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Optimizing Inventory Reconciliation With A Retail Software Solution

Store clerck checking inventory

You look at the shelf and then double-check the tablet in your hand. The retail software solution says you should have five of these widgets in stock, but the shelf’s empty. If this kind of discrepancy occurs frequently in your business, you may have an inventory management problem: a setup problem in the point of sale software, incorrect barcodes, operational errors or even theft. 

Inventory reconciliation requires the coordination of complex data and functions, and then adjusting what your enterprise resource planning system (ERP) thinks you have to reflect what’s actually on the shelf. How you configure your retail software solution has a significant impact on the system’s efficiency and your data’s accuracy at any given time. 

Here are three factors to consider when using a retail software solution for inventory reconciliation. 

  1. Manual vs. automated inventory reconciliation processes: Retailers cover a broad continuum when it comes to methods for checking actual inventory against what the ERP system expects. In a more manual process, your staff goes through the store, counting items and recording the inventory, using anything from a simple worksheet to a barcode scanner or a mobile device connected to your ERP system. Such a manual process depends on how good your staff is at counting everything. For example, if one employee forgets to count additional stock stored in a closet, that oversight could cause an inventory discrepancy. When the next employee does remember to count the stock in the closet, it could create another discrepancy.

    On the other end of the spectrum, retailers may implement active radio-frequency identification (RFID) systems that automatically track exactly what’s in the store (and where it is) at all times. Such a system has advantages over manual reconciliation, but the expense would probably make it unfeasible for most mid-market retailers. 

  2. Avoiding unnecessary complexity: The more items you carry, the more difficult inventory reconciliation becomes, especially if your inventory includes lots of similar items that differ in color or size. It’s important to make sure that your processes don’t make reconciliation even more complex. When retailers generate their own barcodes for items instead of using the manufacturer’s tags, for example, it tends to introduce inefficiencies and errors. 

    Some complexity is very useful, however. If you stock electronics and appliances, such as stereo components and washing machines, for instance, you might want to track individual serial numbers. When items come in from your vendor with serial numbers, these numbers go into your retail software solution so that you know not only how many items you have, but which specific items you’re tracking. If one goes missing, you’re able to track the item’s history. This level of specificity might not make sense with $20 shirts, but $2,000 electronics merit a greater level of inventory control. 

  3. Database architecture: Another important factor to consider is how your retail software solution stores and syncs data. Every time you make an inventory transaction, this data could be reflected in a single, central database, or recorded first in the store’s database and then transferred to the main office’s database. Generally speaking, it’s preferable for everyone to access the same database through retail sales software. In practice, however, network outages and slow data speeds may necessitate running in an offline mode, which means the store has its own database that synchronizes with the home database. This sync could take place in batches, or process individual transactions as they occur. Eventually, the inventory data ends up in one place, but how it gets there depends on whether your system is in an online or offline mode. 

In the end, inventory reconciliation produces two sets of complex data — what should be available and what’s actually present — and must find ways to explain or address differences in the data. How your system records and syncs inventory data affects the efficiency of your reconciliation processes. A good system should automate routine tasks as much as possible, freeing up employees for more complex inventory control tasks, such as using problem-solving to limit damage, theft, vendor error and other issues. 

Learn more about optimizing your inventory reconciliation by scheduling a free operational assessment with ArcherPoint.

Author: Wm. Matthew Street, Solutions Consultant/Retail Product Lead at ArcherPoint