Inventory management systems certify that stores are stocked for sale and to be used in crisis.
Inventory refers to the goods stocked for future use. Every retail chain has its own warehouse to stock the merchandise to be used when the existing stock replenishes.
Inventory management is the method by which you track how many of each product you have on your warehouse shelf, in store or with other retailers and distributors. The retailer keeps a track of the stocked goods and makes sure there is surplus inventory to avoid being “out of stock”. This process is called as inventory management.
When tracking inventory accurately, you know how many of each item you have, you know when you’re running low on stock and whether you should purchase that item again to keep selling it. As a busy retailer, you should be able to do all of this at a glance ready to make good buying decisions quickly. You should know the answers of all these questions about your stock quickly.
When you standing in the centre of any big retail store such as Target or Wal-Mart, and you look around, you can see one of history’s utmost logistical accomplishments. Retailers such as Target, Lowe’s and Best Buy stock tens of thousands of items from all over the world. Wal-Mart alone stocks items made in more than 70 countries, according to its corporate Web site. At any given time, the Arkansas-based retailer manages an average of $32 billion in inventory, reports Supply Chain Digest.
With those kinds of numbers, having an effective, efficient inventory control system, or inventory management system, is imperative. Wal-Mart’s system helps it maintain its signature “everyday low prices” by telling store managers which products are selling and which are taking up shelf and warehouse space.
Inventory management systems are the rule for such enterprises, but smaller businesses and vendors use them, too. The systems ensure customers always have enough of what they want and balance that goal against a retailer’s financial need to maintain as little stock as possible. Mismanaged inventory means disappointed customers, too much cash tied up in warehouses and slower sales. Factors such as quicker production cycles, a proliferation of products, multi-national production contracts and the nature of the big-box store make them a necessity.
Modern inventory management systems must have the ability to track sales and available inventory, communicate with suppliers in near real-time and receive and incorporate other data, such as seasonal demand. They also must be flexible, allowing for a merchant’s intuition. And, they must tell a storeowner when it’s time to reorder and how much to purchase.
To achieve this, inventory management systems pull together several technologies into one cohesive approach. Read on to learn about the history of inventory management systems and how modern systems work.
Why Inventory Management is so Important?
Those days are no more when customers have limited options for shopping. Today if a customer does not get his/her desired product at one retail store, he/she has many other options to pick up and left your store. As a retailer you can’t afford to loose even a single customer. It’s very important for retailer to retain his old customer as well as attract potential customers. The retailer must confirm that every customer leaves his store with a smile. Unavailability of merchandise, empty shelves leave a negative impression on the customers and they will hesitate to visit the store in near future. Inventory management prevents such a situation.
One must understand that the products need some time to reach the store from the supplier’s unit. The retailer must have sufficient stock to offer to the customers during the “lead time”.
Managing inventory also helps the retailer during situations beyond control like transport strikes, curfews etc. The retailer has ample stock as a result of judicious inventory management even at the time of crisis.
The retail industry is always constantly growing, challenging and competing, so as a modern retailer, you need to be consistently adapting your strategies, new technologies, workflows and processes to ensure you’re keeping up and going with the market and competition. This includes how you manage your inventory.
When customers will find your store in new and trending ways, your business and sales will definitely increase. And you should expect sales to keep increasing as you grow and improve your own marketing strategies, which is great news for your business.
However, keeping up with this increased demand (and potential increase in returns) is likely to put a strain on your warehouse; unless you’ve adopted a great retail system and workflows to keep your inventory management smooth, efficient and well-organized.
How inventory management system helps retailers
If anyone wants to discuss the benefits of inventory management system, he/she could discuss the benefits of accurate inventory tracking and why it’s important until the sun sets, and then, we could probably continue discussing it over and over as well. But we know you’re a busy retailer so for now, we’ll try to keep things short and sweet.
- Increased sales, increased challenges
Economies are booming all over the world due to an average increase in consumer spending year on year. With this comes the wonderful feeling of more sales. But this in itself presents challenges, such as potential increases in returns and strains on your shipping processes. With stock coming in and out of your warehouse faster and faster, you need to ensure your stock levels are accurate so that all of your processes can remain as streamlined and efficient as they can be. Otherwise, you could become tangled up in endless stock takes, customer complaints and stressed out warehouse staff. Inventory management system helps to manage your inventory and keep up to date in a real time.
- Several sales channels are difficult to manage alone
If you’re an ambitious omnichannel retailer, you know that you need to be where your shoppers are. If that includes eBay, Amazon, in-store and your own website, then so be it. But trying to keep track of stock across all of these channels could become tough if you’re using spreadsheets or systems that don’t accurately track your inventory levels. You run the risk of overselling across your channels and no-one wants to disappoint a customer buying a gift or something they really wanted. Instead, you should be able to sit back, trust that your inventory management system is updating all of your sales channels in real-time and focus your energies on growing your business.
- Fulfil demand and avoid overstock
Tracking your inventory accurately ensures you always know when you’re running low on your best sellers, when is the best time to re-stock and how many items you should purchase to be able to fulfill your back orders. This allows you to satisfy the ever increasing demand for your best products without running the risk of tying up your capital in overstocked inventory. That’s a win-win situation, right?
- Keep your stock checks quick and easy
With a system in place tracking your stock everytime something is bought, sold, exchanged and returned (across your multiple sales channels); stock checks instantly become quicker and easier at the end of the week, month or quarter. You should always check your stock regularly, so that you’re on top of it if something has gone missing from your shelf or a mispack has happened somewhere along the line. But knowing and trusting that your inventory levels are correct in the majority, results in faster, easier stock checks. After all, you’re just confirming data that’s already in your inventory management system instead of doing a lot of time-consuming data entry. This allows you to handle the exceptions and concentrate your attentions on growth activities instead.
- Happier customers = more sales!
If overselling and understocking are a thing of the past, you’re sure to make your customers happier, resulting in a better chance of positive reviews and ultimately, even more sales! And when you can also keep your customers updated if new stock is coming in from your vendor, your customers feel encouraged to trust you, which in these competitive times, is a valuable asset. Keep on top of your stock and you keep on top of your customer satisfaction!
Hopefully a glimpse into these points has helped to demonstrate just how important inventory management is to a modern retailer, like you. And with the help of a great omnichannel retail system like Brightpearl, so many benefits could be yours quickly and seamlessly.
References:
http://www.managementstudyguide.com/inventory-management-in-retailing.htm