Four Essential Elements to Consider
There is much more to managing inventory than just knowing which items are winners and which are losers. You have to know what to buy, how much to buy and when to buy. In addition, you need to be able to accurately track your inventory and use this information to guide your purchasing process, according to the staff at Entrepreneur.
Understanding the four essential elements of inventory presented by this staff will help you increase your profitability and reduce some of the hazards associated with poor inventory management. These elements are shown below.
Maintaining Enough Inventory – A reasonable assortment of items should be kept on hand to supply the normal sales demands of your business. Too little means lost sales and costly, time-consuming back orders. Lead time (the time between re-ordering and receiving products) must be factored in to avoid shortfalls.
Avoiding Excess Inventory – Set a realistic safety margin and order only what you know you can sell to avoid excess inventory. Too much on hand costs money in extra overhead, increased insurance costs, additional personal property tax on unsold merchandise, and increased debt service on loans to purchase the excess inventory.
Inventory and Cash Flow – Tying up money in inventory can create cash flow problems that can cripple a business. Prioritize your inventory needs. Less expensive items with greater turnover ratios often have a greater effect on your business than more costly items.
Tracking Inventory – A good computerized tracking system that allows you to see what merchandise is in stock, what’s on order, when it will arrive, and what you’ve sold will keep your inventory records up-to-date.
Is your POS System designed to help you with these four essential elements of inventory? NCR’s Counterpoint can help you with all of these and much more. Using Auto Replenishment or Min/Max Settings are just a couple of the features that will help you manage your inventory better.
Call CCS today at 800/425-672-4806 for more information about tracking your inventory and keeping track of your customers with CustomerConnect. You can also email us. Be prepared for the upcoming holidays!