5 Foolproof ways to Manage your Inventory
Stockouts are a retailer’s worst nightmare – and that is no exaggeration. Loss of valuable sales, damaged brand name and reputation, declining business growth – the list goes on.
Worst of all is the utter dissatisfaction with the term “out of stock” brings for any customer. Nobody wants to know the product they want is no longer available – it’ll only make them feel let down. After that, customer loss – and even negative customer reviews – is just a short step away.
As any sensible retailer, you’d want to stay far away from stockouts. Lucky for you, we have come up with methods on how you can stop stock outs from happening too often.
Avoid inaccurate Data
Inaccuracies in data recorded are a lot more common than you’d think. After all, the process of getting products from your supplier is not single-step; it involves ordering, shipping, transportation to warehouses, and then counting everything up. Amidst all these lengthy processes, you might notice discrepancies caused by random factors – misplaced goods, stolen products, and shipment variances are just to name a few.
Using a modern inventory tracking software can help prevent these discrepancies from turning into a bad business habit. Such software successfully replaces the time-consuming, imprecise method of inventory tracking using a paper and pen.
A modern POS (point of sale) system like Oscar does just the trick – its inventory management feature automatically modifies inventory stock levels as soon as you carry out sales in real-time. They even give low stock alerts when you’re running out of a specific product – so that you stay two steps ahead.
While we’re on the topic of inventory tracking software, it is interesting to note how beneficial buffers are. These are tools integrated within a system that defines a buffer – i.e. a minimum quantity of any product within your inventory.
This acts as a predefined limit – such that when this specific number is reached for a product, the system will automatically update your channel to “0”, so that consumers can no longer buy it. Though this seems counterproductive, it actually brings up the problem before it can escalate; by maintaining this kind of limit, you will never oversell a product, and you can immediately update inventory without having to deal with any crises.
Implement demand forecasting
Stockout at its core is pretty straightforward: products leave the shelves faster than you can replace them, resulting in you selling out your most wanted products.
For a simple problem, comes a simple solution: forecast your demand.
It’s pretty self-explanatory – you need to expect demand so that you know what products you need to order. This may be done by using your own intuition, and retail analytics like historical sales data, sell through, seasonality, trending products etc. Social media is a great place to note customer trends and expectations. You can also count on inventory management software like Oscar, that gives you accurate forecasts while simultaneously giving insights on which products are performing the best and which fall in the “unpopular” category.
Conduct stock counts
The ideal solution to the problem of stockouts is accurate data – and you can’t have accurate data if you’re not updated.
Although modern inventory management programs can do a great job at tracking stocks, you cannot rely on it too heavily. This is where physical inventory comes into the field; set some time aside and make sure the numbers you have for yourself align with your actual warehouse. There are two options to pick from full inventory counts or cycle counting.
- Full inventory counts: several hours are required at a time so that you can count every item in your store. This can be done at the end of the day after closing, or on half-days.
- Cycle counting: a small subset of inventory is counted thoroughly on a specific day. This way, you can “cycle count” through your entire warehouse within a few days more accurately.
This sounds pretty vague at first (and we’re sorry if it does) but the crux of avoiding stock outs lies in performing work functions with due diligence. This is where you have to stay on top of your inventory – literally.
With a bird’s eye view, look at the situation, and get to the bottom of it. Don’t just ask how is it happening, but why? Is there an issue with your supplier, or the shipping procedure? Are thefts prevalent among your employees, or outside your business? Whatever the case may be, keep a sharp eye on any inconsistencies you may find in your own business set up.
If there is a problem with the supplier, maintain consistent communication with them so that you can promptly reorder. Double check their shipping processes and be vocal about any quality problems you may face. If you sense a theft problem, you can update your own security to keep a close eye on shoppers. Oscar even prevents pilferages, so that you can maintain vigilance even among your employees.
Completely eliminating the problem of stockouts is the stuff of dreams. With how volatile businesses can be, such problems are just hard to avoid.
Whatever the case may be, it is not impossible to take steps necessary to maintain trust between your brand and your customer. Out-of-stocks can certainly be dodged with these five tips and tricks – and if these make your life easier, you can thank us later!
Read on to find more ways you can manage your inventory like a pro.