In retail, inventory essentially is the business. Without properly understanding what’s on hand, how it’s performing, and what impact it has on the bottom line, good luck staying profitable. This is doubly true for the fiercely competitive world of SMB retailers.
With the advent of the digital revolution, inventory management has become incredibly sophisticated. Retailers can now track and analyze numerous factors about inventory items across multiple locations. The culmination of this evolution is inventory management software. You will sometimes find inventory management as a standalone product while software suites may offer it as a must-have feature. For example, the best POS software (point-of-sale software) include inventory as a built-in feature. SMB retailers that embrace the inventory management technology will gain a better understanding of their supply and demand than the competition.
For those SMBs still weighing the pros and cons of adoption, consider these reasons why your competitors have made the transition to actively tracking their stock:
1. To become more efficient.
It’s no secret that efficiency leads to better financial performance. But this is even more crucial when it comes to SMBs, which have less room for error and need to operate without mistakes to compete with larger businesses.
Inventory management software can be a huge boon in efficiency for an SMB retailer. Without it, employees are manually sorting through files, emailing and calling back and forth, and checking stock by hand. These tasks can all be handled by software, which frees employees to work on more important tasks.
2. To gain better visibility.
Inventory management is largely about understanding what’s on hand and what isn’t. Even SMBs can have trouble keeping track of what’s available with pieces moving in and out of storage and (hopefully) being sold at a rapid pace.
Lately, there has been even more inventory to track. In a recent study, Supply Chain Digest found that the level of inventory on hand based on average sales per day has risen by more than eight percent over a five-year period.
By automatically tracking inventory levels and having the ability to locate specific pieces that might be requested by a customer, inventory management software has provided a useful answer to the increasingly complex question “What’s in stock?”
3. To make better orders.
The relationship between SMB retailers and vendors is hallowed. Both parties depend on each other and work to keep each other in business. Of course, it’s up to the retailer to make sure that its orders are accurate and matched to current demand.
Having too little stock will affect sales, but having too much can be just as detrimental. SMBs may have limited storage space, and unpopular items can easily take the spots of hot sellers. Plus, excess stock will tie up funds in unnecessary overhead.
“A major disadvantage to holding too much inventory on hand is the negative cost implications,” according to The Arizona Republic. “Purchasing any type of inventory or product ties up the funds from being used elsewhere in the business.”
Keeping track of current and previous items can make reordering easier by automatically inputting order numbers, item specs, and calculating currency exchanges.
4. To make more sales.
At the end of the day, improved efficiency, visibility, and automated restocking are all efforts to make more sales. That is the business that retailers find themselves in and one that is incredibly important: The Balance reports that retail sales and consumer spending drive almost 70 percent of economic growth.
When your clerks can stop telling interested customers that something is out of stock, when employees stop wasting time physically checking the stockroom, and when new items are automatically ordered as they run out, higher sales will be the natural result.
Peter Chawaga is a contributor for TechnologyAdvice.com with years of experience as a reporter and editor for publications around the country. He’s covered arts and culture in Philadelphia, business and development in Greensboro, and healthcare and technology in Nashville.