Store Inventory Control: Maximize Efficiency and Productivity
Store inventory control refers to keeping track of how many items are available at a retail store. This phrase also indicates everything involved in the process of ordering more stock. To get the full picture, it’s critical to include outgoing and incoming stock and items held in your warehouse.
The goal of using store inventory control is to minimize the expense of hanging onto stock. Additionally, it’ll give you a much better feel for when it’s necessary to replenish stock, purchase new products, and discount older pieces. This process should help improve your cash flow and free up some space in the warehouse. Perhaps even more importantly, it helps guarantee that your business will not keep holding on to unsellable stock.
Importance of Store Inventory Control
At its base level, inventory control makes it simple for a business owner to understand what items are at the warehouse and what items are actually selling. There are five other vital considerations that store inventory control will impact, including:
- Ensures your warehouse is running at peak efficiency.
- Prevents you from overselling your stock.
- Keeps your stock properly counted.
- Assists with inventory accounting.
- Makes it easier to ensure your items have quality control.
Inventory accounting makes it easy to determine the price and value of each item in your inventory. In other words, if shirt A keeps selling, its inventory value will be high. On the other hand, if shirt B barely sold, its inventory value will drop until it becomes essentially worthless. If your company uses inventory accounting and inventory control, you’ll have the opportunity to place shirt B on clearance. That way, you can order shirt C to take its place!
Common Challenges in Store Inventory Control
Even with store inventory control, there are still numerous challenges that could mess up the system. For example, when a store overstocks an item, this leads to wasted resources, excess inventory, tied-up capital, usage of valuable warehouse space, and obsolete products. Other common challenges include:
- Understock – This can be even more damaging than overstocking a product. Let’s say that product A becomes a runaway hit, and your customers are clamoring for one. If they can’t find it at your store, they’ll become dissatisfied and may go elsewhere.
- Poor Demand Forecasting – If you’re unable to forecast how much demand there will be for a specific product, you run the risk of drastically under or overstocking an item.
- Inefficient Ordering and Tracking Systems – If you want to be efficient, it’s beyond time to throw away your paper-based, manual inventory management practices. Even if you have a successful sales season, it’ll be extremely difficult to replicate your success if you rely on inefficient tracking and ordering systems.
- Poor Inventory Visibility – If you’ve ever tried to order an item from a major retail chain that has poor inventory visibility, then you already understand how harmful this can be. After all, the store probably lost out on your order, despite having the product sitting in their warehouse. This is what happens when a store is unable to properly locate and track its existing inventory.
Inventory Control in a Retail Store
Whether you’ve got a good inventory system in place or not, inventory control will always be a critical process. Fortunately, you can put the following tips in place to improve your inventory control management.
- Count Inventory Regularly – Even with a system in place, it’s important to manually double-check your inventory. Do this a minimum of once a year.
- Track Your Sales – Update your inventory on a daily basis. If you’re lucky, your system will do this for you. If not, though, it’s up to you to make sure your inventory is accurate.
- Use a Deadstock Process – Anything that’s damaged, faulty, or an unsold seasonal item should be pulled immediately from your inventory and placed into your deadstock. Handle your company’s deadstock area as often as needed (once a week, a month, a quarter, etc.).
- Create a Method to Track Incoming Stock – Many errors occur when stores accept incoming stock. To stop this from happening, put a process in place to verify all packages and enter them into your store’s inventory.
Types of Store Inventory Control Systems
Although there are more systems available, the four listed below are by far the most common.
- Materials Requirement Planning (MRP) – This system depends entirely on your ability to accurately forecast your sales.
- Just–in-Time Management (JIT) – This can save you a considerable amount of money. However, if there is an unexpected demand, you may be unable to keep up.
- Days Sales of Inventory (DSI) – This indicates how long it takes, on average, for a company to turn inventory into sales.
- Economic Order Quantity (EOQ) – How much new inventory do you need to order to ensure sales without purchasing too much? EOQ gives you the answer.
Benefits of Implementing a Store Inventory Control System
Implementing a store inventory control system provides numerous benefits, such as:
- Greater Automation: Automating inventory processes reduces manual errors and saves time.
- Reduced Expenses: Efficient inventory management minimizes waste and lowers storage costs.
- More Accurate Inventory: Real-time tracking ensures accurate stock levels and reduces shortages or overstock.
- Greater Organization: A structured system helps categorize and locate items quickly, streamlining operations.
- Improved Productivity: Employees spend less time on inventory counts and more on other critical tasks.
- Improved Business Relationships: Reliable stock management supports smoother transactions with suppliers and partners.
- Improved Customer Experience: Accurate stock levels mean better fulfillment of customer orders and fewer disappointments.
- Improved Data Visibility: Enhanced insight into stock levels aids in making informed purchasing and sales decisions.
- Enhanced Data Security: Advanced systems protect sensitive inventory data from unauthorized access.
- Greater Coordination Between Locations: Centralized data ensures consistency and efficiency across multiple store locations.
How to Create an Effective Store Inventory Control Plan
Are you ready to take your business to the next level? An effective store inventory control plan can make the difference between a good and bad sales year.
- Analyze Existing Inventory – Review sales trends and historical data to highlight obsolete or slow-moving items.
- Set New Inventory Targets – Balance the costs against the risks of holding onto each category of items.
- Optimize Inventory – Consider using lean manufacturing, vendor-managed inventory, and frequent small-batch production.
- Monitor and Evaluate Regularly – Make sure to continuously monitor and evaluate your inventory. Stay tuned in to industry trends so you can meet the demand.
- Utilize Innovative Inventory Management Systems – Take your inventory control to the next level by adopting an ERP such as N41 and barcode scanning systems.
- Enhance Supply Chain Collaboration – Establish and utilize regular communication with the members of your supply chain. Consider using automated replenishment to make things easier on both sides.
Best Practices for Store Inventory Control
Now that you have a much better understanding of inventory control let’s look at some of the best practices.
- Use ABC Analysis – Arrange your stock according to the ABC principle. A is most important, followed by B, etc.
- Establish KPIs – Key performance indicators (KPIs) help you meet your goals.
- Ensure the Accuracy of Stock Receipts – Double-check everything and always follow up with your suppliers about issues.
- Invest in an ERP System – Enterprise resource planning (ERP) will take your company to a higher level.
- Calculate Your Minimum Stock Threshold – Take your average daily product sales, divide it by the number of working days in the month, and then multiply it by the average product delivery time.
- Build Strong Supplier Relationships – By building strong supplier relationships, lock in greater discounts, reduce quality control issues, etc..
Store Inventory with an N41 ERP System
Whether you’ve got a retail chain, a bespoke specialty store, or you’re a designer, it’s critical to stay on top of your inventory. Fortunately, when you use N41 as your ERP system, you’ll be able to track warehouse management, eCommerce management, and tradeshow/showroom management. Even better, we have a 99% client retention rate, so you can rest assured that our ERP fashion solution is right for you!
Ready to improve your business? Contact us today to schedule your free demo!
