Inventory management a necessary tool

The entire process of retail business is dependent on one important factor - timely delivery of goods and their ready-availability in the stores. This is how and why ‘inventory control’ becomes very important. The objective of ‘inventory control’, common to all the retail set-ups, is to ensure that the physical inventory in the store matches with the ‘electronic inventory’. In order to make sure that stores are well stocked, it is necessary to account for all the goods received.

Inventory management, though complex, is a necessary tool for smooth functioning of any store. It involves not only physically accounting for the merchandise delivered to the stores on a daily basis but also ensuring that this physical transfer is added to the store’s inventory electronically. It also involves areas such as training store managers and staff in the stores on accounting for merchandise and ensuring stock replenishing.

Inventory control also comprises following factors:

Inventory upkeep: Maintaining a steady flow of merchandise in stores on a timely basis to ensure that the stores are never in want of any particular good and the profit margins are higher.

Inventory adjustment: Keeping up with the rise or fall in demand for goods and, accordingly, allocating resources to the stores based on their needs.

Merchandise problem: Having a back-up plan in place for untoward scarcity of a particular product at a store.

Merchandise transfers: Should there be a need for a particular item, inventory can be transferred from one location to another, regardless of inventory origin by way of the software used by the stores. The transfer of this merchandise is thus accounted for, wherein the sending location enters the actual quantity sent and the receiving location enters the quantity delivered to their store.

Inventory guidance: The store managers and staff in the stores should be trained on the methods involved in using the software to enable them to account for the inventory in their stores so that the figures of the stock available in the stores are accurate and the store does not face a crisis situation at any point of time.

Inventory audits: Physical audits should be conducted to ensure that the management and staff in stores are fully competent and capable of efficiently managing their inventory at store level. Retail organisations also generally use various softwares in order to track the quantity, status and location of their stock. Barcodes and RFID tags are both popularly used to keep track of inventory. There are also various popular softwares like GERS and SAP that are able to fully integrate the entire processes of the company and streamline the process involved at the distribution centers and stores. Useful in being able to ensure the proper utilisation of goods, it also helps determine which products are popular and the demand for each individual product. This enables retailers to make projections for the coming seasons, and determine whether production of certain goods should be increased or decreased.

There are numerous advantages of inventory management. Facilitating replenishment process, inventory management illustrates the selling flow of a store. It minimises wastage and maintains an even flow of goods from the warehouses to the stores. It is the direct outcome of the level of sales in a store as a well kept inventory will ultimately lead to higher profit margins, reduce theft or mismanagement of stock and also enable the retailer to better gauge the wants of customers so as to accordingly meet their demands, ensuring thus customer satisfaction.