‘Continuous improvement is better than delayed perfection.’
It’s a quote attributed to the famed American writer, Mark Twain, and it’s interesting to think about in the context of inventory management. That’s right. Inventory. The dreaded word that can send shivers down the spine of even the very best retailers. Indeed, the challenges faced by businesses are certainly varied, but inventory management highlights a consistently difficult process.
A poor inventory management system will result in everything from inaccuracies to shrinkage and the time-consuming, labour intensive work will only end up hurting your businesses bottom line.
Finding a solution that’s perfect however might be near on impossible, as there will continuously be ways to improve it. Which is why Twain’s line is a pertinent one for businesses to follow. A mantra, if you will, that empowers businesses to take meaningful steps in improving their inventory management techniques, and ultimately their entire operations.
Here we’ll single out what some of those steps could be, and how a more streamlined inventory management system can help you make smarter business decisions.
The ‘First-In, First-Out’ is an old yet essential tenant of inventory management. Self-explanatory, it of course refers to your oldest stock being sold first, before your newest stock. Hence the First-In, First-Out moniker that speaks to this very equation.
This is especially vital for retailers that hold perishable goods, such as food outlets and grocery stores. Holding unsellable goods in your inventory, contribute to unnecessary spoilage that wastes valuable resources and costs. Prioritising your stock that has early expiry dates, as the first items to be sold, is simply sound business.
In addition, the FIFO method is also sound inventory management for businesses that don’t have non-perishable products. If your oldest stock is left at the back and unattended, there’s a good chance it will show signs of deterioration. Plus, if an item is ‘hot’ and in season, you want those items to be sold first and not later as a new trend arises, and that item becomes obsolete.
A strong FIFO means having an organised warehouse, that can prioritise immediately the selling of old products first.
Cycle counting is a savvy way to get around the cumbersome interruptions of daily stocktakes. By implementing a strategy where you do partial counts of stock over a calendar year – whether it be daily, weekly or monthly.
By maintaining a rigid schedule as to when your store will complete a cycle count, relieves you from having to perform the arduous full inventory counts, that forgoes business sales whilst also not being able to guarantee complete accuracy.
Cycle counts offer more accuracy by focusing on a smaller range of items – over a longer period of time – and can also tailored to count for specific products that are of high priority.
The ABC Method in an extension of the cycle count where it asks you to divide your stock by value, and prioritise inventory counts for the most valuable items. Commonly, that would mean you sort your products into three types:
- Highest value products
- Moderate value products
- Low value products
Using these tiers, you can schedule counts that reflect their priority, with your highest value items being afforded the most attention. Obviously, the amount of times you count your inventory in a financial year will be dependent upon how much stock you have, but the ABC method is one way to help you plot that out.
Par levels are the minimum number of products that must be in your inventory at all times. When that stock dips below that set point, you’ll know that you should be ordering more of that item. It’s a useful tool to have, that will allow you to make better decisions, as well as empowering your staff to handle inventory management more efficiently.
It’s certainly a process that requires ample amount of time in planning – ensuring that each par level set is in accordance with the stock level movements of that item. Yet, the beauty of it is that it is flexible and easy to change, when the need arises.
Hike Tip: As a smart retail point of sale solution, Hike can set automated par levels to help you manage your inventory! Set customer re-order points on your best-selling products, so that you can stay on top of all your stock.
Organise your inventory space
This may sound simple enough, but you’ll be surprised by how many inventory mistakes can occur by unorganised stock. You want to ensure that your staff have ample room to count stock and keep detailed records, and avoid any unnecessary mistakes.
Making your storage space tidy also goes hand in hand with creating new spaces in which you can store more stock in! The more stock you store, the more you can sell.
Utilise a Cloud POS
Okay, so a Cloud POS is what we do here at Hike but using a cloud-based really does make a difference when it comes to managing inventory. Considering the globalisation of many business, where there are multiple stores in multiple locations – nationally and internationally – having a spreadsheet based solution to record your data is not going to be detailed or accurate enough for your business needs.
In a cloud-based solution, all your inventory and purchase orders are updated in real-time. Don’t be bogged down by having to track individual items and sales to see how much stock you have on hand. Hike gives you that data on tap, giving you a wealth of information that you can have access to on any device, from anywhere in the world, at any time.
Hike Tip: Features in Hike’s POS is our advanced reporting feature that helps you identify trends in your sales that you can reflect by managing your inventory.
To bring this full circle, improving the operations of a business, needs to be done with continuous improvement. There’s no such thing as a perfect process, and with the management of inventory being one of the more volatile factors in running a business, focusing on little improvements is key.
Every small bit helps, and we hope that some of these ideas can help you streamline your inventory tenfold.
Check out Hike’s inventory management features to find out more about how Hike can help you streamline your inventory management.