In today’s choppy economic waters, it’s vital to dive below the surface of your operations to understand and control inventory costs fully. Amid global disruption and persistent inflation, you can’t afford stockouts and lost sales, too much capital tied up in inventory, excessive storage fees, or avoidable product wastage. Instead, it would help if you had real-time inventory visibility and nimble management capabilities that enable more efficient and resilient operations.
Read on as we explore five best practices that will help to tackle your inventory management iceberg to maximise profitability and customer satisfaction.
1. Enable inventory visibility
Effective retail inventory management hinges on having clear visibility into demand trends, stock levels, and incoming orders. By fully understanding your inventory, you can make more informed decisions, reduce risk, lower costs, and increase your market responsiveness.
Maintaining the accuracy of and trust in your inventory data is crucial. Regular audits help verify that the data in your system matches your physical inventory. There are several different approaches to consider.
· Physical inventory audit: Periodically conduct full verifications of inventory records against physical counts to ensure accuracy.
· Spot checking: Regularly check different sections of your inventory to catch and correct any discrepancies quickly.
· Cycle counting: Count parts of your inventory on a rotating basis. This allows for continuous verification of inventory accuracy and helps identify issues before they become significant.
2. Optimise and automate replenishment
You can’t have a well-managed retail inventory without effective replenishment. To order the right stock, at the right time, in the right quantity, you need to track inventory levels, place accurate orders with suppliers, and ensure efficient delivery. Amid increasingly complex global supply chains, multiplying sales channels, and rising customer expectations for speedy deliveries, this couldn’t be more important to get right.
Automated replenishment boosts operational efficiency by streamlining order processes — saving time and freeing up your staff to focus on higher-value tasks. By automating the ordering process, you can ensure ideal stock levels are consistently maintained, dramatically reducing the risk of stockouts that could lead to lost sales, as well as preventing the costly problem of excess inventory. By minimising manual tasks, you’ll also significantly reduce the risk of human errors, such as order duplication or incorrect order quantities, which can significantly impact your bottom line.
The ability to plan for the future and share purchase plans and make consistent and timely orders will improve your supplier relationships too. With a clear outline of what you need to order over the coming months, you can negotiate with suppliers for better prices. You can also check that a supplier can meet your requirements to ensure more reliable replenishment.
3. Enhance forecast accuracy
Accurate demand forecasting is another linchpin of effective retail inventory management. It gives you the ability to predict what customers will buy, when, and in what quantities. By continuously merging historical inventory and sales data with broader insights like market trends and expert knowledge, you can anticipate dynamic customer behaviour, market trends, and economic conditions.
Knowing what your customers will want tomorrow, next month, or even a year from now, lets you act, not just react. You’ll be able to set up a smooth flow of goods, maintain high service levels while keeping inventory costs under control, avoid stockouts that lead to lost revenue, as well as excess stock that sucks up cash flow, bumps storage fees, and can end in clearance sales. You’ll also have happier customers, improved brand perception, and better supplier relationships.
4. Regularly review demand planning
Keeping a sharp eye on your demand planning processes is crucial to maintaining forecast accuracy and staying agile in an ever-changing market. By regularly auditing and improving your approach, you not only safeguard against stockouts and overstocking but also ensure that your decisions are rooted firmly in data.
5. Deploy a retail inventory management tool
Adopting a new inventory management tool can significantly enhance your ability to monitor, manage, and optimise your stock, leading to improved operational efficiency and cost savings. Here are some practical tips to ensure you get the most out of any new system.
· Choose a user-friendly tool: Select software that is simple and easy to use, ensuring your team can quickly adapt and use its features without adding complexity to their workflow.
· Pick a cloud-based solution: Cloud-based tools offer numerous advantages. They require minimal infrastructure investment, enable quick deployment, and provide access to extensive capabilities at a lower cost than traditional software.
· Ensure seamless integration: Look for software that integrates seamlessly with your existing ERP system. This enables efficient data flow and operations, making the transition smoother and more efficient.
· Leverage automation features: Choose a tool that can automate routine tasks like reorder points, stock level alerts, and order processing. Automation minimises manual errors and will save your team valuable time.
· Start with a focused approach: Don’t try to do everything at once. Begin by optimising your top suppliers, biggest spend, or most important items. Alternatively, address key exceptions like stockouts or overstocking.
· Train your team: Take the time to train your team to make the most of the new system and help everyone to gain trust in the software.
We can help!
Effective inventory management empowers your business to maintain optimal stock levels, minimise waste, boost customer satisfaction, and capitalise on new market opportunities, securing a competitive edge in the retail landscape.
Fast to implement, easy to use, and highly scalable — our cloud-based software has everything you need to master inventory management. With cutting-edge tools rolled into one risk-free subscription, it’s the missing link in your business success. Our capabilities include advanced data visualisation, varied forecasting methods, extensive automation, easy integration with existing systems, and much more. We also ensure every customer has a dedicated success manager — not only to support them through onboarding but also to offer long-term guidance on reaching their inventory management goals.
Learn more about how we can help or book a personalised demo.
