Always having items in stock does not guarantee that your retail business is assured of its profit. Did you know that poorly executed inventory management has quietly (and without warning) crippled many retail businesses into the ground?
Inventory management is not just about having full shelves; it is about understanding what products are missing, what is overstocked, and how each of these factors could negatively affect your business operations, finances, and customer satisfaction.
In this post, we will explore what inventory management is, and how mastering it could positively affect the growth of your retail business.
WHAT IS INVENTORY MANAGEMENT?
Inventory management is the management, tracking, and control of resources and raw materials by making sure they are available in the appropriate quantities, at the appropriate times. Excellent inventory management is one of the secrets behind business success. It can improve your:
- Cash flow
- Customer satisfaction
- Operational efficiency
- Loss Prevention
On the flip side, a poorly managed inventory means money tied up in unsold stock, increased storage costs, and perpetually disappointed customers who can’t find what they need from your store. On the other hand, an efficient system ensures that only the right products are available at the right time. Explained below are a few strategies you should know about efficient inventory management:
KEY INVENTORY MANAGEMENT STRATEGIES FOR RETAIL BUSINESSES
1. Try going centralized with smart tech:
A centralized system will help you reduce errors such as duplicate stock entries. If you run a small retail business, you can start with affordable inventory management software. And if you run an e-commerce business, it is best when the software is linked to your store’s website platform.
This way your inventory updates automatically, and you can receive alerts in real-time when your items are low in stock.
2. Stock smart:
Smart stocking is not only about knowing what items are in constant demand, and the slow-moving ones to avoid. It also has to do with taking advantage of local events. In Nigeria, buying patterns show that sales spike during festive periods, school terms, economic trends, and even during fuel scarcity. Track demand in your location by using tools like Google Trends, maintain a cultural calendar and gather your customers’ feedback to better predict demand.
3. Restock before you run out:
Having to explain to customers that you are out of stock can make your customers lose trust. Try to consistently anticipate demand and restock proactively. In doing this, your customers will keep coming back, confident in the fact that always have what they need.
4. Physically Stock Count:
Even if you use the best inventory software, conducting physical stock counts is a must. Helpful ways to do this effectively are by assigning more than one person per section, addressing issues immediately (so you do not forget or have things get mixed up later), and stock counting as regularly as possible. Stock counting regularly can help to check issues like staff failing to log some products, and expired or damaged goods, which tech might not always catch.
6. Thoroughly train your staff:
As important as it is for business owners to learn about inventory management, inventory errors most often start with untrained staff members. Train your team to log and track stock properly, and responsibly handle returned or damaged goods (by reporting them and not just disposing of them).
Your retail business can only grow when your inventory management is done properly. Don’t let poor stock management slowly run your business into the ground. If you get your inventory right, you’ll build a business that’s not only efficient but grows steadily, and is scalable.
If you are unsure of where to start and feel the need to speak with a financial adviser, that’s okay! Contact a member of our advisory team here
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