Ask any business owner for a major source of headaches and you’re likely to hear a lot of frustrated mumbling about running out of stock. Sales are lost; customers are less likely to return and more likely to leave a negative review; your name and brand are damaged. Any product stockout is detrimental to business but they are an unfortunate commonality for all businesses, even the best. U.S. retailers lost a collective $634 billion in 2015; WalMart alone lost an estimated $3 billion due to stockouts in 2015.
To be sure, a certain degree of this is unavoidable for any type of business. A volatile economy, unpredictable holiday seasons, tax rate changes, poor weather and many other factors can make optimal ordering and stock management nearly impossible. But there are ways to stanch the bleeding and keep your business profitable. Here are five ways (including how your retail point of sale can help) to avoid stockouts in your store and keep your shelves looking beautifully full.
1. Keep up to Date with a Modern Inventory System to Avoid Stockouts
Gone are the days of pen and paper ledgers or even Excel spreadsheets. The best inventory tracking is built into your point of sale system and helps guide your ordering and inventory management. Using a cloud-based system allows you to manage and edit inventory remotely and also allows operations to continue even if internet access is interrupted.
A good retail point of sale allows you to create order recommendations when inventory gets down to certain levels. These levels and subsequent orders can be easily adjusted at any point and help take some of the human error element out of the equation. You can also categorize your products based on the impact they have on your total revenue, highlighting your money makers and your money wasters. Figuring out which products aren’t selling is just as important when trying to prevent stockouts of the products that are.
2. Stay Organized and Observant with Your Product
Employee and customer theft is an unfortunate reality. In fact, the numbers are jaw-dropping. It’s estimated that U.S. retailers lost $50 billion in product to employee theft in 2016. While theft prevention is another topic in and of itself, it contributes to stockouts. Missing and unaccounted products lead to misordering and empty shelves. Again, a modern inventory system can help bring problems like this to light and allow you to better pinpoint the issue.
3. Invest in Scanning Technology or RFID Chips for Faster Inventory
The barcode revolutionized the retail industry when it was invented in the 1970s. Scanning technology that has come out since then continues to improve. QR codes can be linked to free apps on your cell phone that make inventory a breeze. And accurate.
RFID technology is the next level. Though expensive, this allows you to take inventory without requiring a line of sight scan and ensures durability that barcodes cannot. It’s therefore even more accurate and less time consuming, saving you on labor costs, and, in the end, lost sales.
Such technology allows you to count often as well. Figure out a system and routine that is best for your business. The more up to date your inventory is, the more accurate your ordering and stock levels will be.
Look for sales patterns during certain times of the day, week, holiday season, etc. Too often businesses are caught off guard by spikes in sales when they are actually predictable events. Your point of sale system should be an integral part of this.
Automatic, up-to-date inventory reports are part of what makes Korona’s cloud-based inventory system an improvement to any retail store. These help illustrate your business’s ebbs and flows in a tangible way, allowing you to order and stock accordingly.
5. Maintain Good Relationships with Vendors and Manage Your Capital
Communicate often with your vendors and always settle invoices on time. They suffer from the same inventory issues that you do. The more you can communicate the more you can anticipate changes in availability for certain products. There are times to make large orders and times when you can afford to order products in smaller, more frequent batches.
This goes hand in hand with managing your working capital. Over-ordering one week can leave your pockets (and stock) empty for the next. Additionally, use marketing and pricing strategy on the floor to adapt. If you notice a significant surplus that isn’t moving, offer discounts or change its position in your store.
The inventory game is a tedious one, but it doesn’t have to be as frustrating as it often is. Streamlining the supply chain process with the right point of sale system can help prevent stockouts and, in the end, keep customers coming back happily. Let us know what you think and any other ways you’ve improved your inventory management. Give us a shout to find out more about Korona’s cloud-based inventory system.