The blunt truth about inventory management and revenue: If you’re sitting on inventory, you’re sitting on dollars. And if you’re mis-selling or mis-receiving inventory, you’re losing dollars. When it comes to one of the most important operations for a retail enterprise to practice, inventory management is it. And the more locations a store has, the more difficult inventory management is to keep up with and the more vigilant you need to be.
You might be thinking... wait... back up... am I doing it correctly? Why is this so important? Let's find out.
Inventory discrepancies can mean any of the following:
- You may be promising customers product you do not actually have on hand—either through orders from another store location or ecommerce purchases on your website.
- You could be overlooking a theft problem.
- You may be paying for product you never actually received from vendors.
- You may be selling items incorrectly—skewing data which will eventually come back to haunt you during physical inventories and the analyzing of selling reports.
How do we prevent these issues? Here are five inventory management best practices for multi-location retail stores using your point of sale inventory system.
1. Tag Everything
...and tag it correctly! This process should not be rushed. Add descriptions, including style name, color, size, and other distinguishing attributes to the tags so that sales associates are able to quickly identify products. Confirm that the barcodes on the tags match those in your POS system and are uniform across all store locations.
2. Inventory Transfer QAs
Inventory transfers are a great way to quickly move merchandise between locations to meet customer demand. However, there is always the risk of error in transit that could alter data. Stores should constantly be checking on "discrepant transfers", in which the quantity shipped does not match the quantity received. Should discrepancies arise, cycle counts and inventory adjustments are the necessary next steps.
3. Physical Inventories
While the frequency of physical inventories can vary greatly depending on size of store, seasonality, staffing, and status of more frequent cycle counts, we recommend performing one PI at least every three to six months. Springboard Retail’s Count feature allows management to freeze a store’s inventory in order to perform a physical check of an entire location, and then provides a list of discrepancies to address post count. Here is a great Springbard Help Center article on best practices for taking full inventory counts.
4. Cycle counts
Unlike extensive full inventory counts, partial cycle counts should be done weekly, or, as soon as a discrepancy arises, (ie.) a customer is looking for a small Alanna dress in stock, which your retail inventory control software reports that you have on hand, but it’s nowhere to be found. Before making an inventory adjustment, stores should investigate and note what may have caused the discrepancy. Was it due to theft? Was an order or transfer received incorrectly and is the item possibly sitting in a different location? Was the item rung up under a different name or SKU? Is the item set aside due to damage? Once the issue is determined, a reason code should be added to the inventory adjustment. Because full cycle counts can be time consuming, stores should prioritize by counting products with the highest cost on hand.
5. Negative On Hand Reports
Run a Negative OH report for each location daily to bring any products with negative inventory to light. An inventory on hand issue means you could be mis-selling products and therefore incorrectly altering inventory levels.
Clean inventory across all channels makes for confident sales associates, satisfied customers, and smooth daily operations—from ringing out purchases at point of sale to filling online orders. Physical inventory that matches book inventory is absolutely essential to the success of a retail company and in the long-run will save you time and money.
Understanding the full range of point of sale features your POS software offers is key. To learn more about Springboard Retail's inventory management system's features and functionality...