7 Tips for Effective Retail Inventory Management
In Retail, if you fail to plan your inventory management system, you are planning to fail. Managing inventory is one of the most important aspects of retail, it is also the most time-consuming tasks you'll face in operating a retail store. No matter the range of your product mix, i.e. everybody should have a system whether they are big or small; you'll spend a significant chunk of time tracking inventory. Although it requires work and discipline to maintain, a good inventory system will make it easier to meet the needs of your customers -- the key to growing a successful business. If you do not have accurate inventory total, you will have a much harder time replenishing stock, preventing spoilage, selling through stagnant merchandise and maintaining proper displays.
Here are some advantages of a good inventory tracking system:
- Theft control: Without an inventory system, it's impossible to know if you're being ripped off by customers or employees until it's too late.
- Customer service: You can avoid running out of stock and can determine if an item's in stock and locate it more readily if you keep track. You can also locate out-of-stock items, their prices, and manufacturers.
- Financial management: Inventory systems help you keep track of how you're doing. It makes little sense to go for an entire year without knowing the status of your stock.
- Product tracking: You can track specific items and weed out low sellers with sales or markdowns.
There are a number of computer software programs available for tracking inventory. Some are relatively inexpensive. Many allow you to print and read barcode labels, print invoices, and provide a complete array of reports and statistics. While you may have a software that calculates your current inventory, performing a visual inventory also tells you if your loss-prevention techniques need to be changed and allows you to spot items that may not be performing as well as they should. Below are quick ways of quick ways of performing a visual inventory;
- Print out a current inventory list: This list should include everything you currently have on hand in your store as well as the current amounts of each item. If you have stock-keeping units (SKU) on your products, make sure that the inventory list also includes a description to make the inventory process easier.
- Assign each employee to a different section of the store: If you have a few helpers, assign each one to a specific area of the retail store. For example, one can handle jewelry and accessories, while another handles men's clothing. If you are doing the inventory on your own, start with one department and work through each one before moving to the next.
- Go through each item on the list and count the current stock: You may want to count through each item twice just to double check. It is easier to be certain of your hand count the first time rather than having to go back to figure out potential problems later.
- Mark down on your printout how many items you actually have: Ideally, this number will match the number on your printout. Write down your number in pencil in a separate column or next to the printed quantity.
- Go through any damages or returns you may have had: Often, inconsistencies in stock amounts can be traced back to damaged items or returns that were not properly accounted for. If you have a return stockroom, go through these items and match up their SKUs or descriptions.
- Reconcile the hand count with the printed count: This last step will help you determine the actual inventory in your retail store. If necessary, recount any items that may not match up.
- Update your inventory software with the correct amounts: Once you have determined the actual inventory, make sure to update your software with the new amounts.
Many retailer managers don’t see the value in doing physical inventory counts. That’s a mistake. Paying attention to the stock you have on paper vs. what is actually in-store will help you maintain inventory accuracy and identify causes of shrinkage, as well as ensuring that you have the products in stock to meet customer demands. Overall, accurate inventory management is an indicator of your store’s health, influencing your potential to increase revenue and forecast the future.
Follow the inventory management techniques above and your retail store or e-commerce business will soon be running an efficient and effective small business inventory management system.
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