The Quick Guide to Inventory Management for Retail Business

Most of the retailers would have faced the problem of improper inventory management. The stock is something whose situation can't be predicted. Usually, it is not possible for a retailer to understand the demand for the particular stock. There are so many situations where overstocking messed up the margins whereas less inventory led the customers to go for other stores. This situation is something that is not easy to predict, and it costs a lot for a retailer that's why inventory management software comes in picture. Proper management of the inventory may help in sorting out this situation. Here is a quick guide to the inventory management for the retail business.

Having Knowledge About the Products

It is the first and foremost thing that a retailer should take care of. No matter whatever products you are dealing with you should have complete knowledge about every product. As everything being digitised, it has become easier to know the details of the products. These days even Point Of Sale Software are providing inventory management option.

Keeping the Count

Make some time out of your schedule to count the products in different categories. This is a cumbersome process, but it helps in easy maintenance of your stock. ERP software will help in keeping track of the products once you are done with the counting. If you are manufacture make sure to count the raw products along with the stock that you have.

Costs Of Maintaining An Inventory

There are three types of expenses that should be handled by the retailer during the stock maintenance

  • Ordering cost: This is the cost of the product, resources that you need for the shipping of the products, salaries of the staff who will operate the facility, quality control.
  • Carrying costs: This is the cost that you should handle when the stock is present with you. This means the warehouse cost, handling of the product until it is shipped, stock loss, taxes, insurance, etc.
  • Stock Out cost: This is the main point of effective inventory management. The loss that you will face when a product went out of stock or if you fail to meet the delivery commitment that you have made for the customer.

Jargon of Inventory

There are specific terms in the effective inventory management process that you should understand,

  • Maximum Stock Level: This is the maximum number beyond which you should stock up the products. Perishability of goods, demand for the goods, modifications in consumer preferences will influence this number.
  • Minimum Stock Level: This is the minimum number of goods that you have to stock up to meet the market demand.
  • Reorder Level: This is the level when you have to raise the reorder request for your vendor to ensure that the stock stays above the minimum stock level.
  • Reorder Point: This is the particular time where you have to reorder the stock at your vendor.

Controlling the Supply and Demand

This isn't something that can be done quickly. You have to forecast the situation and should take the necessary steps required. To control the demand and supply, you can use project management tools.