Since the initial days of the COVID-19 pandemic, businesses across nearly all industries have dealt with supply chain issues. These challenges have not gone away as quickly as we all hoped, and they continue to evolve. In reality, the supply chain is not just about dealing with the problems we have right now but also what will be in the future. We’re unfortunately likely to see more pandemics, environmental catastrophes and wars that will disrupt our increasingly global system.
Many of these phenomena are beyond our control, and they are, of course, bigger and more important than simple business or commerce. Nonetheless, there are some steps that companies can take to mitigate negative effects from ongoing supply chain issues. The best thing a retailer can do is take as much into their own hands as possible to keep their customers happy and cash flow steady. Read on to learn more about how retailers can optimize their supply chain management.
Table of Contents
- Get An Accurate Picture Of Lead Times
- Keep Safety Stock To Keep Customers Satisfied
- Be Ready To Work With Other Suppliers
- Simplify Your Supply Chain By Working Local Producers
- Utilize Logistics And Tagging Technology
- POS Inventory Software Is Vital To Supply Chain Success
First and foremost, try to develop a thorough understanding of your lead time for all of your suppliers and products. Lead time refers to how long it takes between initiating a wholesale purchase order from your supplier and receiving those goods. It’s impossible to try to plan any kind of inventory management without a firm grasp of the process of replenishing your stock.
Keep track of your lead time history and communicate with your supplier about forecasted lead times for the future. This will help you nail down a realistic picture of your supply chain life cycle. Don’t hesitate to reach out to other suppliers to see if they guarantee faster lead times than your current provider.
Obviously the most detrimental aspect of supply chain issues is not being able to provide your clientele with the products they desire. Thus, keeping extra inventory on hand helps retail businesses avoid stock outs in the event they do run into these issues. This strategy is referred to as holding “safety stock,” “reserve inventory,” or “buffer stock.”
Businesses often use a basic equation to measure this:
(Maximum daily usage x Maximum lead time) – (Average daily usage x Average lead time)
This formula will give you a solid idea of the amount of safety stock you need for each product. However, depending on what kind of retail business you run and how many different products you sell, there are several other ways to determine optimal safety stock levels.
With the unstable and ever-evolving landscape of the supply chain, it’s necessary to plan ahead to ensure that you can stock the products that you need. With common factory shutdowns and constant price fluctuations, it could be advantageous to shop around and see what competitors are out there. Consider product testing new suppliers in advance so that you can turn to them for fulfillment in case your original wholesaler becomes unable to complete your orders.
Some business relationships are certainly worth nurturing. But not if they hurt your bottom line and drive customers towards your competitors. For example, let’s say you own a liquor store that sells a lot of Malbec. You notice that there are some issues with restocking the most popular bottles. If a new wine salesman guarantees fulfillment of your purchase orders in time to prevent a stockout, then it might be time to work with them instead of less reliable existing suppliers. In other words, if a different factory has a much faster lead time, it’s probably worth checking them out as an alternative.
Try To Source Your Products Locally For Good Supply Chain Management
Establishing relationships with local producers and distributors can simplify and speed up your supply chain. It’s not rocket science. Sourcing locally means eliminating virtually all of the steps along the way that can cause bottlenecks in shipping, customs, and more.
Hence, acquiring products from regional suppliers can reduce lead times considerably. More locally-driven relationships help businesses roll out new products faster. In addition, you will be supporting American workers and companies and putting money back into the community.
Manually entering product data and filling out spreadsheets are outdated methods. Using modern scanning technology is much more efficient and accurate. With this tech, workers can use barcodes, smart tags, and scanners to feed inventory data back into their computers and point of sale software.
The current industry standard are SKU barcodes with laser or photo capture readers. However, the retail industry is increasingly seeing the use of RFID scanners that can read smart tags on multiple items at once. These technologies can certainly be costly investments. Nonetheless, they offer businesses substantial advantages for optimizing inventory management with precision and reliability over old fashioned methods, ensuring more accurate inventory counts.
Smart, robust point of sale software offers sales data and inventory analysis to provide business owners with valuable insights. Such insights can help immensely, predicting sales patterns and forecasting inventory levels. Prepare your retail business for the future by getting the most out of your past data.
KORONA POS has a fully customizable back office interface for key performance indicators (KPIs). These indicators, such as ABC analysis and sell-through rate, will eliminate blind spots and provide a deeper understanding of your inventory. Using built-in point of sale analysis, KORONA POS gives you a clear picture of specific products and your inventory as a whole. With this knowledge, you can increase cash flow and more efficiently predict restocking demands.
KORONA POS Has The Best Inventory Features
Your point of sale should be a principal tool for your inventory management. KORONA POS offers a built-in predictive inventory widget using previous sales data to prevent stock-outs and keep your customers satisfied. Set your minimum count levels and let our system handle automatic reordering, reducing busy work and stress for you and your staff. Give us a call today to learn more about how our point of sale can optimize your inventory management!
FAQs: Dealing With The Supply Chain Crisis
Supply chain refers to all of the steps involved with creating and delivering a product. It includes everything from the initial production of goods all the way through the final sale.
Supply chain affects retailers immensely because retail businesses need a steady supply of raw materials or products to sell to their customers. If there is a disruption in the supply chain, retailers cannot stock their shelves or fulfill orders. This makes shoppers unhappy and pushes them towards competitors.
Retailers can improve supply chain management through optimizing their inventory by utilizing sales data and predictive analytics. There are many strategies owners can take to mitigate the negative effects of supply chain woes. Keeping extra stock, working with local suppliers, and staying nimble with supplier relationships can help maintain a steady supply of goods, keeping customers happy.