CEO, National Retail Solutions (NRS). NRS POS, NRS DIGITAL MEDIA, NRS PAY, NRS FUNDING and NRS PETRO: Helping independent retailers succeed.
Inventory management is a critical process for retailers, enabling them to optimize their resources and maximize profits. Effective inventory management requires retailers to maintain an optimal balance between supply and demand, ensuring they have enough stock to meet customer needs while minimizing the risk of overstocking. Poor inventory management can lead to lost sales, excessive inventory and reduced profits. To stay on top of their inventory, retailers can invest in inventory software, improve warehouse management, utilize forecasting and analyze inventory costs.
Investing In Inventory Software
Retailers can manage their inventory through inventory management software through a point-of-sale system that can track stock levels, sales trends and more. This technology can also help retailers identify when to reorder products and how much to order. This helps ensure retailers have the right stock to meet customer demand without overstocking and tying up capital.
Improving Warehouse Management
Retailers can also manage inventory by implementing effective product categorization and organization. Retailers should consider using a stock-keeping unit to do this. SKU is a unique code assigned to each product that can allow retailers to track the movement of inventory and help differentiate all distinct items in a warehouse. Often, it is a barcode on a product that contains the product information. While retailers are using the SKU code system, they should label all of their products and put up signs in the warehouse to ensure that employees can quickly locate and identify products. This can help streamline inventory management and shipping processes and reduce errors. Additionally, a clear labeling system can improve customer satisfaction by ensuring that the correct product is delivered.
Utilizing Forecasting Demand
Another way retailers can improve customer satisfaction is by utilizing forecasting demand to ensure they can meet customer demand. To do this, retailers need to track past data using inventory management software to ensure accurate inventory levels and stay on top of trends based on the season, customer behavior and customer preferences.
Retailers must remember that the demand for their products may change over time because of competition, the economy or supply chain issues, so it is vital to update and review product forecasting consistently. That way, they can ensure they have the proper inventory to avoid overstocking or stockouts, which can negatively impact their bottom line.
Analyzing Supplier Performance
While retailers are trying to manage their inventory, it is also critical that they ensure that they can get quality items that arrive on time for their customers. When items are delayed or out of stock, it can lead to dissatisfied customers and lost sales opportunities.
Therefore, retailers need a reliable supplier and contingency plans to mitigate any potential disruptions. When researching which suppliers to work with, retailers should ensure that they have many years of experience, high-quality goods and best-value items and are able to build a good relationship. In my experience, if retailers find a reliable supplier and foster a good relationship, their supplier will give retailers what they need for a fraction of the cost so as to entice them to place larger orders and buy more from them in the future.
Saving On Storage Costs
Keeping an eye on inventory coming in and out of the store is essential, but retailers should also be aware of how long inventory stays on the shelves. Otherwise, they could end up paying more than they should. To ensure that retailers aren’t spending too much money on storage, they should calculate inventory holding costs. For example, detailed storage costs include inventory, employees, opportunity and depreciation costs. Retailers can add these amounts and divide the number by the total value of their annual inventory. The total is expressed as a percentage and is the inventory holding cost. To save money on storing inventory, retailers should avoid overstocks, eliminate dead stock, reduce inventory turnover times or outsource inventory storage.
Being Strategic
Retailers also have to contend with implementing new strategies to keep up with the constant evolution of technology and consumer behavior. There are many inventory strategies available for retailers, such as the just-in-time method, which can help minimize inventory costs and maximize profits by ordering products when they are needed rather than keeping excess stock on hand. Another strategy is ABC analysis, which categorizes inventory based on value and helps retailers prioritize which items to focus on managing more closely.
Even though managing inventory can be a complex and challenging task for businesses of all sizes, with technological advancements, there are numerous ways for the process to be more efficient. Technology has revolutionized how businesses can save time and money in the long run, from inventory management to barcode scanning and real-time tracking. With a thoughtful strategy, retailers can harness this technology and remain competitive in today’s rapidly evolving business landscape.
Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?
Read the full article here
