What you'll learn:
- How to harness your inventory data to make more accurate business decisions
- Combining omnichannel inventory data for accurate availability & fulfilment
- The benefits of setting up detailed stock categories early
- Using an ABC analysis to prioritise your stock amounts
- Undertaking smart, not time-consuming, stocktakes
- What to look for in inventory reports
- Using data to inform and negotiate your supplier decisions
Effective inventory management is an invaluable skill for any retailer, but optimising your inventory comes down to using the right data-led tools and processes built into your point of sales system. Let’s go over the best ways to harness data from any inventory management system to help you make better decisions for your retail business.
Unify your inventory data to include every channel
The benefits of integrating your inventory control processes across your eCommerce and bricks and mortar store(s) are many, and with good reason. Having an accurate, business-wide view that factors in multi-store stock, online and marketplace stock, laybys and back-orders tells you what stock is in demand so you can optimise your stock availability.
Both back-office and in-store staff should be able to view what inventory is available across every store, online or in-transit. The last thing you want is to tell a customer an item will be arriving in-store soon when it’s already been back-ordered for another customer.
Configure your inventory structure correctly
It’s critical that you’re able to break down your inventory data into detailed categories and sub-categories. Why? Let’s go over an example;
If you’re in the fashion industry, rather than just have one category only for black dresses, you’d break your black dress category into multiple sub-categories; Mini Black Dresses, Short Black Dresses, Mid Black Dresses and Long Black Dresses.
Sub-categories empower you to perform advanced searches, stocktake by category and obtain high-level insights about specific product lines and types. One black dress subcategory may be selling slower than others, and one may be selling out consistently. But without an optimised view of your inventory by product type — you wouldn’t be any the wiser.
Configure your data structure correctly
It’s critical that you’re able to break-down your inventory data into detailed categories and sub-categories. So, if you’re in the fashion industry, rather than have a category only for black dresses, you’d break your black dress into multiple sub-categories like Mini Black Dresses, Short Black Dresses, Mid Black Dresses and Long Black Dresses.This empowers you to perform advanced searches, stocktake by category and obtain high-level insights about specific product lines and types. You can also use this information to power your integrated webstore to make the user experience much easier for your customers.
Use your ABCs to prioritise your focus
One invaluable tool to optimise your inventory is to assign certain products with priority levels through the use of an ABC analysis. Here’s how you do so;
- ‘A’ products are your highest value products — they typically drive 80% of gross margin/revenue, but make up 20% of your inventory portfolio.
- ‘B’ products are medium value products — around 15% of gross margin/revenue, but make up 30% of your inventory portfolio.
- ‘C’ products are low-value products — around 5% of gross margin/revenue, but make up 50% of your inventory portfolio.
Once you have these products identified, you can set appropriate order quantities and frequencies, pricing/margin strategies and marketing/promotional programs according to their value or stock amount.
Perfect your stocktake
Regular stocktakes have many benefits. They clarify your profit margin, help to identify slow-moving stock to focus on, reduce reliance on backorders and highlight any poor practices or theft before they become a bigger problem. But only if you have a proper process in place.
As helpful as they are, stocktakes are a process seen by many retailers as a necessary, but painful, evil. But utilising data management systems and smart processes can make it a less manual and more accurate part of your business processes. Before your next stocktake, take stock of whether you’re streamlining the event by:
- Digitising your stocktake process using barcode scanners and POS software
- Making use of RFID technology if you have a large store to count inventory faster and with more accuracy
- Breaking the stocktake up into less daunting bite-sized sections known as ‘cycle counts’
- Having a cross-check method in place within your system to banish any mistakes
- Following a 10 step method to an efficient stocktake
Use inventory reports to drive your decisions, not hunches
Do you currently know for a fact which products are under and overstocked across each of your stores? Are you confident which categories are currently selling well?
If the answer isn’t a resounding yes, with evidence to back it up, you’re missing out on a chunk of information to properly inform your stock decisions.
You need real-time reports and dashboards built into your point of sale system that allow you to have full visibility over your sales, inventory turnover and to unveil any blind spots you might not be seeing. It’s critical to have an inventory management system that integrates with your point-of-sale, so you can easily access inventory reports.
Review the following data in your inventory reports (to start with) before making decisions on your stock:
- Sales performance by product type
- Sales performance by supplier
- In-store vs online sales
- Inventory turnover rate
- Stock vs sales rates
- Top-performing and under-performing stock
- Low stock rates
- Ageing stock rates
Review and act on your purchase and supplier insights
Once you have real-time inventory data clearly available, you’ll also be able to drill down into your suppliers. Specifically, which of your suppliers are delivering on time and providing the best prices — and which are not.
Arming yourself with accurate, data-based evidence helps you negotiate with suppliers to improve your margins and fulfilment performance.
Clear, easily accessible data is crucial to making accurate decisions for your business. If you find that your inventory management processes or system have become complex, unclear and overall too time-consuming, it might be time to look for a cloud-based retail system built with inventory optimising features.
Or book a personalised demo with one of our retail experts and they’ll take you through how you can make your inventory management and logistics work better for your business.
Built by retailers, for retailers, Retail Express POS systems come with all-inclusive implementation by a dedicated success manager, local support from retail experts and solutions made to expand with your needs.