4 Valuable Inventory Management Lessons for Retail Businesses
How streamlined is your current inventory management system and processes? Cloud-based software has made premium technologies affordable and accessible for businesses of all sizes. And with a wide range of Xero add-ons to choose from, SMEs can get all the power of these business-boosting applications tied directly to their accounting software.
We looked at a few of the biggest companies in the world to see what smaller businesses can learn from their inventory management techniques. Here are four of their most valuable lessons.
1. Find a system and stick to it
If there’s one company that can teach us something about coping with massive volumes of stock across a huge range of products, it’s Amazon.
From its modest early days in a Seattle garage in 1994, its grown into one of the largest suppliers of consumer goods on the planet, selling at a rate of 64 items every second on its busiest days.
So how does it manage to keep up with this phenomenal turnover of inventory? According to Alan Lyall, Amazon’s vice-president of European operations, “You need to be organised”.
Amazon’s workers don’t mess around with pens and paper. As products enter their gargantuan warehouses, each item is scanned and logged, sorted by size and checked for defects.
With a system of scanners and codes, products don’t even need to be grouped together. A quick scan of the product along with a corresponding code on the shelf it’s stored on means that when workers need to find an item later, they know exactly where to look.
Your retail business might not need a system as advanced as Amazon’s. But we all know how easy it can be to start making mistakes when you’re stuck with an archaic mess of clumsy spreadsheets – or worse, illegible scribbles. That’s why so many companies have made the move to a Xero add-on like Unleashed – one that helps you get organised with real-time reporting and control over your inventory, as well as the ability to accurately track stock across multiple locations.
2. Trim the fat
For any retail business, running out of stock is a serious, everyday danger – and it’s one that could be enough to send your customers straight to your competitors.
If it’s any consolation, it’s a problem that plagues big businesses just as much as smaller ones. With nearly 2,000 different locations across the United States, the complexity of Target’s supply chain mixed with its massive range of products and brands can often make it a struggle for the retail giant to stay on top of its inventory. “The number one pain point [for customers],” says John Mulligan, Target’s Chief Operating Officer, “is that we’re out of stock”.
Target’s answer? Simplify your inventory management process. By cutting down on the vast array of different variations of products you stock, you can make your entire process of ordering and organising your inventory more efficient and easy. A clothing store doesn’t need to stock nine different shades of blue jeans, and a supermarket doesn’t need to keep five different brands of baked beans on the shelves.
3. Make your inventory more accessible
It’s already a cliché to say that mobile technology is changing the way we do business. But in the case of Walmart, the introduction of a piece of inventory management software is expected to enhance productivity, increase sales and improve customer service – on top of making it easier for teams to control their stock.
By giving their managers a smartphone app that allows them to restock items and access real-time sales data, Walmart hopes to take the thousands of hours its teams were spending in the back rooms of its stores and put them to better use.
You might not have the kind of immense Walmart-sized budget that lets you develop your own in-house software, but that doesn’t mean you can’t get the help of expert integrators of cloud-based software to make your operations more efficient.
4. Don’t ignore your data
No one can argue that data analysis isn’t valuable. With a deep understanding of your sales patterns, customer behaviour and stock fluctuations, you’re guaranteed to be in a better position when it comes to predicting changes in demand.
But over the last few years, Tesco has taken its data analytics to a whole new level – and it’s already saved them millions of pounds.
The supermarket’s supply chain analytics team gathers historic data from Tesco stores all over the UK to create predictive models that they can use to better gauge each individual store’s stock levels. After comparing past weather reports against the sales records of more than 3,000 stores, Tesco is now able to tweak its stock levels to match the current weather forecasts. They can bring in the right levels of hot dogs and burgers when it looks like barbecue weather, or make sure they don’t run out of cat litter during the colder periods when pets stay indoors.
Of course, you don’t always need a meteorological investigation to stay on top of your stock. But with accurate tracking of your sales trends – made easy with the right software – you can start to make smart choices about how you look after your inventory.
Ready to put these lessons to use?
We don’t need to tell you how important it is to pay attention to your business’s inventory management. What we can tell you is how easy it can be to get things under control.
If you’d like to see your retail business retain more customers, make more sales and keep a healthy, glowing cash flow – all while being guided through a seamless, pain-free transition by our expert integrators – book a free consultation with us today.