By Lisa Evans
It’s January, so that means after all the Christmas returns are handled and your store has been put to rights again, it’s time to do your physical inventory and figure out exactly where you are in real time vis-a-vis your merchandise stock. Keeping track of inventory is no-one’s favorite job, but there are several tricks of the trade that can help keep your stock levels in good order, and keep you sane, too.
The number of options available to retailers for inventory control can be intimidating, but between the barcode scanners, the analytics reports and the product forecasting software, the real truism of managing inventory comes down to understanding your system, and keeping an eye on it. As every retailer knows, the process begins with a physical count, toting up every single item that’s in-hand at your store or in your warehouse.
How often should you set aside the time and energy to do a full inventory count? It truly varies, depending on the size of your business and how quickly you turn over stock. For some retailers, once or twice a year is sufficient, while for others, it may be required with each change of season. It is critical to being your process with an accurate count, however, as everything else you do will be based on those numbers.
Comparing your actual stock to what your software or management tools say you should have is also sometimes a painful reconciliation. Merchandise theft is an unpleasant reality, but understanding exactly how much of your stock is walking out without your knowledge is of prime importance. Keeping your stock secure is a topic for an entirely different article, but understanding that you may have a problem is the first step in correcting it.
Independent Retailer interviewed Larry Collins of Novatech Wholesale, an industry expert on inventory control, to ask him how he keeps track of the thousands of products he handles in his warehouse, as well as the thousands more he manages for his retail clients. Collins knows the ropes, having written the custom inventory management software Novatech uses, as well as programming all the company’s many applications for the Internet, in addition to a highly sophisticated supply chain management system.
The Devil In the Details
Collins recommends using an inventory management system that carries as much detail on every product, including dimensions and product weights, as is possible to enter. Why? For those retailers who run an ecommerce store, product size and weight is critical for shipping. Collins notes, “The product determines the shipping. Some things can ship USPS, UPS or FedEx, but some items can only be shipped one way. For example some products can only ship via ground if they contain something that can’t be sent in air shipments, like batteries, or maybe something that can’t be sent through the mail. If these details are part of the inventory system, everything is tagged so that when it flows through your site, nothing can sneak through. Everything falls into it’s own place.” Even if you don’t run an ecommerce store, understanding how much space you’ll need to store or rack your inventory is another consideration retailers can ponder once all your stock has been counted up. Before you order new stock, you can do some quick math to determine whether you have the space for new orders to deliver in the next two weeks, or the next month.
Use a Cycle Count to Stay On Top Of your Game
Once you’ve done the hard part and counted everything you have, reconciled it against your store software count and made your corrections, now you’re ready to move ahead. One tip used by many retailers is to run cycle counts. Cycle counting is where you segment off a section of your store or stockroom and run a physical count on a regular schedule. With this method you are periodically validating each section of your store’s footprint. Using cycle counting you can also compare your on-hand stock to your software-based inventory to reconcile any variations on a regular basis. This can be especially important if you handle a lot of online orders and your stock turns over quickly. Keeping your online inventory numbers accurate is critical if you sell through some of the bigger retail outlets like eBay, Amazon or Shopify – if you chronically run out of stock on these large sites you risk losing your selling privileges all together.
Share the Load
Running a cycle count is a great pastime for your sales associates to complete during slow store hours. Be sure to explain and train them fully so that the whole team understands the importance of the task, and that their accuracy is a big deal for the store’s overall health. Sharing your goals with your staff is one way to keep them involved and motivated. You can also try to add some fun by offering small prizes, like a few hours of PTO, to the staffer who completes the most cycle counts in a given month. Trying to put a positive spin on the task will help it all go smoothly.
If you have enough staff to run a double or triple check for orders placed online, implement a procedure that flows logically and efficiently. As Collins states, “We triple check every order. You’ve got the person who’s pulling the stock that’s checking it, you’ve got the person who’s packing the box that’s checking it, and then you’ve got the person sealing the box that checks the packing list against the contents. Each person has to sign off on the process so that keeps it really accurate.”
Keeping on top of inventory is a never-ending game, but with some careful thought and attention to detail, you, and your staff, can succeed with ease.