Retail inventory management is not simply stacking products on shelves and ringing up sales. It’s a complex set of practices that involve tracking, forecasting, ordering, and analysing.
Raw materials, work-in-progress and finished goods inventory are the three categories of stock a business uses to record its operations. Retailers can use ABC analysis to categorise lists based on profitability and sales volume. For more information about the retail inventory management software, click here.
Inventory Management Software
If your retail business relies on inventory, you need a reliable and effective tool to manage it. Inventory management software is designed to streamline and automate your business operations. It can help you improve efficiency, reduce costs and quickly meet customer demand.
Inventory management software can track product data, identify best sellers, determine sales trends, optimise supplier purchasing quantities, and fine-tune fulfilment processes. It can also integrate with your other systems, such as POS, CRM and accounting solutions, to streamline the order-to-fulfillment process.
Cloud-based inventory management systems are typically less expensive than onsite hardware solutions, eliminating the need for costly maintenance. They can be accessed via the internet and are easy to deploy. It allows SMBs and startups to invest their capital and profits in other growth-oriented activities rather than focusing on maintaining hardware infrastructure. They can also be easily scaled to support increasing sales and inventory levels. It would be best if you chose a vendor that offers open APIs and pre-built integrations with popular platforms to ensure flexibility and ease of integration.
Inventory Tracking
A key component of retail solid inventory management is tracking inventory levels, which tells retailers how much product they have. Consistently accurate stock counts help reduce a business’s storage and carrying costs and minimise stale inventory, which can result in a stockout that frustrates customers and damages the brand’s reputation.
Retailers can track inventory using various methods, including barcode scanning, RFID, and advanced mobile applications. These technologies reduce human error and make implementing best practices like cycle counting easier.
Quantitative forecasting uses historical sales data to anticipate future demand. For example, if you know that a particular product is usually more popular in the fall than in the summer, you can plan to increase inventory levels during those months. It helps you reduce stockouts and improve customer satisfaction.
When forecasting, it’s important to use comparable periods. For example, a forecast that looks at sales over the next two weeks is more likely to be accurate than one that looks at demand 12 months out. Also, review trends and marketing variables that might affect sales. For instance, if a particular marketing initiative positively impacted sales, you might want to factor that into your forecasting process. Finally, don’t forget about analysing lead time (the amount of time it takes your supplier to deliver new inventory after you place an order). It will help you determine when to place your orders with suppliers.
Inventory Reorder Points
Reorder points are a crucial part of inventory management. They determine when to reorder raw materials or finished goods so that stock levels remain healthy and you don’t have too much or too little of any one item. Reorder points are calculated using a formula such as average daily usage multiplied by the lead time (the number of days from ordering to getting the inventory into your storeroom) plus safety stock, which is a buffer or contingency supply that you want to keep on hand in case of sudden high demand or slow deliveries.
Inventory Analysis
Inventory analysis is the process of evaluating the level, movement and management of a company’s stock. It can include analysing key performance indicators, such as inventory turnover ratios, days of inventory, and reorder points. It also includes implementing methods, such as ABC analysis, to categorise lists into groups based on value and importance. The goal is to optimise inventory levels so that a business minimises carrying costs while having enough stock to meet customer demand.