Last Updated on Apr 1, 2020 by James W
If there is one thing that works well for successful retail businesses, big or small, it is a well managed and well organized inventory system. Stores that neglect good inventory management practices run the risk of disappointing their customers. Mismanagement can cause stock shortages and, worse, damaging the products that they sell. Now that we established just how important inventory management is. Let us see what businesses can do to ensure that they keep running a smooth operation. Particularly, we are going to look at inventory management software and what it can do for us.
The Functions of Inventory Management Software
Retail is essentially the movement of products from suppliers, then the shelves, and finally the store’s customers. Since this pipeline of supplies has a limited bandwidth, there needs to be a system to manage it and hence was named inventory management. Other than being the lifeblood of the retail supply chain, inventory management also allows the store owner and staff to monitor the same chain.
Inventory management software came about to automate the functions of inventory management. The reason you can see the stocks of online shops in real time is because of such a system. However, having inventory management software does not mean that the responsibility of the management is lifted. In fact, with an inventory management software in place, the cost of making a mistake becomes much more pronounced. Imagine mistakenly ordering for 10 times more the amount you intended because of an erring zero.
Use Inventory Management Software to Prioritize Your Goods
Prioritizing in inventory management means grouping together products in terms of reorder frequency. Depending on the range of goods that your store sells, the number of groups and what they represent should vary accordingly. For instance, a specialty store normally has only a few types of items and do not expect that a certain type of product would sell out on a daily basis. This means that their first priority group should be reordered either weekly or monthly. Then, they may have items that are sold seasonally which could then make up the lesser priority group. On the other hand, a store that sells everyday use supplies like toiletries and canned goods, should expect to have a priority group that has closer reorder times.
When using inventory management software, the store staff could set by adding a field to correspond to each item. This field will then determine the priority group of the item, and thus, how the item will be ordered in the future. The maintenance of this information is the task of the inventory staff. It is necessary to keep this value updated should the need arise. However, an auto-update system may be necessary for products that routinely changes priority. These kinds of products follow a seasonal pattern, rather than a consistent one. Some products will also be caused by a trend then die quickly with it. These are a few things that you need to consider when taking the task of monitoring the prioritization of your items.
Using artificial intelligence and machine learning, grouping products can be done through a software pattern called decision support systems. In cases like these, the system will learn from experience and recognize how the products will trend through a forecast. After reading the forecast, the store owner can then decide what action to perform. This capability is quite advanced for an inventory system but is slowly becoming more common. But since it crunches quite a lot of numbers, the infrastructure expense could be substantial as well.
Let The Inventory Management Software Store as Many Info as Possible
As with any tools in our disposal, the goal is always to optimize its value. The case is true with inventory management software as well. I have seen a lot of retail stores that keep it way too simple. Some just jot in the SKU of the item with wanton regard for anything else. Most inventory management software will let you fill in, apart from the basics, info about the actual product itself such as net weight, dimensions and distributor. There will come a time when these values will be needed to enable other inventory management software functions.
An example of an inventory management software feature that requires rigorous information tracking is the ability to predict the size it will take up in a store room. Given the dimensions, and the shape of a store room, or rooms for bigger retail stores, the predicted capacity can be computed. This can only be possible if the info about the dimensions of the product, weight, stacking height, content and other information is available.
Use Inventory Management Software to Profile Your Suppliers
While not a salient feature, most inventory management software actually allows you to profile your suppliers. The bigger the store, the more complex the supplier matrix becomes and this can be difficult to track especially if these suppliers may have overlapping markets. When you profile your suppliers, you will be able to get a hold of vital information such as delivery time and the quality of the delivered goods. This way, you can decide which supplier to put on top of your preferred ladder and which ones to blacklist altogether.
Suppliers often fall down the chain of importance when it comes to managing inventory when the store is still small meaning that they also have suppliers. This is dangerous for the store simply because there is no data available to predict the supplier movement. So, when using an inventory management software, make sure that each inventory entry has the supplier field filled.
Track Sales in Your Inventory Management Software
Finally, the last stage of an item in a store is when that item is sold to a consumer in what is called a sales transaction. These transactions are normally recorded however it is often understated how this impacts inventory management. Sales should be the one who dictates the frequency of reorders for each product.