Does Your Retail Inventory Management Processes Need An Overhaul?
As the retail industry adjusts to the needs of the changing consumer, stores must look at whether their inventory management processes meet those demands.
Identifying optimal inventory levels is integral to minimizing losses and maximizing profits. Start by examining these three inventory management areas to find room for improvement.
Receiving and tracking: Retailers can better track stock deliveries by gaining more visibility into their processes. Does your retail or warehouse manager know which purchase orders are outstanding and the expected shipment arrival date? Are the orders going to the warehouse or the store? Ideally, retailers should have the answers to these questions, and every aspect of their receiving and tracking.
It’s especially important to have clarity into one of the key facets of the receiving process — location. When retail buyers or planners determine the quantity needed to replenish inventory at store locations, they must also decide the delivery location. Should the vendor send the inventory directly to the store, or should the product go to the warehouse to serve as safety stock for multiple stores?
To determine where to send the inventory, consider three scenarios.
First, for the vendor to send the product directly to the store, retailers must ensure that store management knows there are outstanding purchase orders and what to do with the inventory when it arrives.
Second, consider the shipping process to your multiple stores. If you have one truck that delivers to each of your 10 retail locations, it’s inefficient to ask your vendors to split the purchase order among those locations. Instead, ask the vendor to ship items to your warehouse, where the products will be sorted by cross-docking. That means warehouse workers receive the products at the receiving dock, where they’re immediately sorted and ready to be transferred to the stores. Essentially, the products pass through the warehouse instead of being stocked at the warehouse.
Third, say your buyer estimates that your stores will sell 1,000 items of a particular product, but the buyer doesn’t know the exact quantities each store should carry. In this situation, the vendor should ship the order to the warehouse. Later, when the reorder inventory point is calculated, you can issue a transfer order from the warehouse to the store.
Assist on the store floor: Retailers can use mobile point of sale (POS) or mobile inventory tracking to better manage inventory and provide more accurate inventory information on the sales floor.
It’s important to know the difference between each. A mobile POS system is customer-facing, meaning it’s used to assist customers with checking out at the register, and includes some inventory status tracking features. Mobile inventory tracking is the mobile interface for managing inventory. It’s possible for mobile inventory apps to record and track quantity on hand, automatically reorder inventory items, display store pricing history for each item, and carry out other inventory management functions.
To determine which technology is best to manage inventory at your store(s), decide the primary role of your store employees. For example, consider equipping cashiers with mobile POS technology, and equipping other store associates with mobile inventory tracking devices to help them record and restock items.
- Track inventory as it moves throughout the store: Retailers should think of their store as having multiple inventory locations. One area of the store should be a place for customers to pick items off the shelf, another area designated to hold special orders and a different area for the stockroom or backroom. Modern technology, like bar-code scanning or radio-frequency identification (RFID), can help pinpoint the exact location of inventory items.
Evaluating these three areas of your inventory processes is vital to helping you to identify the right inventory levels for your business. After all, inventory management plays an integral role in determining profitability.
Author: Wm. Matthew Street, Solutions Consultant/Retail Product Lead at ArcherPoint
To learn more about improving your inventory management processes, schedule a demo of ArcherPoint's Retail Management Solutions.