Smart inventory control improves forecasting and enables you to make smarter decisions around retail sales and inventory stock. Without proper inventory control businesses may end-up with unsalable lines of inventory stock or alternatively lack the inventory stock that their customers are seeking.
Today’s technology offers data collection and analytical capabilities to help improve inventory control. Facilitating informed purchasing decisions that take a more balanced, customer focussed approach to increase consumer appeal.
Customer focus comes first
With contemporary data and analytic capacity, retailers can learn more about their customers, gaining deep insights to enable the ready identification of patterns, purchasing behaviours and any potential changes in these habits.
The products that your top customers are purchasing are those which are most likely to attract other similar consumers. Understanding what your best customers are looking to buy from your business will give you an insight into market trends for this consumer segment.
When it comes to smart inventory control, it makes undeniable sense to focus on your best customers because they are the ones who already like what you are offering and they demonstrate this by shopping the most often and spending the most overall. Generally, it is more expensive to gain new customers than to keep an existing one, so keep your loyal customers happy and they will keep coming back.
Sales and inventory
When contemplating your inventory purchase and replenishment strategy, you need to understand the relationship between sales and inventory.
Don’t focus simply on top sellers, consider other factors too when making assumptions about this relationship between sales and inventory, such as seasonality, or if an item is front-loaded to begin a season so that you don’t miss opportunities to do more business.
Just because that large purple widget is your top seller and the small blue one is slow moving doesn’t mean you should purchase more of the purple widget. It could be that you already have quantities of the purple widget in stock that is tying up cashflow and taking up valuable space in the warehouse.
Sales and inventory should be considered holistically. Know who’s researching, buying and advocating for your products by applying analytics to sales and inventory data.
In addition to sales data, you should be looking at inventory stock information, par levels, reorder points and delivery dates and terms. Partner inventory control best practices with your retail merchandising strategies.
Automate inventory control
Utilise inventory management software and automate inventory control processes by integrating systems such as RFID scanning and Point of Sales (POS). POS will show you which product categories are the most profitable, which are the most popular types of products, and other valuable insights to help you make more strategic purchase decisions.
Make informed purchasing decisions with better inventory control by utilising real-time analytics to determine demand relative to your current inventory stock levels. Analytics can also help with:
- Monitoring referral traffic to identify where your marketing is and isn’t working
- You can monitor customer behaviour with real-time visibility to identify inventory patterns to capitalise on them as they happen
- Analytics also allows you to monitor revenue goals, keeping you up to date on revenue targets and identifying whether certain products are helping or hindering sales.
By keeping track of your analytics, you can make better decisions when it comes to your inventory to increase cashflow, improve the customer experience, and grow your business.
Address opportunity costs
Inventory stock is expensive to acquire, and inventory control isn’t just about managing the goods moving in and out of your business, it also involves managing your working capital.
- If you are purchasing an item from a supplier with the expectation that you will quickly sell the item for a higher price and it continues to sit on the shelf, it is money spent that can’t be used elsewhere in your business.
- Watch your cashflow management. The peaks and flows of cash caused by inventory stock purchases can place stress on a retail business. Proactively projecting cashflow needs is crucial.
The ability to manage sales and inventory well puts you in greater control of your business and will help you avoid real-time cashflow problems that many retailers experience during their financial sales cycle.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.