Strong sales are the backbone of a retail or e-commerce business, but inventory management can mean the difference between success or failure. Retailers who have a hand in inventory management likely understand how it might feel more like a tightrope balancing act than a business operation. Without effective inventory management techniques in place, retailers make their businesses more susceptible to costly stockouts and related issues.
Retailers, manufacturers, wholesalers, warehouses – nearly every business can benefit from inventory management best practices that streamline operations and processes and keep inventory, assets, and equipment in check. From correctly balancing stock in warehouses to ensuring production can continue to flow, inventory management is essential for keeping businesses up and running and the bottom line healthy.
Implementing inventory management best practices is one of the best ways to maintain transparency of stock and assets, keep accounts in line, and create reports for stakeholders.
What is Inventory Management? Inventory management is a part of the supply chain where inventory and stock quantities are tracked as things move in and out of the warehouse.
Here are 6 inventory management best practices in a retail store:
1.Automate Everything you Can
Retailers should automate the inventory management process as much as they can. The most important thing a retailer can do when it comes to inventory management is to use software such as CompuLynx Retail (CORE) Point of Sale POS that does the heavy lifting for them.
Retailers always have to do some physical counts to make sure actual numbers match what’s in the system. But a Point of Sale System (POS) also show a retailer which product categories are most profitable, what types of products are popular on which days of the week, and other valuable insights that can help retailer purchase more strategically.
2. Track by Batch and Expiry Date
From raw materials to finished goods, batch and expiry date tracking allow retailers to see where each collection of inventories has come from, where it’s going, how much of it is left, and when it will expire.
Batch and expiry date tracking are critical for several reasons:
- Avoid inventory spoilage
- Identify which batches to sell first
- Ensure you’re selling in-date checked goods
- Remove specific batches in the event of a product recall
3.Leverage Technology to Understand Inventory Flows
Supply chain leaders need to leverage technology to understand inventory flows. The types of technology available range from RFID-connected sensors to GPS-enabled systems. As supply chain leaders gain the ability to track more granular detail and data, such information can be processed with advanced analytics capabilities to understand how inventory moves within and outside of your warehouse.
4. Remember to Count Inventory in Transit
Tracking inventory while in transit is also critical to the success of the supply chain. Inventory in transit forms a considerable asset for organizations in the global supply chain. Failure to track such inventory will naturally lead to problems with replenishment strategies.
Inventory Key Performance Indicators (KPIs) measure performance in a particular area over a certain period, toward a certain goal. Setting KPIs helps to eliminate guesswork because retailers have clear milestones to hit on the timeline they set, whether it is weekly, monthly, quarterly, or annually. Using these, retailers will have the data they need to make informed decisions about what to do next in their business. Some KPIs you may wish to focus on include:
- Inventory carrying costs
- Inventory write-off and inventory write-down
- Rate of inventory turnover
- Order Status and Tracking
6.Safe Stock Inventory
Safe stock inventory refers to a small surplus of inventory retailers keep on hand to protect themselves against variability in market demand and lead times. If retailers don’t have some kind of safety stock inventory on hand, they could lose revenue, lose customers, and even market share. When retailers have a safe stock inventory, preventing stockouts, protect against unexpected demand spikes, compensate for inaccurate market forecasts, and ultimately, create a buffer for longer than expected lead times.
In conclusion, proper inventory management can be the difference between a lost sale and a lifelong customer. Implementing these inventory management best practices begins with setting your business up to do so accurately and effectively. Choose the right inventory management system for your business, adopt a POS that integrates with your inventory management software and technology stack, and consider which inventory management best practices will make the biggest impact on your business.
By Carolyne Rabut
Content Marketing – CompuLynx