What you’ll learn:
- The non-negotiable features for your inventory management system needs
- The key benefits of implementing an inventory management system that will help your business thrive and expand
- How to properly review your inventory turnover, supply chain efficiency and forecast accurate stock demand
Every part of your business is affected by your inventory management system and processes. They shape your interactions with suppliers in your supply chain, the efficiency of your warehouse operations and your profitability. And most critically, they affect your customer service — your ability to meet demand, deliver on time, and the quality of your post-sales support.
In a world where pretty much everything is available at the click of a button, customers are looking for retailers that have evolved with their needs and can supply them the products they want, where and when they want it.
So what are the non-negotiables of an inventory management system in this dynamic retailer era? And what are the 6 key benefits of having an agile inventory management system?
What an inventory management system needs to do for your retail business
Implementing the right inventory management system plays a major role as the central database and control system that, in conjunction with your POS system, coordinates the ordering, flow and audit of stock levels across all areas of the business.
In a marketplace where one-click ordering and fast delivery are the standards, your inventory management system must be:
- Able to process large volumes of data
- Capable of providing fast, accurate data to all retail outlets in real-time
- Easy to learn for everyone, including your point of sale staff
6 key benefits of implementing an inventory management system
1. Forecast demand & set stock levels based on data
The first step is to implement a system that gives you an informed view of potential demand for each of your products. You should be basing your decisions on real-time data, not information from months or years ago. Looking back at previous inventory movement is useful for spotting longer-term trends, but it’s risky to use this as baseline data to predict customer demand in a volatile and fast-moving market.
Instead, having access to live data from your point of sale system can give you an accurate view of demand based on multiple results including:
- Sales cycles: What are the daily, weekly, monthly and yearly sales trends you can observe? How often does your inventory turnover?
- Customer tastes: What are the latest trends categories that your customers are engaging with that could indicate new product opportunities or restock needs?
- Location/channels: How does demand differ by store location? What about online vs. offline? What combination of channels are customers using end-to-end? Do they expect to be able to Click & Collect from all your store locations?
Once you have a fact-based view of demand, you can then use automated stock replenishment features to set the stock levels you need for each product in each store location. For existing product reorders, a best-of-breed POS platform can use smart algorithms to calculate the optimum inventory mix for each of your stores, based on real-time data and multiple variables, including run-rates, supplier lead times and the status of stock from pre-order through to delivery.
2. Configure your supply chain
The right inventory management system will go much further than just giving you a clearer view of required stock levels in each store — it should be able to give you a clear view of your entire supply chain, allowing you to streamline your fulfilment processes and keep up with customer demand.
Use your system to spend some time evaluating how quickly you can source different products and ship them to customers or between stores. Suppliers are an integral part of your inventory management system.
From there, you can use your supply chain visibility to record performance for both your suppliers and fulfilment processes:
- With product ordering and receiving, how formalised are your systems? Are they prone to human error?
- Do you have visibility of key data so you can spot potential issues early on?
- Can you easily arrange for stock to be transferred between your stores?
- What home delivery timeframes do you offer and how do these compare to your competition?
Consider introducing a supplier compliance system setting out your expectations for service standards, product condition and quality, delivery dates, packaging, customer returns and electronic POs.
3. Measure and improve your inventory balance
The visibility that comes with the right inventory management system gives you the information you need to get a good measure of how well you’re managing inventory — aka understanding your inventory turnover rate (ITR).
Your ITR describes the number of times inventory is sold in a given timeframe e.g. a year and gives you a feel for whether you have a relatively high stock turnover rate or whether stock is moving slowly through your business — each indicating a lack of freshness or overstocking.
Here’s how to calculate your ITR:
Inventory turnover = Cost of goods sold / Average inventory (at cost)
To truly understand how you’re tracking, you’ll need to compare yourself to benchmarks for your industry. As a general rule, women’s apparel, pharmacy and cosmetics are at the higher end, with an ITR of 4-6. Jewellery and bulk goods like furniture are more likely to sit at the lower end, turning over between 1-3 times a year.
In a market where consumer purchasing patterns are changing rapidly, your supply chain management must be responsive and predictive to meet customer needs. Being able to see real-time inventory data and understand your stock balance puts your business in a better position to respond to changes in customer demand.
4. A user-friendly, integrated interface all staff can be trained on
A user-friendly interface will allow all staff, from in-store to back-office to access real-time information, offer customers the best solutions and make informed business decisions.
Here at Real Express, we offer a simple, easy to use POS solution that includes agile inventory management and dedicated training that your staff will be able to learn quickly and painlessly, saving you both time and money in training resources.
When staff have visibility of inventory, they’ll be able to easily implement discounts and promotions, view customer loyalty information, create special orders and multiple fulfilment options and surpass customer needs right from the point of sale.
5. Higher customer satisfaction
Real-time inventory management is integral to making the right stock available to your customers where and when they want it and at the best available price.
When they shop online, a real-time Live Stock in Store and Click & Collect display can increase buyer confidence and help drive purchases for customers who want those purchasing and fulfilment options.
In-store, advanced customer care features can help staff tailor orders to their customer’s needs, and communicate exactly where an order is in the supply chain and when it’s expected for the customer in real-time.
And back in the office, your team can use integrated customer information to create personalised marketing campaigns that highlight the products customers care about and bring buyers back to your store.
6. Improved profitability and cash flow for multi-store businesses
If you have a large business with multiple warehouses and retail outlets, your choice of retail software should place just as much importance on inventory management as it does on helping your employees sell to and service customers in-store.
Your inventory management system must be able to provide multi-store capabilities, even if you’re a single-store retailer. With these capabilities, you’ll be able to easily expand your business when the time is right, and still purchase the right amount of inventory per store based on individual store data, whilst also reducing the amount of slow-moving, obsolete stock across your business.
Choosing an agile inventory management system that expands with your business
In the past, retailers wanting to expand their business were looking at a heavy investment in equipment, retail software packages and on-site maintenance. But with the right inventory management system, your business should have every tool they need without the crippling cost.
Retail Express offers a centralised, secure-data inventory management system that gives you advanced inventory management capabilities from day 1, at a fraction of the cost of other, more complicated packages. From point of sale through to complete supply chain management, you and your staff can manage your inventory in real-time and along with changing customer needs.
Want to see if Retail Express’ inventory management system is right for your business? Book a personalised demo to be taken through the exact features you would use every day with one of our retail experts.