or keep such items for re-use. To save deco items when a product is temporarily out of stock. Save packages for short-term marketplace displays in order to put back to stock (example

lamp weeks) for the possibility to use a TT450 by restoring to original specifications. Always consider if the transfer (cost) is necessary and follow up.

TT310- Deco transfer

Manner of operation: Increase stock and statistical GM, no effect on statistical sales. Use: Used when an item is written of on TT310 but there is no need for the item for display, the item is put back to stock again (reset the TT310 transaction). Used when an article is removed from display and sold by article number (full price).

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Routine: The registration must be done immediately after the displayed article is moved to stock-or sales location. When a displayed article is moved to Recovery or sold by 9+article no more transfer code is needed.

TT315 Internal Use

Manner of operation: Reduce stock and statistical GM, no effect on statistical sales. Used by: Administrative manager for office furniture or public relations Routine: The registration for at least Full Serve Handout articles must be made before picking of the articles. Use: Use for all furniture or equipment needed from the IKEA range for office purpose. Use for outgoing press or requisites (if no specific customer account has been created). Use for customer consumables (packaging material used by customers when buying glasses). Use for yellow bags, when the bags are taken from storage and put in circulation in the store. This transfer type must also be used for charity and donation. The proper transfer sheet must be signed out and returned as soon as possible to the Logistics department and no later than the same day. Then the sheet needs to go to the Accounting department for manual booking on the proper account/cost centre depending of the use of the TT. Amounts should be booked at purchase price. Best practice: Transfer management Taking goods from BC Dry cleaning rugs & cleaning upholstery Repairing and using touch up kits for hiding minor scratches and blemishes Using Common sense Restricting authority as per the Authorization Database

TT315- Internal Use

Manner of operation: Increase stock and statistical GM, no effect on statistical sales. Use: Used when an item is written off on TT315 but there is no need for the item for office purpose, the item is put back to stock again (reset the TT315 transaction). Routine: The registration must be done immediately after the displayed article is moved to stock-or sales location.

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TT320 Cash & Carry Returns to Stock

Manner of operation: Increase stock, reduce statistical sales and statistical GM. Used by: Customer Service. Use: Used when perfect Cash & Carry goods are returned back by customer. (Before CODII is implemented you also use this transaction for customer order returns). Routine: Customer Service keypunches the return/exchange in the Return application including reason codes. The sales & stock is updated when Recovery empties the Recovery room and update the system.

TT325 Cash & Carry Returns to Recovery

Manner of operation: Reduce statistical sales and statistical GM, no effect on stock. Used by: Customer Service Use: Used when goods bought as Cash & Carry are returned by customers, including reason code. (Before CODII is implemented you also use this transaction for customer order returns). Later the product will be classified as, AS/IS, Recycle, Spare parts or back to stock (See TT 450). A lot of the money lost on customer returning goods could be recovered by the Recovery department by repackaging etc to be able to put the item back to stock or by preparing it to be sold as AS/IS. Routine: Customer Service keypunches the return/exchange in the Return application including reason codes. The sales & stock (delete stock, it’s only sales that’s effected) is updated when Recovery empties the Recovery room and update the system. Best practice: Transfer management Use spare parts library where ever possible. Promote assembly service. Improve self-choice standards by conducting customer surveys, especially for complicated

purchases (for example kitchen, Ivar, wardrobes). Focus on basic actions. Control that the correct reason code is used and customer service co-workers register the

supplier number. Control that reason code and supplier number is entered for TT325’s registered by goods

administration in MHS. Educate co-workers at returns & exchanges to, by some polite, simple and short questions,

have the customer describe why the goods are returned. Investigate stock on hand when quality problems are suspected.

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TT330+ Quality claims

Manner of operation: Reduce stock and statistical GM, no effect on statistical sales. Used by: Recovery Use: Used to adjust stock figure when the retailer makes reclamation, a quality claim, to the wholesaler. This is done to decrease the stock value while the decision is made if the goods should be returned to the wholesaler or recycled. Registration is to be made before the goods are moved out of stock. This transaction must always be used together with TT330- (when a decision is taken for the articles). Routine: Described in ASR Rules & Guidelines – Recovery’s part. Best practice: Transfer management Keep accurate and timely quality reports. Locations of quality stock must be accurate. Ensure that TT330 is reversed by TT330-

- and TT260 (back to terminal) is done when stock is returned to Wholesaler - and TT440- is done when stock is returned to Recovery (scrap or AS/IS).

A TT450 is done if the store has completed a quality repair so that the articles with former quality problems are corresponding to original specifications

- a reversed TT330 is done as well when no action is taken and the articles go back to store stock on hand

TT330 will with this procedure always show the stock on hand for Quality problems.

TT330- Quality claims

Manner of operation: Increase stock and statistical GM, no effect on statistical sales. Used by: Recovery Use: Used to adjust stock figure when the retailer has made reclamation, a quality claim, to the wholesaler. Used when the store has received a decision from Wholesaler. Registration is to be made after the goods are put back to stock. Best practice: Ensure that TT330 is reversed by TT330-

- and TT260 (back to terminal) is done when stock is returned to Wholesaler - and TT440- is done when stock is returned to Recovery (scrap or AS/IS).

A TT450 is done if the store has completed a quality repair so that the articles with former quality problems are corresponding to original specifications

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- a reversed TT330 is done as well when no action is taken and the articles go back to store stock on hand.

Routine: Described in ASR Rules & Guidelines – Recovery’s part.

TT390 Internal damages

Manner of operation: Decrease stock and statistical GM, no effect on statistical sales. Used by: Sales – and warehouse department Use: Used when goods are damaged in the store. Having too many items in stock increases the risk that goods are damaged. It’s also important to educate staff, forklift driver’s etc, about how to handle goods in order to keep the damages down and to inform of the value of the goods that are damaged. The registration should be done immediately after confirmation reporting. Routine: Described in ASR Rules & Guidelines – Logistics’ part. Best practice: Transfer management All TT 390’s must pass recovery for re-use / re-cycling. Training of forklift drivers. Encourage proper pick bin maintenance. Use pallets vs. product on floor. Keep warehouse neat and organized. Proper placement of products on sales floor. Improve self-choice standards by showing proper function at point of display. Communicate weight restrictions in self-serve area. Control that the correct reason code is used and warehouse co-workers register that

supplier number. Too many articles in stock increase the risk of articles being damaged.

TT391 Received, damaged

Manner of operation: Decrease stock and statistical GM, no effect on statistical sales. Used by: Sales – and warehouse department Use: Used when it’s discovered that goods were damaged when delivered. As the truck drivers take part in loading the truck as well as unloading it’s important that they understand that the store doesn’t accept any damages and that all goods damaged when delivered are reported. Mixed pallets delivery also increases the risk of damages in transportation.

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Only used upon goods receipt, never thereafter and only with accompanying damage report/claim to the wholesaler. Routine: Described in ASR Rules & Guidelines – Logistics’ part. Best practice: Transfer management Receiving co-worker should keep accurate container reports. Ensure receiving co-workers understand the importance of intercepting damages at the

receiving door and to report them according to established routines. All TT391’s must, after being reported, pass recovery for re-use / re-cycling. Control that receiving co-workers uses the correct reason code. Full pallet delivery also decreases the risk of damages in transportation.

TT431+/- Positive/Negative Sales-& Stock correction

Manner of operation: Reduce/Increase sales and stock. Statistical GM is not affected. GM can be affected both ways in connection with 89-sales (use wrong price when registered on sales group 89 in the till). Used by: Goods administration, Cash Office, Customer Service and Sales leaders. Use: Cashier has registered sales on an article on sales group 89 (article number was missing)

and the sales must be corrected to correct article number. Used when sales are moved from an article number to a sales group. Used in case of Off-line transaction from Calypso Used in case of SAMS-GOODS-OUT (customer complaint) Cashier has done a keying error COD articles for display Routine: Sales of unidentified articles: The cashier registers an unidentified article (article without article number) on sales group 89 in the till. Cashier writes down as much information as possible about the article on the 89-form. Sales department must latest the day after identify the unidentified article and a correction must be done so the sales are connected to correct article number. 89-form (including information about correct article number) is delivered for keypunching. Following keypunching must be done: 89 sales group: TT431- (reduce sales on sales group 89) Article number: TT431+ (increase sales/reduce stock). If article number is missing

(outgoing article) use sales group 80. Sales corrections: Department head has decided to stop selling an article on original article number/sales group (A) and start to sell it on an another article number/sales group (B). Article A is corrected by transfer code 431+, which increases sales and reduce stock. Article B is corrected by transfer code 431-, which reduces sales and increase stock.

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Used in case of Off-line transaction from Calypso Routines are described in Cash Office & Cash Line Rules and Guidelines, chapter 6.6. Used in case of SAMS-GOODS-OUT (customer complaint) Actions to solve customer complaints, such as new order sent out, must manually be transferred in/keypunched in MHS (TT431+) based on document from SAMS. Manual Keying error (keying error is not corrected by a return item/sales ): Cashier has done a keying error on an article in the till (wrong article number or wrong quantity). Cashier fills in the Keying error form. The correction is done by using transfer code 431- (reduce sales and increase stock for the article). COD for display: When COD order for display is done with price equal to zero following action has to be taken; Goods administration/Stock Control use TT431- to get the article in to stock (with the value of 0.01) and after that use TT310 as normally for display.

TT440+ Undamaged & Q-article back to Stock

Manner of operation: Increase stock and statistical GM, no effect on statistical sales. Used by: Recovery Use: If articles by mistake are keypunched by transfer code 440-.

TT440- Undamaged / Q-articles to Recovery

Manner of operation: Reduce stock and GM, no effect of statistical sales. Used by: Recovery Use: For last pieces of outgoing articles (maximum 3 pcs in case of Self Serve/Full Serve

articles and maximum 15 pcs for Market Hall articles) Q-articles to Recovery (first do a TT330- transaction, and then do a TT440-).

Write-offs of green plants that perished inside a store. Note: this does not affect the

administrative handling of damaged in-deliveries (still handled via CASY and SL function

during consignment registration) and quality issues (still handled via TT330).

Write-offs of expired products, e.g. shampoo, lotion.

Routine: Described in ASR Rules & Guidelines – Recovery’s part.

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TT441+ Negative stock adjustment

Manner of operation: Reduce stock and statistical GM. Used by: Stock control and Department head. Use: Used to reduce stock on set article numbers and 441- is used to increase stock for respective article numbers. Set articles are when goods in for instance different color are delivered with the same article number and are to be sold on different article numbers. The 441+ and 441- should always be used together and their net should always be zero. Used for articles paid for but forgotten/not picked up by the customer. Routine: Set articles Transfer code 441+ is used to reduce stock on set articles and transfer code 441- is used to increase stock on respective article number (which is the number the article is going to be sold on Articles paid for/not picked up by customer Routine is described in ASR Rules&Guidelines – Customer Service part. Transfers of Ikea Food articles from the store area to Ikea Food area Routine is described in ASR Rules & Guidelines – Ikea Food part.

TT441- Positive stock adjustment

Manner of operation: Increase stock and statistical GM. Used by: Stock Control and Department head. Use: Used to increase stock on a specific article numbers from set article. Set articles are when goods in for instance different color are delivered with the same article number and are to be sold on different article numbers. The 441+ and 441- should always be used together and their net should always be zero. Used for articles paid for but forgotten/not picked up by the customer. Routine: Set articles Transfer code 441+ is used to reduce stock on set articles and transfer code 441- is used to increase stock on respective article number (which is the number the article is going to be sold on

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Articles paid for/not picked up by customer Routine is described in ASR Rules&Guidelines – Customer Service part. Transfers of Ikea Food articles from Ikea food area to the store area Routine is described in ASR Rules & Guidelines – Ikea Food part.

TT450 Recovery – back to stock

Manner of operation: Increase stock and GM, no effect on statistic sales. Used by: Recovery Use: Used when returned goods are recovered back to stock. Routine: Described in ASR Rules&Guidelines – Recovery part. Best practice: Transfer management The ultimate recovery is to transfer a written off article to sellable recovery. A thorough check of the contents sometimes coupled by a replacement or addition of a damaged part and a re-taping of or replacement of packaging. Correction is possible with TT450-

TT456+/- Spot Inventory

Manner of operation: Positive values reduce stock and statistical GM, no effect of statistical sales. Negative values increase stock and GM, no effect of statically sales. Used by: Stock control Use: Used continuously through the FY to increase or decrease the stock figures in spot inventory. The aim of inventory is to show as correct value as possible, in units, volume and value. The stock balance is the store’s basis for: Calculation of goods requirements Calculation of gross profit Following of goods loss, shrinkage

The inventory must be carried out on a continual basis, i.e. every day. We differentiate between three types of continuous inventory:

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Spot inventory, made daily for articles signaled in the system for inventory, articles with negative stock balance etc

Ordered inventory, when there are signals of thefts etc, or if there are other reasons to doubt the existing stock figures.

Inventory of articles with no article number (e.g. sales groups)

Best practice for TT456-/+ Transfer management In common with the follow up of all internal transactions, and especially for the inventory

transfer codes are the importance of clear routines and that these are followed in a proper way. If the routines are not followed this could effect the outcome of the inventory transfer codes.

It is also important that inventories are performed according to the instructions. Otherwise the result of the inventory could be a worse stock balance than without inventory being done.

Control has to be established to avoid internal and external theft.

TT457+/- Annual inventory (yearly inventory)

Manner of operation: Positive values reduce stock and statistical GM, no effect of statistical sales. Negative values increase stock and GM, no effect of statically sales. Used by: Stock control Use: Used once every FY to increase or decrease the stock figure after the annual inventory. Besides the spot inventory a year end inventory of the whole store is carried out and dealt with in the same way as an ordered inventory. Best practice: Transfer management In common with the follow up of all internal transactions, and especially for the inventory

transfer codes are the importance of clear routines and that these are followed in a proper way. If the routines are not followed this could effect the outcome of the inventory transfer codes.

It is also important that inventories are performed according to the instructions. Otherwise the result of the inventory could be a worse stock balance than without inventory being done.

Control has to be established to avoid internal and external theft.

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Transfer Codes, overview

To summarize the recovery in- and outflow this picture serves as a guideline to use correct transfer codes. “Recovery transfer codes” in bold.

AsIS

Returns

Internal

Damage

Received

Damaged

Deco

Q-claims

Stock

adjustments

Inventory

Recovery

Inventory

adjustments

450 (Recovery back to stock)

390

(incl. rsn cde and suppl. no.)

391

310

330

330-

440

441

441-

456 &

457

Recycle Spare

parts

= no reclassification done

325+ 326 (incl. reason code and supplier no)

320 + 321 (including rsn cde and suppl. no.)

(incl. rsn cde and suppl. no.)

440-

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Internal transactions, best practice at Recovery

In common for the follow up of all internal transactions are the importance of clear routines and that these are followed in a proper way. Below there are some guidelines on how the transaction costs could be reduced and how to get money back on already written off articles. Through Prevention: Recovery will lead, the co-operation across functions, on global-, country- and store level to identify and take action on potentials for cost-savings related to our products. The results are measured by total TT costs of total sales.

Through optimizing revenue: When all efforts to prevent costs have failed, Recovery must take bottom-line profit and operational costs into consideration when deciding what and how to recover. The results are measured by the TT450 share of revenue and by the Product Recovery Index. The ultimate recovery is to transfer a written off article to sellable recovery (TT450). A thorough check of the contents sometimes coupled by a replacement or addition of a damaged part and a re-taping or replacement of the packaging. The TT450 share is measured as follows:

The second choice for products, which are not possible to completely recover, is to sell with a reduced price in bargain corner as AS/IS. Products sold here are marked with 9+article number and a price in order to end up in the Product Recovery Index. No reclassification of existing transfer codes is done. The purpose of bargain corner is to generate as much revenue as possible by selling displayed or damaged goods to offset the losses due to transactions. Bargain corner refers to the recovery sales area of the store. Products or parts of products coming from the IKEA range and is still functional can be sold. Compliance with national legislation and IKEA Risk Manual must be followed. Use common sense and take into consideration IKEA’s image when determining if an article should be sold as AS/IS. If a unit is not possible to sell, consider selling it as “building material” in the “Handy Corner” of bargain corner or using it for spare parts and/or hardware. Assembling for bargain corner is an investment in time and only “profitable” articles are built and sold.

Product Recovery Index The Product Recovery Index (PRI) is a measure of the store’s success in minimizing loss. It is a number representing the percentage of the value of goods written off in relation to AS/IS sales, quality credits and transferring articles back to stock. The PRI is calculated as follows:

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Like all good key figures, the PRI has the following benefits: 1. Possible to budget (start by budgeting the transfer codes then budget the PRI goals, the AS/IS sales, back to stock and Q-credits will come out as a function of this)

2. Development can be measured over time

3. Comparisons can be made between stores The normalized goal is to reach a PRI of 65%. If it is not possible to reduce the internal transaction costs and sell the products in ASIS, we must dispose of the products in a sustainable way. Sustainability contribution for the complete store is measured using the KPI from People and Planet Positive strategy “Wasted sorted for recycling in store” (in Kg). Recovery contributes to this goal through disposing in a sustainable way by ensuring that waste coming from Recovery is sorted in fractions, enabling recycling as far as possible.

GL_ASR_Internal_Transactions DEC 2013

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