Inventory management is an increasingly important part of the retail picture for several reasons.
The rising number of retailers making a move to global expansion, creates a need for improved efficiency in stock movement strategies to manage freight and storage costs, and ensure stock lands exactly where and when it is needed.
The boom in online retailing brings a clear need for effective logistics systems due to the high level of reliance on fast and cheap shipping as a customer selling point. The retailers caught between the global giants and the online operators cannot allow their logistics to be a negative point of difference and as such need to focus on finding efficiencies from both a speed and cost saving perspective. Inventory management is now a key element of retailing.
Equip stores with merchandise
The primary aim of any retail inventory management system is to provide the store with merchandise that can be sold to the customer. Logistics and inventory systems provide a valuable service, as they make possible the merchandising strategy directives. Put simply, they allow for the right product to reach the right store at the right time.
Streamline stock receipt
Stock receipt can be an extremely smooth and streamlined process with the right planning. Effective planning requires consideration of the objectives behind stock receipt. To reiterate: Retailers need the right product, at the right time, at the right place, in the right quantities, at the right quality.
In addition, it is essential to have a policy and procedure that outlines what staff are expected to do to effectively manage stock receipt. Formal, written policies and procedures exist to provide a consistent set of guidelines for staff in completing the tasks they are responsible for. Without a formal document each staff member may develop a slightly different way of doing things based upon experience, preference and level of commitment.
Over time practices passed by word of mouth can lead to confusion and inefficiency. Most importantly, policies and procedures support new staff in being able to competently fulfil the responsibilities of their role sooner. Logistics and inventory systems bring merchandising directives to life, so clear and timely information from the merchandising team is a mandatory element of effective stock receipt, just as it is for all other inventory management tasks.
Stock may come from suppliers, or from head office, there may be manual or automatic replenishment ordering, there may be dedicated stock receiving and purchasing staff or floor staff may be required to receive and unpack stock deliveries. The variables are numerous and each can impact the approach taken to stock receipt policy.
Dispatch stock from store
Just as stock receipt refers to stock coming into the store, stock dispatch refers to it leaving the store. Stock dispatch is generally required for one of three reasons. Either: Stock is required in another store, stock delivery has been requested by a customer, or stock must be returned to the warehouse or supplier for credit or reallocation. Regardless of the reason for stock dispatch it is essential to be on top of the paperwork as confusion can rapidly descend into chaos when it is unclear what went where and to whom. When dispatching stock it is industry best practice to prioritise the following:
- Dispatch paperwork accuracy
- Order details
- Delivery address with preferred date and time
- Quantity, quality and description of order are checked for accuracy prior to dispatch
Ensure packing protects delivery items and minimises space and packaging requirements. Package labelling should be clear and accurate, and a packing slip should be included for the receiver. It is important to maintain high standards of relationships with externally contracted delivery suppliers
Implement an inventory management system
It is rare for a retailer today that would have a requirement for stock dispatch not to have some form of computerised Retail or Inventory Management System (RMS / IMS) that provides clear reporting on dispatch activities. Most retailers that have a requirement for stock dispatch have some form of computerised Retail or Inventory Management System that provides clear reporting on stock to be dispatched.
Depending upon the needs of the business, reports may be generated at the beginning of the working day so product can be removed from storage or the shop floor prior to opening to avoid disruption of the customer experience. This also allows customers to be given a clear idea of the time their goods will be delivered and makes it straightforward to consistently book an appropriate delivery service if the business dispatches frequently.
Effective stock storage
Inventory is an asset and in some cases a very expensive asset that needs to be kept in saleable condition. It needs to be kept safe and secure so that opportunities for theft and stock loss through accidental damage are minimized. Inventory also needs to be kept in a location that is as easy as possible for staff to access when the time comes for it to be taken to the shop floor. Product offers vary wildly across retail sectors.
Some stores stock products that are fragile, expensive, bulky, prone to humidity damage such as mould, they may be alive, poisonous, boxed, unboxed, heat sensitive, small, heavy, awkwardly shaped, highly desirable to thieves, the list goes on… Effective storage must therefore be specifically appropriate and at times adapted to the needs of the product requiring storage. The largest considerations when deciding upon the best method of storage are to:
- Minimise the opportunity for theft
- Minimise the risk of damage
- Maximise ease of staff access
To illustrate the potential complexities of ensuring effective off the shop floor stock storage consider the examples below. Each has very different needs and therefore storage solutions.
Retailers that have a broad range of products on offer are the most challenged by the need to develop appropriate storage solutions for everything they stock. They need to balance cost effectiveness with minimising the required volume of storage whilst ensuring appropriate storage to optimise their storage protocols.
The ARA Retail Institute runs multiple workshops on inventory management and procedures. Click on the link below to explore our upcoming courses and events.
About ARA Retail Institute
ARA Retail Institute is Australia’s leading retail training provider for both accredited and non-accredited learning programs. For more information, please visit: www.retailinstitute.org.au