How can liquor stores effectively manage their inventory?
Global retail
How can liquor stores effectively manage their inventory?
Did you know that the global market for alcoholic beverages will grow by $1.6 trillion in 2022? Demand for alcohol is growing exponentially, driven by increased incomes and changing cultural practices.
Market growth is driven by several factors:
- Increase in urban populations;
- Revenue growth in emerging markets;
- Young people with high family incomes influenced by social media have easy access to alcoholic beverages;
New products and branding mean consumers are more likely to try novel products.
To stay competitive, you need to not only analyze demand but also understand existing drinking cultures. People living in a hot climate will have different preferences than those living in colder regions, for example.
A retailer needs to ensure they order products accurately and to maximize the use of their shelf space. That is why business owners and senior managers should automate their ordering processes to fully understand liquor store inventory management. This helps them to account for every aspect of the production process.
This is Leafio's Experience in Achieving Automation
The first thing to understand about inventory management is measuring performance indicators. Without high-quality and transparent analytics it is impossible to understand whether or not your business is on the right path.
If liquor store inventory management performance indicators and their dynamics aren’t properly analyzed then it is impossible to assess how well they are managed, or if ordering procedures are being properly followed.
Many specialists in the procurement department easily tire of these tasks, which means that labor resources are used inefficiently. Since the scope of alcohol stores is quite diverse, a manager has to process a large number of orders, usually processed via Excel, that are then sent to the supplier via instant messengers or even the telephone.
Without transparent analytics and order management, important parameters, such as supplier reliability and order execution accuracy, cannot be tracked. This results in poor to problematic liquor store inventory management.
Instead, many managers tend to draw up orders "intuitively." A person guided by their instincts, which are rarely informed by data or qualitative analytics, always finds it difficult to understand when mistakes are made. For example, liquor stores often sell snack food with a limited shelf life, which can result in a significant financial loss.
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This means that substantial losses are inevitable due to write-offs. Competent management of snack ordering needs to be directly proportional to the growth of net sales in general, as this category of goods accounts for a fifth of sales at liquor stores.
That is why it is absolutely crucial for liquor store owners to understand proper liquor store inventory management and learn about which tools they need to employ to achieve it. This principle holds true in most industries today, and not just the liquor business.
here are two main solutions on the market based on the principles of supply and demand. The former holds that products are manufactured and shipped according to anticipated customer demand, the latter that supply chain strategy is driven by actual consumer demand. LEAFIO proves that the demand system is more efficient in inventory management.
A quality liquor store inventory management tool should include the following features:
- Theory of Constraint methodology;
- High-quality expertise and experience;
- Transparent and comprehensive analytics, extensive product functionality;
- Intuitive user interface.
To make proper use of the above, you also must implement the following steps:
1. Centralization of the purchasing department
If you assign responsibility for specific business processes to different employees and take the load off of managers, then productivity increases significantly. Moreover, with the help of inventory management automation programs, you can successfully manage a whole network of stores without employing too many staff. This is especially so if your program includes single order counting and analytics algorithms.
2. Automation of orders
Automation allows you to use resources more efficiently and free up time for strategic and innovative tasks. It optimizes all aspects of retail work and allows you to fully control stockroom processing, unlocking new levels of liquor store inventory management optimization.
Order automation also helps with special logistical conditions. With the help of the liquor store inventory control program, you can control the number of orders and automatically generate them to a specified amount, taking into account which product is in most demand.
3. Inventory management by product categories
As mentioned above, it is very important to understand that categories like draft beer and snacks require special attention as they are the basis of most alcohol stores.
When ordering, it is important to consider not only the consumption of these goods but also the heterogeneity of demand. For example, weekends are usually much busier than weekdays.
You must also take into account the level of write-offs due to expired shelf life, the residual shelf life of the product on its arrival, uneven demand for each day of the week, and the desired level of service of the supplier.
Taking all these factors into account is difficult when managing multiple orders. If you just make the same orders for all categories, then essential factors will not be taken into account, thus impacting accuracy. That is why automated liquor store inventory management is so crucial.
Your stocks are in your hands, and an inventory management system will help you achieve maximum results. It’s a tough market, coronavirus isn’t helping, and, to put it simply if you don’t adapt your liquor store inventory management system, your business could suffer.
Mary MakarchukRetail Optimization Expert
