Managing inventory is one of the most important aspects of retail. Automation is easing up the retail sector – both online and offline. Alongside automation, some crafty techniques can help retailers manage their inventories better.
Retail Inventory Management Tips
Here’s a list of those techniques:
Accurate Calculation and Tracking
Inaccurate calculation leads to wrong ways of managing inventory. To fix it right, work on inventory tracking and supply chain management. Outsourcing the latter can burn a hole in a small business’s wallet. Inventory solutions like rent-a-space, warehousing, etc are hardly free. So make sure your projections are accurate.
When making a projection, don’t simply consider how much you can stuff in the facility. Consider how much you’ve sold in the previous month, and the month before. If you have been selling 50 merchandise (give or take a few) every month for last couple of months, project a number close to 50. Do consider seasonal uptick though.
As for inventory tracking, eliminate miscounts at all cost. Mistakes are quite common during order-fulfilment. Use barcode scanner and electronic data interchange (EDI) so that not a single error occurs. Remember, spending too much on inventory management can reduce your profit margin if your calculation and tracking methods are flawed.
Discriminate Between Items
Some of the items are best-sellers while some are slow-moving. As a retailer, you need to discriminate between them and readjust your inventory management strategies accordingly. For example, an item that moves fast is likely to run out of stock. Hence, its procurement and availability is a top priority. Do bear that in mind when you devise a space allocation strategy for your inventory.
Slow-moving items occupy the shelves for a long period of time. Such products often eat up space, because of which the supply for fast-moving items fail to match up with the demand. Large businesses use pricey software solutions which can figure out how much loss the retailer is making due to these slow-moving products. Small businesses, on the other hand, must instruct suppliers to deliver freshly produced goods.
Set Your Priorities
Not all items matter equally. Some items matter more than other items – that includes the bestsellers and the upcoming seasonal top picks. As a rule of thumb, 80% consumer demand is generated by 20% of all items. Constantly review the in-stock position of those items because these are your priorities.
Experts believe, among the rest 80% inventory items, 30% make up the 10% of customer’s pick. Stocking these items should be the next priority for the retailer. The slowest-moving items make up the rest 10% consumer demands. Hence, those items should be at the end of the priority checklist.
Most retailers use automated solutions which assist them in several ways. Alongside, automation can making physical counts of inventory super easy. Smart retailers keep a manual track using spreadsheet. I advise them to use Google Spreadsheet because it’s cloud. There are software like Sage 50, Peachtree, Quickbook, etc that come with spreadsheet and accounting solutions.
Quick Order Processing
Slow order processing can clutter inventory management. Install a state-of-the-art order management system to monitor everything related to order processing, starting from placement of order to shipping the item to the exact street address of customers.
The benefit of quick order processing is it eliminates the need to send items back to the warehouse. Besides, it keeps retailers posted about their current inventory status. There’s a proven method to make order processing effective – playing the intermediate between manufacturer and the consumers.
It’s called drop shipping and it’s incredibly popular among customers. In case of drop shipping, the retail store purchases the product from third-parties and send it to the consumer. For e-commerce companies and small retail outlets, out of inventory or storage option, drop shipping comes in handy. Here are ten drop shipping companies.
Aim for Stock Optimization
Stock optimization ensures efficient inventory control. Techniques that guarantee stock optimization includes:
- Inventory audit and budget
- Inventory turnover ratio
- Automatic inventory system
- Updated stocking policies
An inventory budget should be inclusive. It should cover all kinds of costs. The total cost at the end must combine logistics cost, cost for redistribution, operation and carrying. Inventory turnover ratio is a bit tricky. The higher the ratio, the higher the sales volume. Automatic inventory system is easy to install because of ERP and WMS.
As for stocking policies, retailers must update them every year. Revising the minimum and maximum stock levels can help them meet changing consumer demands. Re-order and safety stock levels also need to be revised each year.
Top Software Features
Hundreds of inventory management software are out there. Selecting one is not easy at all. That’s why retailers need to zero in on selective features – features that can help them optimize their stocks and manage their inventories better.
Here are the features that cutting-edge inventory management software should include:
- Multi-channel selling: This one’s important. Customers access online retail sites from several types of devices. The software must accommodate them.
- Reduction of paper flow: This one’s important as well. Reducing paper flow is a precedent when it comes to enhancing warehouse productivity.
- Operation consolidation: Managing everything including shipping integration, order management and inventory optimization from a unique dashboard is empowering for retailers.
- Scheduling: Scheduling repetitive tasks such as physical counting can be useful. Advanced software come with this feature.
It’s not possible to downplay the importance of automation in retail. Make an informed choice, select software with the said functionalities.
Retail is rapidly going virtual from physical. With that, the need for better inventory management is surfacing. The tips here can help retailers – be it a large business or small business, meet that need.
Inventory Scanner Photo via Shutterstock
Automation can help and so does categorization. I think this is how businesses with big inventories do it.
Using software can make or break the business.
With advancement of technology, using softwares to automate the process is the way to go
You’ve got some great inventory management tips here. I love how you said that your priorities should be set on the items that are most important. It makes sense that your highest revenue generating items are more important. That’s something I never would have thought of if I owned a business.