Poor inventory management practices cost the world’s retailers $22 billion in lost sales, according to a 2018 survey by the Global Manufacturers Association. A 2019 survey reported by Software Advice found that 39 percent of U.S. shoppers have left a store without making a purchase because the product they wanted was out of stock.
U.S. retailers are losing money because of inefficient—or nonexistent—inventory management practices. To further flesh out the extent of this issue, consider the following statistics:
- According to warehouse management firm Conveyco, the average inventory accuracy of retailers in the U.S. is only 63 percent.
- Shrinkage, stockouts, overstock, and other “inventory distortions” cost retailers worldwide $1.1 trillion each year.
- The U.S. Census Bureau reports that the business inventory/sales ratio increased to 1.67 in April 2020, compared to 1.39 in April 2019 (for every dollar in sales, businesses held $1.67 worth of inventory).
Automated inventory management POS systems boost retailers’ profitability by providing accurate inventory counts in real-time. The systems send alerts when a product’s stock level reaches a preset level, and they can also reorder products automatically and track the shipment to prevent customers’ favorite items from going out of stock. If you’re ready to save your business time and money with better inventory management, here are the inventory management features to look for in retail POS software.
How POS Systems Help Retailers Anticipate Demand
One of the best ways for retailers to make their inventory management more efficient is by keeping a close watch on sales trends. Four modern approaches to inventory management all rely on accurate, up-to-the-minute tallies of sales:
- Just-in-time is designed to minimize on-hand inventory to the level required to meet immediate demand. This saves retailers storage expenses and reduces waste, but it increases the risk of products running out of stock if orders or shipments are delayed.
- Materials requirement planning bases inventory orders on sales forecasts, so it requires that sales data be accurate and current. It also entails establishing clear channels of communication with suppliers to ensure the products are available when needed.
- Economic order quantity saves retailers money by placing orders in large batches, which cuts holding, setup, and other inventory management costs. However, it assumes constant demand for products.
- Day sales of inventory determines the average number of days it takes to convert inventory to sales. The fewer days required to clear inventory, the more money a retailer can save on inventory management.
The goal of these and other automated inventory management approaches is to ensure that customers find the products they want when they want them, while preventing retailers from overstocking or maintaining inventory of products that their customers no longer want. The systems also help retailers identify promotion and product bundling opportunities, while reducing product returns due to inaccurate SKUs.
Integrating Inventory Management with Online Sales and Promotions
Perhaps the greatest benefit of automated inventory management POS systems is how well they combine online and in-store accounting, sales reporting, marketing, and other retail operations. This capability has gained importance as retailers respond to restrictions related to the COVID-19 pandemic.
Here are four ways that automated inventory management helps boost a retailer’s bottom line.
- Customer loyalty programs are most effective when backed by data about customers’ buying histories. Inventory management can pair overstocked items to the customers most likely to respond to promotions for the products, for example. Cloud-based inventory management provides clear insight into the effectiveness of marketing campaigns and promotions.
- Efficient inventory management approaches improve a retailer’s cash management by requiring that fewer resources be tied up in slow-moving inventory. This makes cash available for overhead or to finance upgrades and enhancements without taking on debt.
- Inventory management that combines online and on-premises sales tracking allows inventory levels to be reported in real-time. This simplifies expanding the retailer’s reach by implementing a pop-up store, for example, that takes advantage of mobile POS and cloud-based reporting.
- Automated inventory management makes it fast and simple to create barcodes and product IDs for new items. The IDs can be customized to meet the retailer’s specific needs, and the cloud-based systems are inexpensive to set up and run.
Top Features of Inventory Management POS Systems
Attempts to make a retailer’s inventory management operations as efficient as possible can be daunted by “feature creep.” Businesses may feel compelled to add unnecessary bells and whistles to their POS software because of a fear of missing out. These are the features that are most important in retail inventory management software that will provide a solid foundation for your business:
- Sales reporting and analytics can improve cash management, including the resources a retailer has tied up in excess inventory.
- Customer relationship management helps ensure the products in greatest demand are available while also promoting high-inventory items to the customers likely to be most interested in purchasing them.
- Tracking inventory in real-time provides retailers with up-to-date information for bundling products that complement each other while allowing employees to spend less time sorting, stocking, and restocking items.
- Discounts and promotions at point of purchase are more effective when they connect customer histories to inventory levels, so offers such as buy-one-get-one-free and loyalty discounts are as timely as possible.
- Omnichannel inventory tracking not only allows customers to order products online and pick them up at the store, but also integrates various payment options and facilitates order management and record keeping.
Of the many tasks involved in managing a retail business, keeping tabs on inventory is an activity that few managers look forward to. Yet they understand that without accurate and accessible inventory figures, their business will suffer. Automated inventory management POS systems are designed to meet the needs of retailers while giving them more time to spend serving customers and meeting the needs of employees.
If you are interested in automated inventory management POS systems, talech has everything you need. We devote our time to identifying your business challenges and help you apply an innovative POS solution that levels the playing field. Reach out to us today to sign up for a demo and to learn more about how talech can be your valued POS partner.