• Monday, May 27, 2024
businessday logo

BusinessDay

Get a Grip: Modernize your inventory control

businessday-icon

Facing facts is rarely easy, especially when it’s about something that you’re emotionally involved in as much as your own business. But when you can’t lock down the source of shrinkage, when you know you should have items in stock but don’t, and when you can’t seem to get a grip on what’s on the books versus what’s on the floor and in the stockroom, it’s time to take a deep breath and start taking concrete steps to getting yourself right-side up.

Risk

Here, There, and Everywhere

You would think that with a smaller business, it would be easier tokeep tabs on all the things you need to know. However, when you know your sales are good, and the money’s coming in, but you’re still coming up with shortages and problems, the issue may or may not be internal. The fact remains that $13 billion dollars a year just get up and walk right out of stores and stockrooms, according to the National Association for Shoplifting Prevention. Theft is the number one reason for shrinkage, and whether it’s a return merchandise scam or a kid sticking something in his backpack and walking out, there are a few things you need to do in order to get on top of it. Inventory can also eat money when it’s doing nothing at all. According to Logistics Management, the costs of storing and servicing inventory can exceed the costs of transportation – and if it sits long enough, the costs of its initial purchase.

Businesses Run On Information

Who sold that, to whom, when, where, and for how much? Where did we order that, when, how much did it cost, and why is it still here? These questions are the basic information that runs retail. Dropping any of those answers means that there is a gap in the flow of information and that’s a gap that has the potential to turn into a crevasse if left on its own. Lost information could well cover what you’re losing in inventory. Businesses that use the best information systems they can afford can shrink losses that might otherwise shrink their inventory, according to the Houston Chronicle, and use systems that cover the three typical loss vectors – internal theft, paperwork errors, and shoplifting.

You might think that an information system like that would run thousands, if not tens of thousands of dollars. You would, however, be wrong. Yes, some systems are that expensive, but there are lower cost systems based around tablets that offer flexibility, scalability, and a front to back solution for operations woes. Start with a simple, tablet-based point of sale system in the front for the shop, add a barcode scanner and a barcode printer, and there’s your information system. You can pick up components from your local office supply place, a retail fixtures warehouse, or even an eCommerce platform such as Shopify.

Getting to Liftoff

It’s going to be a lot of work to get this going, but these steps are vital for getting a grip on your inventory. Once you have your new equipment set up and running smoothly, the next step is a biggie, and depending on the size of your organization, it might be easier to just close down and go at it over the course of a few days than to try to work around it.

  1. Make a master list of everything in stock and include information about the product such as SKU number, location, units of measure, description, vendor and minimum restocking number.
  2. Print a barcode label for every last item you have and then stick them on the items, making sure that the barcode matches the SKU number.
  3. Assign each person on your staff a section to scan each barcode. Once the scan is completed, have them sign and affix a peelable label to the bin or section that they just inventoried, then assign them another section. Do not allow sections to be double counted, or anyone to enter a section once it has been scanned.
  4. Now the down and dirty part, which might not be so bad. You will need to reconcile the new inventory with the old and figure out what happened. Once you have that reconciled, you’re ready to go live.

Next Steps

Now you will need to put in policies that keep your live inventory system live. Your information system is only as good as the information put into it, and a system that doesn’t have accurate information can’t give accurate reports.

  • Never ever add, remove, or relocate anything from inventory without scanning it first. Doing this will throw your inventory system off, and it will not be able to give you accurate information.
  • Everything must have a scannable barcode label. Not just readable, but scannable. It only takes a moment to print one out, and this will help to keep inaccuracies from manual keying out of the system.
  • Designate different levels of access with a username and password system so that, for instance, if a sale is over a certain amount of money, or a discount above a certain point is being offered, that the correct amount is charged and collected.

Developing, implementing and carrying out these policies will also help stop losses from the inside due to employee theft and general inaccuracies in data entry. Keeping that information timely and accurate will keep your company healthy and growing.