Don’t you think it is easy to arrange things, that are on top of the desk than to organize the contents which are below or inside? You didn’t get that? Let me explain-
You must have met a person or maybe you’re the one whose desktop is just immaculate –everything just lined up perfectly neat and clean. However, when you give a glance at his/her office drawer or cabinet you see everything messed up. Agreed, that the desk looks great to the boss when he/she walks by, but when the time comes for this person to unearth some important financial file from a few days back…good luck with that!
If you are a retailer, then the outward appearance of your store is equivalent to the top of the desk, while your inventory is equivalent to what’s in the drawers. Remember, that inventory management would not increase the attractiveness of your store, but surely it will gain you the elements to enhance your product sales.
Hence not only your desk requires a proper tidiness, but also your backend inventory should be treated the same way.
Now, let’s have a look at some important things that business overlook or give less attention while managing their inventory:
1) Involvement of all departments
Kevin Lawton is an inventory manager with a distribution company and has 7 years of inventory management experience. He says…
One of the most important things that businesses overlook while managing inventory is involving all departments and making the inventory management a critical point for the company as a whole.
Inventory is tied to multiple different aspects of the operation and without it being properly maintained it can make the operation less efficient. It also has a downstream effect on customers, when their orders are slowed down or they find out what they ordered is actually not available, at the time.
Your store manager should not only be the chief person handling inventory issues for your retail stores, but the remainder of the staff should also be included in the discussion, related to inventory. Inventory management is the kind of thing that should be communicated across the board.
Blacknbianco’s CEO Lisa says, In order for the inventory management software to be utilized at its max potential, you must involve your employee in every step of the process.
Let your employees know about your inventory strategy because their input and ideas can help your business be more efficient and productive Have the perfect inventory balance is important to maximizing profit.
Don’t underestimate what your employees can offer, because they are the ones managing the inventory on a daily basis. Remember the inventory management software accuracy will be dependent on its users.
Getting all your departments on board will ensure that, everyone is being conscious of what they are doing and how it will have an impact on inventory.
2) Treating all the products in a similar fashion
Do you possess the same inventory goals for all the items? Then tell me, are all of your items consumed in the same quantity at the same rate, NO right? Different items require different inventory planning to meet efficiency.
This strategy of treating all your items in inventory, the same way may cost you, a significant amount of time and cost. Hence, by analyzing reports and data from the inventory management software, you can perceive which items are trending and which ain’t. Therefore accordingly plans regarding inventory and stocking can be decided.
3) Disorganization in Warehouse
Warehouse clutter and disorganization can lead to – if ignored – long-term inefficiency and safety concerns. Beyond this, it can impact your bottom line. The average cost per square foot of warehouse and distribution centers in the U.S. is $5.08.
When a warehouse is disorganized (in terms of management or actual stuff lying around), or when inventory is tracked through pen & paper, accuracy problems can occur.
If warehouse operators feel that their personal comfort and safety aren’t important to management (feelings arises when the warehouse is disorganized), a serious drop in morale takes place.
Poorly maintained facilities can even contribute to a higher employee turnover rate, increasing human resources costs and reducing your fulfillment rate, as new employees need to be trained again.
4) Different Prices for different Sales Channel
Let’s suppose, there are 2 shopping malls side-by-side, and you went to buy a jeans pant. You entered the 1st mall and saw stylish jeans worth $25. Suddenly your friend yelled that the same denim, the same brand is available at $20 the next mall beside.
Now as a buyer, it is obvious that you would go and buy the item that has a lower price, but subsequently, a doubt for that jeans brand regarding the different price for the same item would arise in your mind, which may let you think twice before buying the same brand in future.
Likewise, when it comes online selling your customers don’t even need to go physically to the next mall. By just a few clicks they can compare all the prices that a brand is offering at various sales channel. Thus, it is highly advisable to keep the same rate of identical (same brand) items across all the sales channel.
5) Out-Of-Stock products
One of the happiest and saddest feelings for all the retailers, when their product goes “Out-of-Stock”. Isn’t it?
However, when it comes to sales it is a big loss for both big and small businesses. Showing out-of-stock message on the product page is a big turn off for the buyers. Moreover, a search engine bot might remove your product page from the index if it is down for an extended period.
Hence it is recommended to not display those messages. Instead, if new inventory is en route, keep the product page up and alive. Inventory management software even supports backorder facility by which your customers can place an order for the product which is temporarily out-of-stock.
Another option to deal with the “out-of-stock” situation is by explaining why the item is out of stock. Some items may not be available year around. Add a clear note to the product detail page describing the reason for out of stock.
“This product is only available August through March” or “Due to unexpected demand, we’re temporarily out of stock.”
A loyal customer might be willing to wait for your business to restock, rather than heading to a competitor.
Also, adding a sign-up button for getting details of your potential buyers then sending them notifications when the item is back in stock, might also convert– who were not willing to buy– when they landed on your out-of-stock item’s page at the first place. Buying a little extra time from them and a “Your wait is over” email message, might make them purchase.
A 404 error can be an even worse experience for consumers coming from a search engine or, perhaps, a link on a social media site. Hence try not to keep that page for out-of-stock products.
6) Carrying Cost of Inventory
Carrying cost of inventory includes taxes, employee costs, depreciation, insurance, the cost to keep items in storage, opportunity cost, the cost of insuring and replacing items and the overall cost of capital for the business as a whole.
Many businesses overlook this cost or take it for granted, which in turn can have a direct impact on the cost of capital and future cash flows associated with the firm.
To minimize the carrying cost of inventory, adopting inventory management techniques, that help in reducing the cost of drop-shipping or back ordering for some of your products.
Rather than relying on Excel spreadsheets (manually tracing each and every transaction will quickly turn into a nightmare), utilize inventory management software that will provide relevant information, such as accurate demand forecasts and reorder points, to help reduce your carrying costs.
If your products don’t sell as quickly as you predicted, you may find that they will lose value or become obsolete altogether. Inventory costs run generally between 20% and 30% of the cost to purchase inventory, but the average rate varies based on the industry and size of the company.
You may believe that only food or human consuming product items can go bad, after a period of time set on the shelf, but everything from consumer electronics to apparel, run the risk of losing value over time.
Overlooking above points may surely would get your business in big trouble. Always remember that managing inventory is an everyday business requirement and not a once or twice a year activity. Adopt an inventory management tool that helps you as a retailer by keeping the store/warehouse organized and notifies when something is fishy.
Hence, for minimum risk mitigation keep above suggestions in mind and take whatever proactive steps you can (without overlooking it) for your business while managing your inventory and consumer happiness.