Implementing par stock level as the basis for inventory management is an exercise in precision. Getting the background calculations wrong can leave you with too little inventory, costing you sales, or too much inventory, costing you valuable revenue. You need to understand and follow three important guiding principles to ensure the accuracy of sales projections and the appropriate and cost-effective level of product reordering.
1. Data is king without exception
Calculating par stock levels requires numbers that are accurate and accessible. This makes data management the number one priority when building an inventory and reordering strategy for your business. Some inventory management will be involved in any type of business—even for businesses such as salons and spas that would not be considered inventory-centric business models.
What technology makes sense for small business data management? Here are a few technological necessities for a small business:
- Secure storage
- Real-time storage size maintenance (as business increases, storage size must too)
It’s vital to have a cloud-based point of sale solution that allows the free flow of data as well as enables the quick building of par sheets and data metrics for business performance monitoring. Finally, the POS system should be mobile-friendly, giving access to valuable data from anywhere, anytime.
2. Monitoring and tracking item usage is a necessity
Advanced data management and metrics help to build a powerful technical foundation in support of par stock level strategies, but this by itself is not enough to reach its potential. This is because one of the key aspects of using par stock level inventory is the ability to track inventory usage with precision for better the establishment of improved reordering metrics.
The data used to develop reordering thresholds revolves around two key points:
- Data formatting must remain consistent regardless of its source or purpose. This means that unit counts should remain consistent in the point of sale (POS) system, and the POS software must allow you to create unit categories for improved tracking.
- The ability to generate and view reports that monitor inventory stock levels is also necessary. Your POS software must provide a method to quickly compare actual inventory usage to real sales, with allowances included for returns and exchanges.
An effective point of sale solution will also provide much of the computational power and data manipulation that helps keep par stock level principles in play when it is time to reorder. It is worth noting that all of your sales channels must retain these consistent data reporting attributes for building accurate par stock level reports.
3. Technology should support multiple channels
Managing multiple sales channels, or points of customer interaction, is a critical consideration. To implement a par stock level strategy, you need to know the “how” and “where” behind every sale or discarded product. Too often, small businesses that implement par stock level calculations do so without fully understanding all of the places their inventory goes after it leaves the backroom.
The most common result of missing data is under-ordering. So instead of short-changing your ordering by not including all of your sales channels, take the time to analyze all potential places where your inventory may end up, even if it is just to a donation center or the dumpster outside.
Taking control over your channels is as simple as introducing a POS system that provides centralized management over all of your sales channels. Whether these are online booking management or the presence of an online ordering website, you can easily leverage all of these tools to develop a par stock level strategy that includes every moving piece in your business. Doing so not only saves you on operating costs but adds enterprise-like levels of precision to the reordering process.
An effective par stock level strategy requires advanced technology
Developing the business technology to keep your operations on track with the core par stock level principles starts with finding a technology partner. They will review your business operations and will help you to see the gaps or wasteful areas that can be eliminated using cutting-edge POS software. With the necessary tools in place to develop a reordering strategy, you can keep your shelves full, customers happy, and profits soaring.
When talech is your POS provider, you’re getting more than just hardware to run your business—you’re getting a team to support you as well. Whether you need features to help with your par stock level calculations or simply to keep everything organized, talech provides your business with years of experience and a strong reputation. Reach out to us today to sign up for a demo and to learn more about how talech can be your valued POS partner.
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