3 Ways A Retail Software System Can Improve Inventory Management Across Multiple Stores
Managing, transferring, stocking or reordering inventory for multiple store locations can get complicated, but a retail software system can keep your operations in motion by providing real-time visibility.
Inventory visibility sheds light on what’s happening at your stores, giving you a foundation to find solutions to your inventory management questions: How do you know which items to stock among your various stores? Which recurring items need to be replenished to avoid shortage? Which items should not be replenished? What should be your stock level for an item?
Here are three ways real-time visibility can improve your inventory management across multiple stores.
Keep track of staples and seasonal items: For example, in the apparel industry, inventory staples and seasonal items vary depending on what type of clothing is being sold. Consider the difference between a fashion retailer and a nursing scrubs store. Let’s say a fashion retailer places 50 blue cardigans on the sale rack, and by the end of the month, only one is left. In this example, low stock doesn’t necessarily mean the inventory should be replenished; a fashion retailer may decide to stock a cardigan in a different brand or color. However, for a nursing scrubs store, low inventory levels on extra-large white scrubs would dictate a need to replenish quickly because the item is considered a staple.
Visibility is necessary to effectively manage various types of inventory for multiple stores. That includes locating a specific item at another store for a customer or transferring excess inventory from one location to another.
- Determine ideal stock levels: Visibility helps to determine the rate of inventory turnover. Let’s say you have an open-to-buy budget for sports jackets. If you stocked a sports jacket that sold quickly but is still in season, you would likely want to order more. But without that real-time visibility, you might order a different sports jacket without knowing whether the previous one sold well.
Figure out the reorder point: Inventory can be a double-edged sword. Having too much or too little stock can lead to lost sales. The reorder point is the threshold for ordering quantities of a specific item to fulfill customer demand while avoiding overstock. Determining the reorder point for inventory in multiple stores can get complex.
But figuring out the expected daily sales varies according to each store’s historical data and how frequently — daily or weekly — you want to determine an item’s reorder point. The month or season could change your sales forecast.
Sometimes retailers determine a reorder point based on a gut feeling or a “like for like” inventory replenishment system, meaning inventory replenishment is based on how much was sold. For example, if the retailer had 10 items of a specific product at the beginning of the week and sold seven by the end of the week, the retailer would reorder seven. If the retailer only sold two during the week, it would reorder two. However, with this method, retailers are not factoring in safety stock or vendor lead time.
With real-time inventory visibility, you have the strategic flexibility to set and adjust a reorder point according to vendor lead times, safety stock, historical data, seasonal trends and other external factors. Those are essential pieces in effective inventory demand planning.
These three factors are just a few of the ways real-time inventory visibility provided by a retail software system can improve and keep your operations moving across multiple retail stores. This flexible approach to managing inventory is essential to fulfilling customer demands in a changing marketplace.