Traditional inventory management systems typically putÂ too much focus on forecasting. Inventory forecasting software, while useful, does not address all of the issues involved in inventory management. Many of the problems that come up regarding inventory management come from the retail stores or business premises themselvesÂ Small business owners need to take it upon themselves to implement better inventory management techniques in their business, as well as to start using online inventory system in a form of an application they can access at any time.
There are three common problems in inventory management that occur in the retail store. These are as follows:
Communication — Poor communication between management and their employees can make any inventory forecasting software useless. If the employees don’t know what is expected of them, they will not be able to organize the inventory based on the managers’ wishes.
Execution — Poor execution occurs when stock is delivered but it never actually makes it to the shelves. Another example of poor execution is having popular items on shelves but out of plain sight to customers. Businesses need to optimize the placement of their products in their retail stores.
Decision-making — Poor decision-making based on ‘gut-feeling’ rather than based on statistical sales data can lead to an inefficient inventory. Customer sales data doesn’t lie. Businesses should alter their inventory according to popular products that are selling well versus products that aren’t popular with the customers and are not selling at all.
In order to solve these problems, specific “likely to be problematic” aspects of the inventory need to be identified before they become actual problems. The best model to do this is the “Pinpoint, Prioritize and Prevent” model. To implement this most effectively businesses should use inventory management systems that alert the user to problematic areas of their inventory. This could be in relation to forecasts, on-hand inventory, stock levels or any other number of variables.
After the problematic areas have been identified, they must be prioritized. But what is the most pressing issue at hand? For example, if you have too much of one inventory item while at the same time you’re completely out of stock of another item. Address the out of stock item first.
Finally, after prioritization, prevent the problems from occurring. The best way to cut out problems altogether is to remove them from the root.
Inventory forecasting software is a very useful tool, but always remember that work needs to be done in store, as well.