When it comes to retail, this quarter is the best and worst of times. You can pop the champagne because from Black Friday to Christmas, your products are going to move. It’s not just that the holidays bring more shoppers to you. It’s especially because 2018 is supposed to be a very good year for retailers. On the other hand, the busier you get, the more inventory management problems comes to light. It’s natural, then, with a new financial year approaching for a lot of retailers, it’s the best time to look for a better inventory management system.
Questions that a new inventory management system can answer in the new financial year
Many businesses will start a new financial year in January, making this a good time to review options. Along with whatever inventory management issues you’ve faced, you’re starting over. You’re setting your budgets, considering your products and options and looking for ways to make your business run better. As a retailer, your inventory is a major investment. You seek the greatest return on that investment by selling promptly at a price that gives you the best margin possible. The system you use to manage inventory is, from one perspective, the way you protect and nurture that investment.
So if you think about what it takes to manage things right now, is it helping you get the best return on investment in your inventory? Let’s look at five ways that might not be the case, and why it just might be time to invest in a new inventory management system.
Are your stocktakes a big pain?
A lot of retailers do an annual stocktake at the end of their financial year. It can be a pain, but it’s critical to get you inventory in order for financial and tax reporting. It can be time consuming and even backbreaking physically count inventory in stores and warehouses. If your inventory management system requires checking stock against multiple sources of information, the task becomes more convoluted. For example, your stocktake may include inventory associated with open sales and purchase orders. In other words, products from orders that have not been completed. And retailers with physical stores will have to review all POS transactions. The more places you have to look for this information, the more your inventory management system will cost you in time and frustration.
Is your inventory at the right level?
A good inventory management system will help you carry the right amount of products. Carrying the wrong amount (particularly too much of a product) can increase your costs and lower your margins. That impact may not be something you even can measure when at the end of the financial year.
It depends on how you track your inventory. If you know you carried too much inventory through the year, you’ll see it. You’ll know you had to sell overstocked items at a discount, lowering your gross profits. At the same time, holding stock that doesn’t sell takes up space and can add to your warehousing cost. Understocked items may have a less tangible impact on your bottom line. However, customers that get disappointed when a product they expect to buy is actually unavailable, they sometimes never come back.
If your inventory management system isn’t helping you optimize stock levels through the year, you have a problem. A system with accurate inventory visibility and stock level alerts will help you optimize inventory as you sell, avoiding the costs of overstocking or disappointing customers.
Can you manage multiple channels?
Retailers that thrive today don’t do so by selling on one channel. You can sell on one or multiple websites, through Amazon and other marketplaces, and in one store or a chain. In all of these cases, complexity in an inventory management system is your enemy. If you have to use multiple software solutions to process orders and manage stock levels, you’ll be selling at cross purposes. Disparate systems create redundant data sets. That leads to uncertainty, increasing the risk of aging or lost stock, double-selling the same products and delays in fulfillment.
Can your system scale with you?
The holiday season can show you what your inventory system can handle. High sales volume will put a demand on your operations, particularly for getting orders quickly out of the warehouse. If your inventory system slows you down from getting a high volume of products out to a lot of customers, then you’re spending too much time on managing orders and operations. As you grow your channels and sales volume, that will only get worse. In other words, if your inventory management system can’t handle the spikes, it can’t handle you.
If you’re thinking about switching to a better system, talk to us. Cin7 brings all your channels, locations, warehouses and 3Pls together in a single management solution. Its automated order workflows helps get orders out the door fast. Both automation and integrations allow you to keep inventory optimized and order fulfillment efficient as you grow and grow. Click below to learn more from a Cin7 business analyst.
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