If you manufacture or sell products and display them in a physical or online store, you have surely already faced the complex task of maintaining an up-to-date inventory or stock . Managing a store’s inventory is one of the most fundamental activities for any business to run successfully, since it depends on its good organization that both you and your customers can know precisely what merchandise is or is not in stock.
You’ve probably asked yourself more than once: what is the appropriate level of inventory I should handle? The most expert specialists share that the answer involves considering that, although it is a difficult balance to achieve, it is not impossible. But how? Being ready to meet any request from our buyers: first of all, avoiding investing in merchandise that, perhaps, will never be sold or that we will have to get rid of through discounts. Secondly, having technological tools that help us automate and make this process more efficient.
Why is inventory important?
Although the answer seems obvious, there are still many business owners who underestimate its importance. We must be aware that inventory has a direct impact on the results and overall balance of the business; That is why it is necessary to monitor it permanently to obtain the necessary information and thus be able to make better decisions.
Also, because knowing how to make an inventory of a store is one of the essential steps for any marketing strategy applied to a business with a physical or virtual location that aims to be functional.
Because by having your inventory in order and displaying it in the catalog on your website, your potential consumers will be able to easily find the product or merchandise they are looking for, know what types, models, colors, sizes or sizes are in stock and make their purchase without having to make as many moves within the site. In this way, your inventory becomes an effective purchasing tool, so they will surely visit your store again; and if this is online, then searching the warehouse shelves is easier: something that, without a doubt, you and your collaborators will appreciate.
What is an inventory?
The inventory is a detailed and ordered list of the tangible assets that a company has to carry out its activity. The “Business Leaders” study by the PricewaterhouseCoopers (PwC) firm revealed that senior executives seek to be attentive to structural changes in the global economy through better inventory placement.
However, this record is one of the most valuable assets of a company and also one of the most expensive, since it means having a direct and continuous source of supply at any time to ensure that a constant and efficient service will be provided to the customer; Not having it puts a company at risk of slowing production or denying sales due to excess demand.
What options exist to take inventory of a store?
Among the options to solve how to inventory a store in a precise, functional and agile way, we can consider outsourcing .
This strategy is very effective in avoiding carrying expensive inventories, since it consists of outsourcing the manufacturing of our products and ordering them as orders arrive. For example, what Gaia Design does , one of the most successful e-commerce startups in Mexico. It is a company that sells furniture and decoration items online, and works with a network of workshops that are responsible for manufacturing and shipping the products to customers’ homes; To avoid problems, the process includes quality control by the company’s team.
However, not all companies, especially smaller ones, can benefit from this inventory management scheme called just in time . This represents a problem, since in order to negotiate with suppliers who work on quick responses, a large volume of orders is required. On the other hand, it also implies that higher costs must be accepted, which impacts the final price to the consumer.
In any case, the first step to correctly manage business inventory is to have a technological solution that connects all purchasing and selling processes to obtain valuable information instantly. Purchasing business software, can not only allow your operation to be more profitable, but also lay the foundation for future expansion.
Today there are many options on the market to take inventory, some even allowing you to operate from a mobile device.
Considerations for taking a store inventory
According to the National Commission for the Protection and Defense of Users (Condusef) , inventory control is one of the main omissions committed by SMEs, which leads them to have failures in the operation of their organization. Due to its relevance, entrepreneurs must focus much of their attention on efficient inventory management, as this will allow their businesses to meet demands and compete within the market.
Effective inventory management involves having an action plan to meet the company’s competitive priorities and thus avoid negative consequences, such as the loss of a sale, stagnation in production, delays and financial losses, etc. Therefore, in order to prevent this type of setbacks, it is essential to consider the following points:
- Determine stock: the main thing is to know how much of each item we have in our inventory.
- Good accounting: correct inventory management requires rigorous accounting; since, if there is any error in the inventory valuation, it would be reflected in the values of the cost of goods sold, the gross profit on what was sold and the income for the entire period.
- Loss control: although these are inevitable, it is important to raise awareness among all those involved in the inventory process about the importance of control, in order to minimize the negative effect derived from losses.
- Use of technology: currently there are different software options specialized in inventory management, which facilitates this task by allowing control by category and determining all the variables that affect the cost of the products.
- Choosing collaborators: it is necessary that the personnel dedicated to this activity be methodical, rigorous, detail-oriented and, above all, reliable.
- Standardize descriptions: using similar terms to describe all items ensures that no product is registered twice, with different codes; In this way, control of the flow of goods is facilitated, in addition to avoiding errors and excesses in inventory management.
- Evaluate demand: periodically making a request to calculate the planning parameters ensures that there are no excess or missing products in the inventory.
- Know the temporality: identify the moments in which you sell more and those in which you sell less; for example, at the end of the year, in the summer, etc. Sales history from past years serves as support for this point .
- Adjust turnover: maintaining an excessively large inventory can imply enormous idle capital. Therefore, the existence calculation must be balanced to ensure that the average storage time is the minimum and thus fewer resources are invested in this asset.
One of the concerns that SMEs have in common is the risk of denying a sale, so they choose to have a large inventory; However, this practice most of the time leads to a lack of liquidity. To avoid this eventuality, it is necessary to consider an adequate inventory rotation period, where the main factor to consider is the time it takes the company to acquire the new order. Rotation should not be so high that it compromises product availability, nor so low that it implies having products stored for a long time.
Let us remember that “without inventories, there are simply no sales . ” Therefore, correct inventory control is a matter of vital importance for any business, since it implies knowing how to make better decisions, reduce costs, greater profitability and more satisfied customers.
Where to start a store inventory?
Poor inventory management is one of the main causes of poor business results. Emergency purchases of supplies (and at a higher price), shortages in products in warehouse, problems in meeting customer deliveries and saturated warehouses are just some of the symptoms of inefficiency in this key area for every company. .
Why is it so important to manage stocks well ?
Because it is the registration of all the company’s assets that are going to be used for the production of products or merchandise or directly for sale. When it is not carried out properly, the business is left without the necessary fuel to continue operating, as if it were a car.
Therefore, if you are about to start a business or if you are having problems taking efficient inventory and need to adjust that process, there are five steps you have to take first to correctly manage your stock.
1. Prepare the winery
To begin, you must have a fixed space where you can deposit the merchandise or supplies necessary for production or the provision of services in an orderly manner. The place must be clean, well lit and free of humidity problems or water leaks, if required also with good ventilation. Additionally, you will need labeled shelves and cabinets so you can quickly organize and locate each item.
2. Define the storage system
This will depend on the characteristics of the stored goods, the available space and the needs for circulation or fluidity. Among the most used options are the conventional storage format, which we normally see in wholesale stores . It is based on the use of pallets or pallets , to combine easily accessible individual items on the lower part with palletized and packaged merchandise on the upper levels.
3. Choose the stock coding system
To complete this process, which we already reviewed as part of the considerations for making an inventory of a store, and according to the type of items, you will have to record variables such as model and number, measurements, weight, color, year of manufacture, date delivery, expiration date and supplier. Keep in mind that this information is vital to define which products are going to leave the warehouse first and thus be able to fulfill deliveries to the production line or to final consumers on time.
4. Incorporate a control tool
Inventory management is one of the most important operations in a company’s buying and selling cycle, and the most appropriate technology for taking an inventory will depend on the number of items the business handles. If the operation is simple, you can start with an Excel template; but, as we have reiterated, the most convenient thing is to start from the start with efficient business administration software, with a good Point of Sale system, that synchronizes the output of goods with The inventory. You will be surprised by the number of tailored and affordable options that exist for SMEs today. (In the last point of this article you can delve more into the functionalities that a Point of Sale system offers for collecting sales and store inventory.)
5. Carry out a first physical inventory
Before starting with the first records of merchandise arrivals and departures, you need to do a manual count to ensure that you have real information about the available stock . Otherwise, when carrying out inventory controls on a monthly, quarterly or annual basis, the figures will not coincide and problems will begin (or continue) in the warehouse and with the entire operation.
Key concepts to improve purchasing decisions and have a more efficient inventory
Below, we share four key concepts to improve your purchasing decisions and consequently you can manage the business inventory more efficiently; given that inventory or stock management is one of the key indicators of the operational and financial health of any company. The excess or lack of raw materials or merchandise for sale are the two extremes that we must avoid. Implement these concepts so that you can find the optimal supply point for your warehouse or warehouse without so much complexity.
To start working on your inventory, the first thing is to understand what its ideal level is. According to the definition of specialists, it is one that guarantees compliance with demand (whether internal, from production; or external, from the sales floor), while avoiding excess stock and minimizing costs. costs (for example, maintenance).
Then, you must understand which are the four variables that will allow you to define the number of products you should buy and at what time. Of course, in order to achieve this you will need real-time information on sales and stock. Therefore, it is recommended that you have effective business administration support, such as the one we recommended before, that connects sales with the inputs and outputs of the warehouse and provides vital information for decision making.
Thus, these are the four items or concepts that you should not overlook when preparing a store inventory:
1. Maximum stock
It is the largest inventory of supplies or merchandise for sale that you can store, according to the size of the company’s warehouse and also its financial capacity. The problem with maximum stock is that it implies idle capital: maintenance costs, insurance costs, losses and also “buried” money that cannot be used for other things.
2. Safety stock
This is the essential minimum that the company must have in warehouses to be able to fulfill orders from production lines or external consumers. A bad calculation can cause many problems, such as delays in deliveries, cost overruns due to last-minute purchases of inputs, or the loss of a sale altogether.
3. Order point
It is the indicator of when a new merchandise request should be made from the warehouse. To define it, you must consider what the safety stock is, the expected purchase request and the time it will take for the merchandise to arrive at the warehouse to avoid a shortage. For example, if in a grocery store the safety stock of cans of beans is 15, 10 are sold per month and the order takes 30 days to arrive, a new monthly order must be placed when there are 25 cans in the warehouse.
4. Economic Lot
It refers to the amount of supplies or merchandise that you must order to have minimum inventory costs. Keep in mind that the larger the orders, the higher the costs of storage, applied capital, shrinkage and insurance (due to theft risks). But on the other hand, you must also consider that each order has a cost (for example, administration, shipping and supervision). The key to the so-called economic lot is to find the balance between these two variables.
How does point of sale software help you take inventory?
These tools offer a technological platform that provides the business with greater profitability. Basically, Point of Sale ( POS ) systems are modern cash registers (making traditional cash registers obsolete) that have digital monitors or that can even be managed from an iPad or a cellular device, thus enabling Payment with credit or debit cards. This innovation allows both the small businessman and the independent entrepreneur to achieve greater profitability.
The emergence of these new tools has meant many advantages for businesses. Now it is possible to serve a customer from any location in a commercial establishment and keep more precise control of what was sold or inventory. This has been influenced by the widespread use of Cloud storage.
If you have a business and have not yet decided to incorporate modern point of sale software , here we tell you what are the main improvements it could bring to your operation and profitability. Take into account that the cost of this equipment has become more affordable and that some providers even offer the possibility of making monthly or “equal” payments, both for the hardware and the license and for its update.
1. Flexibility and better customer service
A modern point of sale, can connect to different devices and peripherals, such as touch screens, credit card readers, scanners and mini printers. So you will no longer have to ask your consumers to come to the cash register to pay or your salespeople to register a sale. You will be able to significantly shorten customer service times and avoid losing any sales.
2. Real-time registration of operations
POS platforms allow for true business intelligence, since they can be integrated into business management platforms and access very valuable data. For example, what type of people buy the most, how often they do so, and what type of products they prefer. With the data obtained you can send your buyers emails notifying special promotions; or, to give them a special discount card for times when sales are reduced.
3. Greater security in transactions and data handling
The new technological platforms make it possible to maintain controlled access where each user requires a password to access the different software options and thus manage its operation, such as: price changes, cancellation of notes, cash cuts, etc. Another advantage that you should consider is that, like many other devices that connect to the Internet, POS have significantly increased their security levels against fraud and problems related to information vulnerability.
Being modernized in the payment of your products or services is becoming easier with POS technology . Grow your business!, unless you don’t want to.
Thank you for your interest and getting here. Now you know that, although taking an inventory of your business is a complex task, it can be made much easier through technological implementation. Both your raw materials and your merchandise, articles or products will be better organized on your shelves and fully registered in your electronic inventory control, you will save space, your business will benefit and your buyers will be happy if you apply these useful tips in detail.
