For anyone that has never had the eventful job of purchasing, warehousing or selling stock, it’s sometimes hard to imagine how complex a task stock management is. On paper, the business model of a retailer or wholesaler looks something like this:
- Buy stock in bulk for cheap
- Store stock
- Sell stock at a profit
Isn’t that nice? It’s a simple 1-2-3 step process just like baking a cake. This is where you’re wrong.
Once your business starts outgrowing your dining room office and your warehouse garage, managing your stock can be a nightmare. This is when you’ll appreciate how complex good inventory management can be.
But first you need to know where and what you need to improve on. I’m going to offer some suggestions to help you start thinking about your stock differently.
#1: Trends and seasonality
Not every business has a product that gets bought equally all year round. In fact, it’s rare to come across a business that does. Yet a lot of them act and forecast as if it is the case.
A great example of this is a clothing retailer who did what most retailers do. Most retailers treat each store as a separate entity, and then have head office ship out stock to each store.
But after looking at sales trends, patterns emerged for the clothing brand. Stores had a buying pattern closely related to the socioeconomic factors of the suburbs they are in.
Some suburbs were ordering smaller sizes, while others needed larger sizes. Some had preferences in colours or styles, those by the beach sold more shorts, and those in the inner city had higher revenue per sale.
In the end, armed with this useful information, the retailer managed to sell more clothes because it could order in what customers wanted, even if customers didn’t know it yet.
#2: The wrong tools
Every trades person will attest to this. Having the right tool to complete the task at hand is absolutely essential and this is as true for those managing stock, especially as different businesses have different needs.
A business that sells large volumes of stock daily for example has different needs to a business selling large, expensive items monthly.
James Sinegal, CEO of Costco, the world’s third-largest wholesaler says, “We want to turn our inventory faster than our people”. Some of the more common tools to help you are:
- Barcodes – having your stock barcoded makes entering in new stock much quicker, also speeds up the picking and packing of orders and helps reduce the amount of time spent on that dreaded ‘stocktake’.
- Bin locations – knowing where your stock is, exactly, means less time wasted trudging up and down aisles trying to find something. The latest addition to this is ‘bin lighting’. Little lights fitted above stock items, a shining beacon to the warehouse person letting them know where their stock is.
- Expiry date, batch or serial number tracking – each of these gives a business a unique way to identify stock. Knowing what stock is reaching its expiry date reduces waste. Batch tracking allows you to know what stock you sold to whom and serial numbers and is imperative to tracking warranties and repairs. I often find that businesses either can’t track the information due to their current software or they can, but manually. If you need to monitor this information, invest in a solution that can handle your requirements.
#3: Data visibility
So you get the right tools in place, you understand your stock and your warehouse is in tip top shape. The last hurdle is visibility.
It’s critical to know up-to-the- minute information on what stock is available, at what location, if you want to increase sales.
Having a salesperson take an order, pass that on to the admin team to generate an invoice and then be told by the person in the warehouse there is no stock available, is not only a complete waste of time for your staff but will likely annoy your customer as well.
Your sales, admin and warehouse staff all need to be able to see what stock is available, its current price as well as previous orders, to really enable you to get the most out of newly improved warehouse and trend information.
From my experience working in a warehouse (admittedly many moons ago), I know I’ve barely scratched the surface of all the ways to help improve your stock control. If you’ve had some blind spots in the past, tell me all about them below.