Retail inventory management is more than just counting up how many units of each product you have in stock. It’s the art of finding the right balance: of having adequate product supply to meet customer demand, without having an excess of slow-moving items taking up valuable shelf and warehouse space.
What is inventory management?
Retail inventory management is the art of optimising your inventory levels, starting with your supply chain and ending with order fulfilment, both for in-store sales and online orders, and continuing on past the sale, to handling returns. It’s a process with so many moving parts that it becomes a complicated aspect of a retail business when you don’t have the right tools to you help manage the movement of products in and out of inventory.
Why is inventory management important?
Inventory management has the potential to affect everything from profit margins to the customer experience, making it a vital part of any retail operation. Inventory management impacts your operational costs and your ability to provide a positive customer experience. Run out of stock on a popular item, and you’ll be turning away frustrated shoppers who may well take their business to your competitors. Purchase too much of an unpopular item, and not only will it take up room that could be devoted to more profitable products, but you may end up having to slash the price or even sell at a loss just to get rid of it.
Inventory Management Techniques and Best Practices
Fortunately, software solutions such as iVend Retail Inventory Management can streamline your operations and take a lot of the headaches out of finding that ideal balance. Here’s what it will help you do.
Efficiently Track Inventory Across Channels
Inventory management software should integrate with your point of sale (POS) system to accurately track products across all of your locations and purchasing channels (brick-and-mortar stores and online). It will enable you to move to a single stock pool model in which all orders are filled from a centralised source, rather than having separate allocations of stock for each store or ordering channel. If an item sells out at one store, an employee can check its availability at other locations and have it sent to the store or even straight to the customer.
- Expedite Accurate Stock Counts
The days of manually counting items and using spreadsheets for inventory management are long past. Handheld devices enable your employees to perform cycle counts much faster and more accurately with barcode scanning. Not only are costly human errors reduced, but employees can use the time they save more productively, assisting customers by checking stock and product information from anywhere in the store.
- Use Data and Reporting to Identify Trends
Your POS system will automatically update your inventory counts with each sale, giving you real-time visibility into which products are moving, at what locations, and how fast. These reports will help you identify stagnant stock so you can stop ordering those items and decide how best to unload them (such as discounted pricing or a “buy one get one” offer). Accurate real-time counts enable you to avoid not only over-stocking but also stock outages, as you can receive alerts when it’s time to re-order.
- Make Strategic Purchasing Decisions
Good inventory management improves your forecasting abilities. Armed with the knowledge gained from your inventory reports, you can make better informed purchasing decisions that will increase your profitability. You’ll be stocking sufficient quantities of what sells (thereby keeping your customers happy), and avoiding what will sit idle on the shelf. On average, iVend Retail clients experience a 10% reduction in inventory carrying costs. Inventory management software is an essential tool for striking that perfect balance.
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