All retailers know that in order to have optimum inventory control, they must find that delicate balance between demand and days of supply. Of course, absolutely no forecasts or educated projects can be made if you haven’t been keeping meticulous on hand inventories. Keeping track of the stock on hand is crucial when analysing the profitability of an individual product.
Luckily, you no longer have to rely on your staff alone the keep these delicate records for you. With technology and software advancing every day, it is easy to find point of sale or POS systems that will allow you to automate these time consuming and mundane tasks.
The Fundamentals of Inventory Control
Inventory control generally implies the methods used to manage product supply, storage and accessibility so that you can reach an adequate supply without excessive oversupply. If you ordered six pink socks and you could have sold eight, then you lost the money you would have made from the sale of two more units.
If you ordered eight pink socks, but only sold six, then you have lost the money it takes you to store those additional units until they sell. Using inventory control to maximize profits requires balancing these two scenarios and hopefully ordering exactly what you need.
Inventory Costs and How They Affect Your Business
We have just seen how having too many or too few socks on hand can be disastrous. Overstocking, or having more items than you can sell, is especially dangerous if you specialize in perishable items or seasonal merchandise. For example, if you order 200 cartons of eggs and 100 expire before you can sell them, you have just lost money. Similarly if you order 200 Christmas trees and only sell 100 you have to pay for the storage of those trees until next season.
Under ordering can also be devastating to a retailer. If you try to reduce our inventory costs by simply ordering less of everything you can end up hurting your business in the end. Ordering too few of a product will cause ‘outs’ on your shelves and enough outs tell your customers that you never have what they are looking for. If they need eggs and you’re completely out, they will not only shop somewhere else today but probably from now on as well. Fortunately retail software allows you to automate the inventory tasks vital for making accurate projections including:
- Receiving Merchandise From Vendor
- Selling Merchandise At Register
- Changing Retail Price To Find Best Selling Point
- Running Productive Reports
How POS Systems Handle Inventory Control
Not long ago, every transaction was carried out manually. Cashiers had to use their registers like a calculator, know which items were taxable, and be able to accurately calculate change due. Not surprisingly, this can lead to a lot of errors. In order to know for sure how many socks you sold each day you had to go and literally count the socks you have left at the end of every shift.
Luckily, POS systems do this for you! Once you enter in each product description, it will subtract a unit every time it is scanned at the register and add a unit when you receive one from a vendor. With this huge reduction in errors and increase in efficiency, every retailer can increase their profits and get a firm handle on days of supply.
By line: Retail Express designs and develops its own POS systems, primarily using Microsoft technologies, and has been doing so since 2005. Currently serving over 1500 retailers, Retail Express has helped hundreds of retailers to streamline and grow their businesses.