Proper management of your inventory is key to your bottom line. To get a handle on what’s in your shop, you need to either choose the right inventory software program or decide where to outsource inventory management.
Your inventory is the lifeline of your retail business, and it’s vitally important to monitor that lifeline consistently. Your goal is to be well-stocked on inventory items that are moving, be on top of hot-selling items that need to be re-ordered, and stay aware of the dead wood, that is, inventory items that are not selling but merely taking up space on your shelves.
To understand how correctly managing your inventory can help your bottom line, read Inventory Management for Good Cash Flow.
While a wide range of excellent point of sale (POS) inventory management software products are on the market, the bottom line is that you, as a retailer, need to be on top of your inventory situation. Computer programs cannot, and should not, make your decisions for you. There’s an art to inventory management that comes with experience and observation. Remember, software programs are simply tools of the trade. A good retailer analyzes the data from the software and plans ahead. Looking at an inventory spreadsheet, you should be able to track ongoing sales of each item, find the profit margins, and know how much of an item remains in stock. While the printout may tell you it’s time to re-order, only you can determine if the item is out of favor with your clientele, out of season, or out of date.
Choosing the right software
Obviously, comparison shopping and recommendations from other retailers are advantages when shopping for inventory management software. Most software today can provide data in many configurations, such as best-selling items, most overstocked or understocked items, etc. Additionally, many software applications can produce purchase orders and keep track of orders already sent.
However, there are other things to consider in a good POS inventory system:
- Does the software track inventory by classification and department?
Note: This feature can be very helpful to determine where to best display merchandise for optimal sales possibilities.
- Can the software be set up to track seasonal products?
- Is there a manner of keeping track of special orders?
- Can you send purchases ordered electronically to your vendors?
- How are returns integrated into the system when items are re-stocked?
The bottom line is to ensure that the software suits your needs and is user-friendly. As mentioned earlier, the software package is a tool, one with which you have to work very closely.
In-house or outsourcing inventory management
A few factors can help you to determine which is best for you. First, the size and diversity of inventory items will affect your decision. If you are not closely familiar with all of the inventory that you carry, then you may have a more difficult time passing that intimate knowledge on to someone else.
Next, time will be a factor. Do you have time to analyze the data in order to make all of your numerous inventory decisions knowledgeably? Are you comfortable with such inventory management? Many retailers learn by trial and error and see huge profits in the end.
Conversely, some retailers prefer to pay for expertise. After all, professionals in inventory management have a background in the field and can use their knowledge and training to make quick and sound decisions based on sales data. An expert can more accurately forecast future trends, find vendors or product lines that will increase your sales profits, and weed out failing product lines. Outsourcing can be a timesaver and ultimately a cost saver if you do not feel that you are capable enough or have enough time to handle the various concerns presented by inventory management.
Doing it yourself or outsourcing? The choice is yours.