How To Boost Your Sales With Smart Inventory Management

Although inventory management affects all parts of a retail business, we often forget to pay attention to it unless something goes awry. In the sales environment, it is easy to forget about the backend unless it begins to present some serious problems.

To enhance profits while keeping inventory issues at bay, it is crucial to implement good inventory management right from the start. Neglecting inventory could ruin other aspects of your retail business, leading to poor customer service and missed opportunities.

So, as a retailer, what can you do to give your inventory management and, in turn, your sales the boost they need?

Here’s the lowdown on some important factors to consider

1. Automation At Every Level

If you sell on multiple channels, automating processes can do a lot more for your sales than you think. Automating order management, in particular, can help in increasing your profitability significantly as it leaves time and resources for more important things.

For this, you need to seek out a powerful inventory management software and set it up for your omnichannel business. Such a software will look into every aspect of handling your inventory including order management.

When an order comes in, inventory levels are evaluated for fulfilment and the order alert is sent to the relevant warehouse where it can be picked, packed and shipped.

You can also consider ways to set low stock alerts and automatically send out purchase orders. So, if your stock levels drop beyond a certain limit, the software will immediately send out a purchase order to your vendor(s) and ensure timely restocking.

2. Adopting Just In Time (JIT) Inventory Management

Storing excess inventory in the form of safety stock or unused inventory not only eats up storage space but also your working capital. So, if you’re looking to increase your profitability, you must work on reducing inventory wastage.

Adopting the Just In Time system of inventory management can help you do this. Because you order inventory only when you need it, this system ensures that you don’t have more stock than necessary. Using JIT can help you as a retailer in the following ways:

  • There is less wastage as you don’t store excess inventory. This, by extension, ensures that your products are always new and of high quality.

  • You don’t have to keep excess stock. So, you can use your surplus working capital for other important aspects like expanding your business.

  • You don’t have to waste your income on storage fees for keeping excess stock.

If not having safety stock seems daunting to you, simply automate your purchase orders with a good inventory management software. This will always keep you safe from the risk of running out of inventory.

Manufacturing and retail are two industries where JIT works extremely well. American computer technology company Dell has managed to drastically reduce its lead times and successfully transform its manufacturing process by adopting JIT.

Its approach is a tad bit different as it gets its suppliers to hold inventory and demands short lead times on components from them. So, once the components are received, all Dell has to do is quickly assemble products with them and then ship these products to customers.

3. Doing Inventory Calculations Often

Inventory math is no doubt cumbersome. But, if you want to scale your profitability, you need to know everything about your inventory all the time.

Doing inventory calculations often helps you evaluate how efficiently you are turning inventory into sales. It also helps you understand how to manage your stock levels better.

Stay informed of your inventory level requirements by regularly calculating your:

  • Average monthly turnover

  • Inventory turnover

  • Safety stock

  • Average monthly sales

  • Critical stock level

You could also forecast your sales for specific seasons and sale periods to get a fairly accurate picture of market demand during these times.

Remember, none of these calculations will remain the same indefinitely. You need to take both surges and slumps into account and keep updating your inventory system from time to time to manage inventory accurately.

4. Reconciling Stock Frequently

Your inventory is constantly in flux and subject to several elements, some of which are out of your control. So, for the most part, your actual inventory levels probably won’t line up with your book inventory levels. But, as a retail business owner, it is crucial that you stay on top of your inventory so that your sales don’t take a hit.

How do you do this? By counting your inventory and doing it often.

Regular stock reconciliation will help you identify any discrepancies in inventory levels and the source of this mismatch. This, in turn, allows you to improve the way your business functions and prevent theft and losses.

So, when you reconcile your stock, you can do it in any of these ways:

  • Shut shop for a day or two and count your entire inventory. Taking to this method can cost you your sales for a short while. No stock moves in or out during the reconciliation period.

  • Count inventory in parts of your warehouse regularly, one part of the warehouse at a time.

  • Count products that sell frequently more often and those that don’t sell as much less often.

A more efficient way to track your inventory is by using an inventory management software. Such a software keeps track of every product moving in and out of your warehouses and stores in real time.

Counting stock often also saves you a ton of money because you’re less likely to lose inventory to retail theft. Of all the inventory aspects that can be automated, we recommend that you keep stock reconciliation manual, and use the results of the count to feed more accurate data into your inventory management system.

5. Consolidating Inventory Management

If you’re a multichannel retailer, manually keeping track of inventory is truly a Herculean task. But, by taking to a powerful inventory management software, you can ease your burden in a manner you never thought possible. All you need to do is update your initial stock levels across every sales channel.

Orders placed across every channel get updated immediately alongside changes in inventory. You can even transfer your inventory across all your sales channels from one place.

Using Radio Frequency Identification tags, or RFID tags, can also help with this a great deal. They are essentially pin tags or stickers that you can attach to your products to track them. So, if at any point in time, products with these tags have been misplaced during distribution across sales channels, you will be able to track them in real time.

6. Preventing Theft

Retail stock theft, as it happens, contributes to losses as huge as $60 billion to retailers every year. It can happen at any point in the supply chain – when stock arrives at your warehouse, while it’s being shipped, or in your store. But it’s almost always the result of inefficient inventory management practices.

So, counting your inventory regularly and setting up an inventory management software can help you identify and resolve theft at the earliest.

In addition, you can also take these steps to prevent theft:

  • Ensure that your staff is aware of what you are doing to minimize retail stock theft.

  • Put up security mirrors and signs in your warehouses and stores.

  • Install security cameras or set up surveillance systems like a video analytics software.

  • Attach RFID tags to your products. They’re great for tracing misplaced/ stolen items.

  • Hire a verified security agency/ guard.

  • Set up permissions for users on your POS so that orders are not manipulated.

7. Processing Returns Efficiently

Returns are a dreary affair – not just for consumers but also for you. Customers want them to be quick and hassle-free. But there’s so much you as a retailer need to look into before initiating the return of a product. You have to get it shipped back, inspect it for damage, identify the damage source, and then decide what you want to do with it.

But the most important step is adjusting your accounts and inventory depending on your action plan – which is where inaccuracies creep in. And the worst part is that the process is different for almost every product.

For instance, if a customer buys medical grade lenses online only to find that they expire soon, he/she will be most likely to return them. Naturally, such a product would be hard to repurpose for the simple reason that it is medical grade.

But, if a cosmetics product was returned because of the same issue, it would probably be redirected for sale as a discounted product.

Essentially, you need to make returns easy for your customers, no matter what the product. Doing this will ensure that they keep coming back to you thus boosting your sales.

Inventory in retail is really that hidden aspect that goes on to influence every sale you ever make. Managing your inventory right, and managing it in a smart and logical manner, at every stage of the supply chain can go a long way in improving your sales.

So, what you are going to do differently today to increase your profitability? Share with us in the comments!

Author Bio:

Mohammed Ali is the Founder and CEO of Primaseller – a MultiChannel Inventory Management software that helps sellers manage inventory better and fulfil orders on time, with nifty integrations that make business better. When not running a startup, Ali is often caught lapping up the latest book in fantasy fiction.

11 Response to "How To Boost Your Sales With Smart Inventory Management"

  1. Comment From Andrea Matthews

    7 amazing ways that seems like common sense but we always forget to do most of it. This is a good reminder!



  2. Comment From Karl Kurtson

    Enjoyed reading this article, let me do my inventory calculation now.



  3. Comment From Jordan Brown

    This article reminded me of all the things I have to do and a bit more, it’s a really good read and made me understand its importance.



  4. Comment From Ruby Smith

    I like this article, it’s really good.



  5. Comment From Diane Hollison

    This was such a short read but it’s very interesting.



  6. Comment From Gray David

    Entertaining, simple to understand, on point. If you’re reading my comment to know if it’s worth the read or not, go ahead and read it and understand how to manage your inventory smartly in just a few minutes.



  7. Comment From Hannah Kurt

    This is definitely worth reading. It’s all explained well, and it totally makes sense to do all of it.



  8. Comment From Jennifer Swift

    This is definitely a good read. I’ll definitely bookmark this for future reference.



  9. Comment From Krisha Madisson

    Wow this is great! I enjoyed reading this article!



  10. Comment From George McCurtney

    Very well said! Your articles are always easy to read and understand.



  11. Comment From Simon Stewart

    Wow! This is my first time to read your articles, but this sure won’t be the last. Learned a lot in just a few minutes.



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