nventory management is the process of arranging and managing your stock from the point at which you purchase it from a vendor to the point of sale. Inventory is one of the most important assets a c-store can have, and it has the potential to create higher turn-overs, increased efficiency as well as a large number of other amazing benefits.
However, with so many different inventory management options out there right now, it can be a little confusing to understand what you should be doing and where you should even start. Fortunately for most of us, gone are the days of humble pen and paper records or massed spreadsheets to track stock items. Instead, new inventory information systems and creative techniques are making it easier than ever for c-stores to manage retail inventory.
Why Is a Successful Retail Inventory So Important?
You may be asking yourself, why do I need to dot the I’s and cross the T’s with inventory in the first place? Yet, stock inventories have far-reaching effects on c-stores and retail businesses which should not be understated.
- Customer Satisfaction: Inventories are key in the process of creating good customer satisfaction. Keeping stock in order allows for purchases to be given to patrons in a timely fashion or to be shipped promptly, reducing the time in which a customer needs to wait to receive their product. Thus, if you know where everything is and which items (if any) are out of stock, you will create an atmosphere of maximum efficiency.
- Storage Solutions: Secondly, a great inventory is one that is organized to give your store optimum storage space. This includes using a clear labelling system which will allow your staff to find stock easily as well as keeping walking paths clear and tidy to avoid unnecessary tripping over items. Tidiness makes operations run smoother and generally will create a more pleasant working environment for staff and management.
- Predicting Buyer Needs: Next, inventories are key in the process of forecasting consumer needs. If you overbuy an item that doesn’t end up selling well, it will take up dead space in the storage area and cost you money. By analyzing which product demand over specified periods, you can not only better understand sales performance, but you can establish efficient thresholds and Just-In-Time inventory practices.
- Controlling Costs: Finally, inventories are important because they keep the cost of goods sold relatively low. Buying in bulk, and understanding what you can buy in bulk, allows more refined negotiating with vendors. By forging positive relationships with vendors and keeping track of accounts, inventory managers can use the inventory to identify where company costs are straying.
Inventory Management Best Practices
Let’s examine some inventory best practices you can employ to ensure that inventory management is empowering rather than damaging a c-store.
- Consolidating Your Records: One of the best ways to manage retail inventory is to have a centralized list of all products. This list should provide as much detail about each product as possible such as item numbers or barcodes and you could even include images. This could either be a physical copy or an online system, both being preferable. This overarching inventory information system will give your staff ease of access and allow them to identify each item with confidence.
- Stock Checking: You should also aim to stock check on a regular basis. This means physically counting all inventory to avoid errors and taking into account damaged goods and defective products. Doing so regularly will help you keep on top of things, avoid a pile-up later down the line and awkward out-of-stock situations. For example, depending on the item, 7% to 25% of consumers faced with a stock-out will continue their shopping trip but won’t purchase a substitute for their desired item at the store while 21% to 43% will actively go to another store to find the item they originally wanted.
- Combining Sales and Inventory Data: Another aspect of stock checking is to combine both products sold and inventory into one platform. This shows you which products are most successful in informing you of when items need to be re-ordered and can easily be done through point-of-sale online systems. Equally, you can use this data to highlight KPIs.
- Staff Training: Another great way to manage retail inventory is to ensure that your staff are properly and consistently trained in how to use it. You as the manager need to make sure that they know how to handle customer returns correctly - whether it’s disposing of or checking an item for faults. Having the best inventory system in the world doesn’t amount to much if its application is lacking due to training deficiencies.
- Create Clear Strategies for Dead Stock: On the topic of disposal, make that clear guidelines for dead stock items are in place such as products damaged on arrival, seasonal leftovers or incorrect items delivered by vendors. You need to get rid of such items from your inventory as quickly as possible to make sure that they aren’t utilizing space where sellable items could be stored. If you hold onto the items for too long, you risk losing out on profit. While it may be tempting to cling onto them, donating such items to charities, food banks or even throwing them away will benefit your store in the long run.
- Combining Inventories Based on Locations: Whether you own one c-store or fifty c-stores in a franchise, you also need to think about how you will determine the exact location of your sold items. With one c-store, you could simply use an organizational system in your stock room. Yet, with multiple, it makes sense to have individual inventories per store using barcodes as well as an overarching one with all inventories included so that you can easily search across all items no matter where they are.
Inventory Information Systems
There are quite a number of high fidelity inventory systems currently in use – each with their own strong points. Point-of-sale options are one of the most popular as they automatically update inventory with each sale made.
As an example, Petrosoft’s SmartPOS touchscreen systems offer user-friendly operating structures with analytics, back-office features and foodservice options all integrated. Other beneficial features include safe drop enforcement, age-restricted sales validation and department sales time restrictions. Commenting on the SmartPOS, customer Jamie Patterson, President of Patterson Food Services Inc. says:
[SmartPOS] gives you a lot of flexibility and the ability to get in and get information easily. It’s easy to train your cashiers and the support you get from Petrosoft is wonderful.
Other popular inventory system methods include handheld barcode scanners that significantly reduce human time spent counting inventory and minimize human errors compared to the classic pen and paper inventory.
Equally, Back-Office Systems are popular with c-store retailers as they allow you to integrate inventory systems with the POS system you may currently have in place. Generally, no matter what you choose, it will certainly be an upgrade from the arduous pen and paper methods that seem so ancient to us now.
Inventory management is and will continue to be extremely important for c-stores, ensuring that retailers are optimizing inventory and its attendant investment. Without a systems approach to inventories, c-stores would surrender to disorganization, clutter and confusion, generally finding it difficult to understand the larger picture of which products are successful and which ones are not.