Inventory management and retail inventory control is challenging, especially when you have online marketplaces, several brick-and mortar store locations and warehouses to maintain. It involves a stock-take day to count each item in your warehouses and marketplaces and record the results.
Although tedious, it’s essential for a business to stay on track with inventory levels. Inventory management software helps you with stock control to make the process easier and smoother than ever.
Holding onto stock disrupts cash flow and is not good for business. Hence, effective inventory management is crucial for a growing business.
What is Retail Inventory Control?
Retail inventory control is the process of tracking stock levels across sales channels and in warehouses. It relates to both brick-and mortar stores and online ecommerce retail and encompasses everything from wholesale purchasing up to the point that product reaches shoppers.
It means monitoring incoming and outgoing stock and the stock being held in a warehouse. Inventory control gives a complete overview of the company’s inventory, including your products and where you can find them in the warehouse.
The ultimate goal of inventory control is to maximize sales of the right stock and minimize costs associated with all stock. It also helps to sell old stock and gauge stock replenishment.
Strong inventory control techniques free up space in your warehouse and money in your cash flow. It also ensures you do not keep hold of old or unsellable stock.
As per Shopify, mismanaging inventory has cost businesses nearly $2 trillion annually. These are mainly hidden costs associated with out-of-stocks, overstocks and preventable returns.
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Importance of Retail Inventory Control Software
Inventory control gives business owners a better understanding of stock levels. It makes sure that deadstock is taken care of and that the warehouse runs at optimum efficiency. Here are some other reasons why inventory control is essential for your business.
Helps in Quality Control
Inventory control helps you keep an eye on products. Hence, while conducting inventory counts, you can also control quality. If any stock falls below your company’s standards, you can act on it, especially during a product recall.
Keeps Stock Count
Conducting regular stock takes is a part of the inventory control process. It involves counting every single item of stock you have. You can monitor stock levels and organize the warehouse.
It is essential as it means you know where all the units are located, along with the quality and condition of each product. You can also see where you fall short on some products and bring in additional stock where necessary.
Helps in the Accounting of Inventory
Inventory accounting is an integral part of inventory control. It helps you measure the value of physical inventory and the costs of goods sold over time.
You can control deadstock that no longer has value, reducing overall waste. Plus, you can help your bottom line by only stocking the products that sell.
Types of Inventory
There are mainly four types of inventory. Let’s have a look at what they are and how they impact businesses:
Raw materials are used to manufacture product components or finished goods. For instance, if your business sells notebooks, the raw materials you require include paper, ring binders and covers.
Let suppliers store the materials for you and then ship them to you as needed.
Unfinished products include products for sale that are unfinished or not ready to hit the shelves. It contains products that need to be processed or are yet to be packed to complete the item.
They are stored in a separate part of the warehouse to make sure everything is categorized and unfinished products never make it in-store.
This refers to inventory shipped from the supplier that has not reached the warehouse yet. It’s also known as pipeline inventory. The transaction is included in inventory management, although it has not reached the seller yet.
The transfer of ownership takes place when the goods arrive at the purchaser. At that point, the purchaser owns the goods.
This refers to the portion of inventory that a seller cycles through to fulfill regular sales orders. Cycle inventory is used and replaced by more stock, or turned over. Some small businesses use cycle stock as they do not have the capacity for safety stock.
Keeping cycle stock to the minimum saves money on shipping and storage and is helpful for smaller businesses.
Large businesses with safety stock avoid dipping into it unless necessary to meet increasing customer demands.
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Challenges of Retail Inventory Control
Inventory management may be challenging for retail and etailer businesses due to several reasons. The most common are:
Managing Warehouse Space
Inventory control techniques aim at minimizing warehouse stock levels.
Your warehouse may have enough space left for your incoming products, but any problem with the supply chain could delay some products.
In some cases, all of your stock can arrive at the same time. Hence, it’s essential to ensure that you have excess space for eventualities like this.
Planning and designing efficient warehouse spaces is not easy, so coordination of new stock deliveries is critical to keep your warehouse space organized.
Issues With Supply Chain
The supply chain incorporates the manufacturing stage, warehousing and products on shelves. When there is an issue at any of these stages, it affects the whole supply chain. One of the inventory management challenges is to be well prepared when a problem arises.
For example, you must always re-order your best-selling products to keep more quantities in the warehouse. So, whenever there is an issue with sourcing raw materials or product delivery, you have enough stock in the warehouse to avoid stockouts until new stock arrives.
Increasing competition leads to many problems. One is you need to keep your product in stock at all times because customers are not afraid to shop elsewhere for the same thing.
Another thing is the demand for raw materials or your products from suppliers may increase in line with supply and demand. You can compete for high-demand materials, but it comes at a cost.
How Dear Systems Helps you Manage Retail Inventory Control
Inventory control is vital for the smooth flow of your business. Having to deal with issues in your warehouse or inventory levels may cause delays, which is bad news for customers.
By investing in smart software like DEAR Systems, you can optimize your workforce and manage inventory right from purchase to sale. It has automated multi-location inventory tracking so you’ll always know where your stock is located.
So, if you are implementing any new inventory control systems, make sure you use software to support you and your employees.