Inventory management is the anchor of successful retail trade. Inventory management technologies in retail help trade chains and e-commerce sellers meet buyers' needs, reduce transaction costs and increase company profits.
What is stock management?
Inventory Management is an integrated process of ordering, processing, storing, and using the company’s assets, so-called inventories. Proper inventory management is a vital part of the retail business. Without an inventory, business does not develop - there are no correct inventory data, analysts, chain performance data, and financial indicators.
Proper inventory management helps to produce retail companies with uninterrupted customer service, improve income and maximize profits, avoid overstock and lost sales, and optimize order execution.
Proper inventory management promotes:
- Customer experience. The trend of accessibility - is a significant indicator for research because it directly affects sales
- Income improving. It is essential to pay attention to the structure of inventories: whether a significant amount of money in overstock is frozen or in the disposition of goods
- Overstock reduction. Purchasing too many goods or improperly storing them may become «dead stocks»
- Optimization of order execution. Proper inventory management increases company agility and provides the power to reply effectively to the wants of consumers in each retail outlet.
Why is inventory management so important?
For example, you want to maintain a balanced inventory level, having either too much or too little of each unit in stock. With proper inventory management, you should understand:
- The types of inventories. You should have visibility of what type of stocks is where;
- Demand forecasting. To know how much stock is needed to meet demand in the coming period;
- The procurement process. You know when and how to create purchase orders for a new or re-order to the supplier;
- Storage. You know how many SKUs can be placed on the CA and how many of them can be distributed to retail outlets;
- Inventory analysis. With the help of indicators, you will be able to analyze the current state of the chain and make more informed decisions about inventories;
- Omnichannel tracking. You can track the location of your stock, current purchases, and sales to get as close as possible to the actual number of SKUs.
Efficient inventory management is the basis of successful retail operation. Without an inventory, a business does not develop properly, as the state of inventories is not transparent, nor is information about financial indicators. Manual work and many tables with data only complicate the retailer's work. To get the best tool for your chain, you should think about software - an inventory management system. That will help you see bottlenecks and challenges, improve business processes, and gain an advantage over competitors.
Based on the long-term experience of our customers from different retail directions, we were ready to analyze all the weaknesses of the business and make the foremost effective inventory management system - Leafio Inventory Optimization.
This cloud solution will facilitate you quickly and accurately identifying areas that need special attention. That can help fine-tune the ordering and delivery processes within the shortest possible time, which can cause the successful implementation of the company’s future strategy by reducing overstock, increasing sales, and releasing funds.
The Leafio Inventory Optimization system also minimizes the impact of the human factor on order creation by relying exclusively on accurate data from complex algorithmic calculations to identify the real need for an individual SKU at each storage location. The solution will help move the business to a new level of inventory management.
And this, in turn:
- automation of business processes related to the supply chain at each stage;
- the release of human resources for better quality work with the assortment;
- the use of an analytical module for a complex understanding of business and development strategy.
5 steps for establishing effective stock management
- Maintenance of accurate inventory data
Any inventory management plan starts with a centralized record of each SKU in warehouses and stores. That facilitates access to any information required to perform inventory management tasks, from the cost of re-ordering and divisional locations to tracking sales data.
- Tracking of stocks
To properly design and sell the product, you need to know where it is. There are various ways to track stock locations in the store - department or category cards, SKU numbers, barcode labels, color codes, and even high-tech RFID labels. Track stock levels and SKU in multiple locations wherever you are.
- Regular inventory count
The stock level analysis is integral to any successful inventory and retail management plan. Data on the number of goods in the warehouses and outlets of the chain help to form a correct order to the supplier and not to re-calibrate the storage places. That will help the retailer minimize overstock and out-of-stock, providing the best service level to buyers.
- Analyze sales and inventory
Data on inventories, their location, and sales enable the retailer to identify bottlenecks and problem areas and analyze and understand what should be first paid attention to in the process of inventory management.
Data analysis is not a separate step in the inventory management process but rather an ongoing assessment of its effectiveness. Having worked out the problem areas, companies are moving to new levels of efficiency in their activities, and inventory management has become more transparent and controlled.
- Create a procurement process based on data
By accumulating data on inventories, suppliers, and orders, it will be possible to track and analyze the movements of your inventories as a whole and for each SKU. You can combine sales data with inventory data and make reasonable decisions about further purchases, product development, and pricing.
Inventory management in retail trade is crucial for the efficient operation and management of cash assets and storage locations. The automated inventory management solution allows retailers to manage their inventory in real-time with minimal effort and errors and improves customer experience.