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5 Ways to Boost Profits With Proper Inventory Management

5 Ways to Boost Profits With Proper Inventory Management

How you manage your merchandise can mean the difference between smooth sailing, and missing out on sales; between having a healthy amount of stock, or running out of space and cash because you bought too much. Managing inventory perfectly is an art form, but with the right tools, it can be reduced to a science. Here are 5 ways a retail POS system can help you get it right.

1. Get Rid of Slow Movers

Sometimes what you thought would be a white-hot seller ends up sitting untouched for weeks, taking up valuable space and the opportunity to sell something better.

To identify slow-movers, run a sales history report to see what has sold in the last week versus the last month. Items with a low sell-through percentage are the low performers, and need to be moved quickly to free up shelf space for merchandise with a more promising future.

What to do once you’ve identified a low-performing item? We suggest marking them down with fairly deep discount (starting at 30% off), or implementing a buy-one-get-one promotion.

2. Reduce Shrinkage

Shrinkage – meaning lost, stolen, or otherwise missing items should be calculated at the end of each season. By properly receiving products into your POS system, you reduce the risk of having stock fall through the cracks, completely unaccounted for.

With a bluetooth scanner, you can easily perform a physical count, then run an inventory report to determine the discrepancies between your original order, and the physical count.

Tip: In LightSpeed (Pro and Cloud) you can find the Shrinkage tab within the Inventory Count feature. Once the Inventory Count has been reconciled, the Shrinkage section will let you know what was lost due to shrinkage. More info here!

3. Set Reorder Points

Since you can’t sell what you don’t have, making sure your merchandise is replenished on time is crucialespecially for hot ticket items.

Once you’ve gotten the hang of analyzing your sell-through, you can determine your reorder points. LightSpeed Pro and Cloud allow a user to determine reorder points for each product by specifying a certain stock count that will flag an item that needs to be reordered.

How to streamline the process? Run a report every week (you can find the Reorder List in the Basic Reporting tab under the Inventory section in Cloud, or “Products to Reorder” in Pro), that shows all the items that have fallen below your preset reorder point, and then automatically create a master purchase order.

4. Be Efficient When Youre on the Road

Trade shows and buying appointments at showrooms can sometimes be exhausting or confusing. When you have your entire inventory with you on a tablet or mobile phone, it’s easier to make sound decisions.

Have boots been selling well, or are there dozens of pairs still sitting in the stock room? What about a certain brand you bought last season; were the shirts hot performers, or maybe the sweaters? Having this information at your fingertips will help you purchase the right items in the right quantities when you’re out buying, instead of getting persuaded into buying too many units.

Tip: A buying appointment would be a great time to browse your Grouped Sales Totals reports. LightSpeed Cloud shows them for Category, Tag, Vendor, Manufacturer etc. The Vendor report is especially helpful to have handy when when negotiating quantities and discounts with suppliers.

5. Be Kind to Your Accountant

Carefully tracking your inventory is crucial to generating accurate balance sheets. If you use the Assets Report in Cloud (or “Inventory Valuation” in Pro), you can find out how much stock you have, and how much your business is currently worth. For tax and accounting purposes, ensuring this information is accurate will help you and your accountant make the most of your finances, not to mention avoid a nightmare audit experience!

Do not underestimate how much time and money you can save by using a POS to track your merchandise, help you buy the right products, and sell-off slow movers.

For more information about managing inventory, check out our Inventory Management Best Practices guide.

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