Why is inventory management so important? How does inventory control benefit the average retailer?
Inventory is often the largest asset on your balance sheet and can
account for as much as 75 percent or more of your total assets.
A major expense attributed to carrying inventory is ‘shrink.’ Shrink
is what happens to your inventory as a result of theft and
administrative error and/or mismanagement – your inventory shrinks or
disappears. It stands to reason, if you can control and limit your loss
of inventory, you are saving money or increasing profits.
By having an accurate physical inventory and access to real time data
analytics, you can easily monitor stock levels and identify products or
items with high levels of shrink. Products identified with high levels
of shrink can be monitored closely, packaged or repackaged, marketed or
merchandised and distributed differently to help reduce losses.
If you are unable to easily and quickly identify what your poorest
and best selling products are, in real time, you could be in for some
heartache. Carrying products can be a significant expense for merchants.
By knowing what products you should mark down or otherwise discount,
you are able to clear out your inventory rather than have slow moving or
non-selling products languishing away in the dark recesses of your
dusty backroom.
By knowing you are getting low on your best selling product, you can
place the restock order in time to ensure you are never without your
best selling product on the shelves.
How important can that be? Say your store or chain is being plagued
with losses from higher than normal returns due to the poor economy.
Let’s consider how your inventory control policies can be affected by
using an outdated system. Because things seem to be picking up you’re
very busy and a return takes at least 10 minutes or longer. Typically
your process was fraught with the danger of mistakes and fraud, chipping
away at your bottom line.
Paper-based management and transactions with receipts that are
required to execute returns are a perfect example of how costly mistakes
are made. Let’s say you capture all of your customer information on
handwritten forms at the point of sale. You then transfer that
information by typing it into a computer, which produces a new receipt
that reflects the return transaction. The customer signs the receipt and
you keep all of the paperwork for reconciliation later.
This is a laborious process that is not designed to catch mistakes.
Oftentimes customers returning discounted merchandise receive full-price
refunds because there are no reports or records to consult.
Receipts should be bar-coded and a simple scan of that bar code pulls
up the entire transaction history, as it occurred in real time. The
actual sale price is recorded and a receipt cannot be used more than
once for a return. A receipt can’t be faked and returns can be processed
in seconds.
Capitalizing on the available technology to efficiently monitor and
control your inventory can be done easily without breaking the bank. In
fact, there are solutions that can easily and quickly be implemented by
merely downloading an app. The app is priced as an affordable monthly
fee enabling an almost instant return on investment (ROI). There are no
expensive point of sale (POS) licensing fees and no heavy investment in
POS system equipment or training regimens.
Control and manage your inventory and you will also be controlling and managing your business destiny at the same time.
Thanks to today’s affordable technology, you can use POS system
features and enjoy the benefits that enable the easy management and
control of every aspect of your business and related inventory so you
capture every possible profit you’re entitled to.
Rick Berry Post from: SiteProNews