When most people think of POS, they think of placing customer orders and swiping a card. But the truth is POS systems also provide other benefits that keep your business organized and efficient. All of these features are meant to boost your profits, and one of the main ways a business can do that is through inventory management.
Let’s look at how a POS inventory management system works in tandem with your accounting system to ensure your small business is profitable.
Retail Store Inventory Management Through Your POS System
Here’s how to use your POS system for better inventory management. We’ll begin by defining what inventory management is and why it is important for any retail business.
Why inventory management matters for your business
The goal of inventory management comes down to timing: to have products in stock for sale at optimal times, but avoid overstocking. Reducing your carrying cost but keeping top-selling items available. Maintaining healthy profits means a blend of both whether you are a mobile business, a retailer with a brick-and-mortar business, or even an online business.
The challenges of inventory management as a retailer
Inventory management can be a detailed and time-consuming task that pulls your staff away from customer relationships and other business initiatives. Using a robust system to do the heavy lifting goes a long way toward your growth, as it means you don’t need to hire more staff or close the store during profitable hours.
For inventory management, you need a blend of manpower and technology to achieve your goal. As a POS provider, we at BNG Point-Of-Sale offer inventory management capability technology in tune with your sales system for clear reads and notifications of stock to make your job easier.
7 ways for managing inventory: how your POS system can help
Below are seven ways for your retail business to develop a process around tracking and managing your inventory. While every store is different, these should help you speed up the process without losing any pertinent information.
1. Store and track product data with SKUs and FIFO
The first step with inventory is keeping a log of all product details including:
- SKU numbers
- Cost per unit vs selling pricing
- Supplier and brand details
- Single-unit quantities
A good POS managing software built for retail makes this inventory management method easy, and you can quickly adjust all information as needed. Since it is connected to your sales invoices, it also changes stock quantities automatically.
Another inventory management plan is to log the order dates to sell the oldest batch of products first, known as the FIFO method. This system aids in tracking items experiencing higher wholesale and retail pricing down the road, ensuring higher profits for you by depleting the lower wholesale priced stock first.
2. Know where products are
Know if you have stock aids with quick access for customer sales. If stock is depleted but in stock at another location, you can see it and plan accordingly by picking up the stock or having the customer go to that location.
Vend POS system is designed specifically for this task. You can manage inventory for multiple locations with a centralized product catalog of your entire stock accessible on your POS terminal, manager’s office, or mobile device.
3. Accurate stock counts of products to save on shipping
Stock readings help during a sales process, but they also provide imperative inventory analysis for accurate re-orderings of stock levels. Under-ordering opens the door to product shortage, fewer sales; while over-ordering results in lower profits due to dead stock – particularly for expensive products.
If time is of the essence, replenishing can also greatly affect your profit depending on the shipping method. Dropshipping, expedited shipping costs, and batch costs result in higher than normal shipping costs.
POS systems that are tied to invoices with SKUs automatically keep track of inventory and adjust stock right at the point of sale, such at the retail store, online, or on the road. All stock remains in real-time to aid with reordering.
Replenishing stock can take a while, so having an understanding of current quantities goes a long way to your profit while achieving a minimum inventory. Being aware of the timing is helpful for period inventory such as seasonal products, aiding with your marketing efforts to deplete stock levels.
4. Maintain a good product ratio with your inventory management system
Balance is maintained through a healthy stock ratio. This formula is an inventory management tool that creates a healthy barometer. The ratio number can vary depending on the business category or your specific business, but in general, a good ratio is between 2 and 4.
To obtain your ratio, take the product cost in the form of cost of goods sold (the cost to you for making or purchasing the product, such as the wholesale costs and labor costs), and then dividing that cost by the average inventory value of that product during the same timeframe.
A POS system with stock capability offers clarity that prevents product shortages and overages and maintains a healthy ratio. It tabulates each total automatically, saving you time and hassle. You know how much inventory you have to tabulate your inventory value and can catch any inventory shrinkage or excess inventory. If you have a heavy sales week and the stock is reduced, you know how much to order.
5. Improves regular cycle counts for warehouse management
A POS system with inventory management capability helps during periodic physical inventory counts of product stock, called cycle counting. With all stock kept up-to-date electronically and in real-time, you can easily filter by product and display counts for manual confirmation. This inventory management technique can also filter items by category, or you can create custom filters.
Counts by cycle from your distribution center are particularly important during year-end for tax purposes. It can be quite involved, but this robust inventory management system can make product counting much easier.
6. Quick understanding of sales trends
With a tight read on annual sales of a product via a POS system, you get accurate historical sales figures to ensure accurate stock levels. You can read sales velocity in specific periods, catch sales trends and patterns to gain a better understanding of what sells when, and how to stock accordingly.
7. Improved customer experience
A POS system also helps toward customer relationship management by allowing salespeople to adjust sales on the fly. For example, if an item is out of stock, a stock alert notifies staff so they help customers choose an alternate during an initial ordering. This simple feature goes a long way in ensuring a strong customer experience. You can negatively affect your business by making them wait for their food only to later tell them the food is out of stock.
Timely readings on ongoing stock levels also help you keep up with customer demand to avoid stock issues in the first place, boosting customer satisfaction and increasing future sales.
Why a POS system is the answer to managing your retail store’s inventory
Inventory Management may seem like a back-end task, but it can take a front seat to your profit if managed well. A POS system aids you with inventory management software with automatic formulas and totals, clear readouts on inventory levels and locations, improved manual counts as the need arises, and accurate inventory turnover rates.
When your stock levels are updated in real-time, you reduce when and where you need replenishing and how much to ensure a healthy stock level. It works equally well for online and retail inventory management individually, but if you want to track multiple locations through one system.
Here at BNG Point-Of-Sale, we offer effective inventory management through our Vend system to provide fast and accurate stock readings to aid in your small business and maximize your profits. We can also ensure you have the right tools to implement your current inventory plan.
To learn more, contact us here.