Do you know an Inventory Management System?
- superstoresolution
- Apr 23, 2022
- 4 min read
Inventory changes constantly. Throughout each day, sales, returns, new receipts – even damage and theft – affect your inventory levels. While daunting, effective inventory management and inventory control are the most important jobs in a successful retail or wholesale business.
Effectively managing inventory gets harder as your business scales and the amount of inventory you’re handling increases. Taking advantage of technology can make things easier for yourself and your employees. This is why an inventory management system is invaluable to any retail business.
Keeping track of your inventory is fundamental to your success in retail.
Listed below are the top eleven benefits of effective inventory management. They all combine to explain the importance of accurate real-time tracking of stock, and can be easily achieved by using dedicated inventory management software.
When you don’t keep an accurate inventory report, it’s easy to run out of products and miss out on sales. Instead of relying on your memory or a visit to the warehouse to decide what to reorder, use an up-to-date inventory report to:
Depending on what inventory software you use, you also might be able to set minimum inventory levels for each item. Then you can view the list of products that are below that level and place and send new purchase orders quickly.
To be successful in retail, you need to invest your cash wisely by buying the right quantity of each product – enough to keep sales going and prevent stock-outs, but not so many that some items just sit on the shelf and increase carrying costs.
Keeping accurate inventory reports helps. You can quickly identify slow-moving products so you can mark them down and clear them out to free up cash to invest in new products, marketing and more.
Accurate product reports produce accurate inventory cost values, which are essential to the precision of several financial reports if you use cost of sale accounting.
This method associates a cost, which comes directly from the product’s asset value with each sale.
That makes correct cost values critical to your balance sheet, as well as your cost of sales and income statement, upon which many management decisions hinge.
If you’re keeping an eagle eye on your inventory levels, you’ll spot problems right away – instead of months later during annual cycle counts when the discrepancies may have already cost you a lot of money.
Maybe a step in your warehouse process is being missed? Perhaps there’s an error in your reorder point formula? Or one of your salespeople is making mistakes on sales orders? You need to know now!
The best way? By constantly reconciling sales and purchases through a tightly maintained inventory management system.
Exact inventory reports also help you provide better customer service. When customers say they haven’t received one of the products they ordered within a given time, it’s not enough to check in with your supply chain management. If the product’s been lost, you need to be able to check your report and confirm that you have one extra in the warehouse.
Likewise, if you regularly keep on top of inventory levels, you can identify incorrect shipments sooner. And if your inventory system is up-to-date with purchase orders, you’ll be able to sell customers the products they want because you’ll know new inventory is on the way. This kind of communication encourages your customers to trust you, which in these competitive times, is a valuable asset.
This means you can work methodically through your product set, making informed buying decisions instead of physically checking individual SKUs on your warehouse shelves to write a purchase order.
If your reports come from advanced inventory management software, you also can see if you already have products on order with a supplier and if your supplier has long lead times or irregular deliveries on finished goods. This information is a must if you want to keep reordering under control.
From theft to loss to damage, products can be lost in many ways. But if you manage accurate inventory levels, you can identify issues quickly.
And while no one wants to think that their staff may steal from them, it pays to be vigilant. Showing your staff that you keep an accurate inventory is a great theft deterrent.
Running an efficient and profitable business is all about sharing and using accurate information. One way to do this is through an software system that integrates with everything from your point of sale devices to barcode scanners.
If your staff knows that the inventory levels in your system are always up-to-date, they’ll trust the software and use it more for all of their tasks. And you’ll end up with cleaner data as a result for better reporting, collaboration and efficiency across the team.
Your warehouse staff don’t need to run around looking for a missing inventory item because you know exactly when it sold and shipped.
This enables you to process more orders in the same amount of time with the same staff – or balance your resources differently. Accurate inventory levels can keep your business lean! Find out how to optimize your warehouse with Bright pearl here.
When all your inventory levels are up-to-date all the time, periodic cycle counts are faster and more efficient because you’re just confirming data that’s already in your system instead of doing a lot of time-consuming data entry.
In the event of high order volumes, such as those that arise during peak trading seasons, flash sale events, or when celebrities step out in your products, your inventory numbers will be able to keep up in order to keep your sales flowing profitably across all channels – but only if the numbers are accurate to begin with. Demand forecasting is key to reducing the total cost of managing a business.
For growing retailers, especially those adding locations or channels, inventory management can seem overwhelming. We hope these eleven benefits of inventory management illustrate that the efficiencies you’ll gain make it well worth your effort. A little focus on this foundational piece of your business can bring big rewards.
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