Retail business owner and consultant Ronald L. Bond—in his book entitled Retail in Detail 5th edition—gave an updated, direct, and efficient guide to the world of retailing to small-businesses owners. There, he emphasized the type of inventory system a business owner should put together in place and the reason why they should do it.
When in terms of operating a retail store, we can all agree that one of the most time-consuming duties is keeping pace with your stock—unless, your business only operates on very narrow product mix. Of course, keeping up with your stock necessitates maintained discipline at work. But though, having a good inventory system is a good scheme to satisfy your market; to achieving a solid and thriving business.
Withal, here are some of the pros of having a good inventory tracking system:
- You can always track your stock to avoid being ripped off by customers and/or employees.
- Being mindful of your stock’s location is vital in handling a business. It includes the knowledge about out-of-stock items, its prices and manufacturers, and where to locate each of them.
- Having a good inventory tracking system can be a help in keeping track of how you’re doing with regard to your business’ financial aspect.
- To identify items to weed out through sales and markdowns, having a good inventory tracking system must be a sound strategy.
Due to modernization, there is a lot of computer software that can be used for tracking inventory—some of which are somewhat not that expensive as you think. These can help you print and read barcode labels, print invoices, and provide intact and reliable reports and statistics.
However, one of the disadvantages of using a package inventory system is that it isn’t able to use stock numbers that ascribe an item to a specific product and vendor. Although the information in the system is always accessible, still, it isn’t transparent to a stock number and it might be a hassle for a businessman to chase down when waiting on customers.
Microsoft Access is also one of the can-be-used database programs to manage inventory. These programs can handle most kind of descriptive product code, but compared to a package system, it is more complicated to use. Here, you’ll have to create your own reports and statistical analyses. Thus, it necessitates finer computer skills.
On the other hand, if your comfort cannot be found in using inventory software, then you can start with using the card system. Preprinted inventory cards are purchasable from office supply stores. Choose those cards which contain spaces for the item code, description, supplier, cost, selling price, beginning stock, sales, and current balance which you will use whenever a new item arrives. On the card, you will grant each item their unique inventory code and enter a description, your cost, selling price, and the amount of your beginning stock. When an item is sold, you’ll place the inventory code on the sales ticket and update the inventory cards from the sales tickets at the end of the day.
Using the same sales tickets, merchandise coding, daily posting, and pricing systems are still applicable while even if you are using a computer system. Well, the mere difference with this is that you’ll have to enter the daily sales and receipts on a computer-generated printout to be encoded to computer weekly or monthly. Also, it is advisable for a business to update its inventory month by month.
Since you already have the knowledge regarding the “hows” of inventory systems, the next step is to create and implement policies for managing inventory. Understanding an inventory system would be just in vain if it won’t be used to improve your business’ sales and profitability.
Not to mention, here are some indicators you might have to keep your eyes with, and how it can be dealt with:
- WELL PATRONIZED PRODUCTS WITH LOW ITEM STOCK – For the next time, on your Inventory Card or Computer Sheet, imply and provide your desirable reorder point that you think would comply with the demand.
- SLOW SELLERS – Markdown or move out these items faster through sales, and whip your money into faster-moving items.
- HOT SELLERS – Invest more of these for it have made your sales increase. Mark up your order quantity and or put in a special order to take advantage of the selling surge.
Finally, at the end of your tax year, you must work on your final inventory activity. This scheme plays a vital role in keeping your business’ financial aspect on the right track to achieve your goals. To do this, you must have to have lists from your inventory system and use them to make your count. Make sure that these lists contain the item code, cost per item, and inventory quantity shown on the records, together with a space intended for the actual count and for the total value of that item in stock.
At the end of this counting activity, determine the value by multiplying the cost with the actual count. Then, add up this column for all items to figure out the total inventory value. When you are using a manual system, you’ll have to do it by hand, but a computerized inventory system can measure the values, together with discrepancies of actual and recorded inventories. On that matter, you’ll get an idea with regard to the loss of goods through theft or disappearance by the way of comparing the two.