By: Josh Wintoniak
What’s in a number?
No, we’re not talking about your age, numerology, your lucky number or even your favorite player’s jersey. We are talking about inventory. Auto-Star has been developing inventory management systems for over 30 years. From pharmacy to supermarkets, our customers all across North America see the benefit of using software solutions to help them manage their inventory more effectively. Sometimes though, it’s good to take a step back and ask why? Why are we spending the time and effort to track our inventory and make sure that we know that magic number we call inventory on hand? What are we really getting out of it? Some of the reasons may be obvious and some you may not have considered.
Let’s take a look at the top 10 reasons for inventory management to find out what’s really in a number:
1. More Accurate Ordering
This may seem obvious but its importance cannot be overstated. The products you buy and put on the shelf is one of the biggest investments that you make in your business. How can you know what to order and keep on your shelves if you don’t know what you have? Whether you are manually creating orders, using our suggested ordering or some combination of the two, you need to know what you have so you know what you need.
2. Customer Service
Ever ask a store clerk for your favorite product and watch them fumble around, running from the shelf to the stock room while you patiently wait for them to figure it out? Having an accurate inventory figure in your retail management system eliminates this problem. Your staff can quickly and easily tell your customers whether you have a product on hand right from the point of sale. The right system can even tell them where to find it.
3. Vendor Management
At best our suppliers can be real partners, helping us to grow our sales and manage our inventory more effectively so we grow together. At worst, they short ship, add on extra items and send us damaged or expiring products. Using our Purchasing and Receiving Module as part of your inventory management process will ensure that you are getting exactly what you ordered and can easily track and respond to those times that you don’t.
4. Employee Efficiency
Your staff have better things they can be doing than searching for product and manually receiving. Empower your employees to provide the great customer service you probably hired them for by giving them the tools they need to accurately manage inventory as efficiently as possible. Spending the time to track your inventory effectively will make ordering, receiving and those dreaded year-end inventory counts a breeze. Working with the right technology partner will make this process simple, accurate and efficient.
5. Avoid Expired Product
There’s nothing worse than having to discount product because it’s getting close to its expiry date. Effective inventory management will help you to identify stale dated and expiring product. Easily run a report to know what may be approaching its expiry date and make sure that you’re merchandising effectively to get it out the door before you are forced to mark it down or write it off.
6. Avoid Damaged Product
The longer a product sits on the shelf the more likely it is to get bumped, dropped and damaged. Inventory management processes like cycle counting, helps to identify slow moving items so that you can blow them out to make space for products that will sell. Having a process for tracking your damaged or returned product is an important part of inventory management. This will allow you to identify patterns and trends that are costing you money.
7. Cost & Margin Control
We already know that inventory is one of the biggest investments that we make in our business. You wouldn’t invest in the stock market without knowing how much your stocks are worth and what your return is would you? Properly using an inventory management system is going to give you the control you need to maximize profit while identifying problem areas. More advanced systems allow you to more accurately track inventory value on a FIFO (First in, First Out) basis while accounting for promotional costs and vendor discounts. Accurate inventory cost can also be factored into suggested ordering. Minimum stock levels can be set based on inventory cost to ensure that your systems are suggesting you re-order low turnover items as long as their cost falls within an acceptable threshold.
8. Loss Prevention
Nobody wants to think about this but according to the National Retail Security Survey inventory loss is about 2% of sales. If your store does $1M in sales per year that’s $20,000 disappearing from your bottom line. Inventory shrink happens in a number of ways that Inventory Management will lower. Employee theft, shoplifting, paperwork errors and supplier fraud are the leading causes of shrink. These issues are all addressed with effective Inventory Management systems. The number will never be zero but technology can help you get your inventory loss as close to it as possible.
9. Cash Flow
We love working with small businesses. One of the most important issues for a small business to manage is cash flow and this may be the most important benefits of an effective Inventory Management system. Our software will directly affect your cash flow by helping you to assess your inventory investment and improve inventory turnover to improve cash flow, increase sales, improve margins, decrease shrink, improve customer service and improve employee efficiency.
10. Knowledge is Power
Our customers are experts in what they do. Whether they are advising a patient on drug interactions, suggesting the best cut of meat, picking out the perfect tomato or finding the right natural solution to a health issue, they are leaders in their industry. Our reporting and analytics solutions are just here to reinforce their knowledge, experience, expertise and gut instinct to help them make decisions to improve their business. Web-based dashboard reporting and analytics are great but only if there is accurate information to report on. Having the right tools for inventory management will ensure that you can make decisions based on the best possible information.
As we can see there really is a lot in a number. My lucky number is 12 but I know that if I really want to improve the odds of my business succeeding, I’m betting on effective Inventory Management.
Did we miss anything on this list? Let us know, we would love to hear from you.
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