Inventory management or stock control, encompasses all the tasks you carry out to keep your inventory in check. Activities like ordering products, storing your merchandise, counting items, and forecasting demand are all components of inventory management.
Having the right products at the right time for your audience is critical in retail. In order to run a successful retail business you’ll need to think about the following key areas:
- Sourcing products effectively – by tapping into online directories, attending trade shows, and analysing your stock data. Talk to your customers and staff and review your sales data to guide your purchasing decisions.
- Understanding different inventory techniques – determine the best stock control method for your store and the products you sell. For example, ‘Just in Time’ means you only order when you need something, but it can involve a lot of work with suppliers. Food businesses might be more likely to use ‘first-in, first-out’ method where items that been on their shelves longest, and therefore closer to expiry, are ordered first.
- Tracking metrics – such as Gross Margin Return on Investment, that will show you how much money you earned on the sales of a product. Stock Turn shows you how many sales within a period, and Shrinkage gives you figures on inventory loss that is not a result of a sale. The more you know, the easier it will be to always have a handle on product movements and sales.
- Conducting physical inventory counts regularly – to ensure that what you have on paper or in your systems, matches what’s in your physical location.
- Implementing demand forecasting – by digging into historical data in your product reports and determining how fast products are selling, looking at trends, seasons and talking to customers.
The following guide is a good resource with more information about inventory management techniques and how to apply them to your business. It contains some useful tips on the topics above and more.