Managing your rate of inventory turnover can be a major challenge for any retail business. Low turnover rates mean that holding costs are taking a bite out of your profits. High turnover may indicate a lack of inventory to cover potential sales. Both have a negative effect on how you meet your customer’s needs.
Calculate, Then Decide
Specialty stores often have hundreds of SKUs to keep track of throughout the year. This makes it harder to calculate your rate of turnover. Some of those SKUs don’t perform as well as they should, and they are taking up valuable shelf space. Slow moving or dead stock can significantly reduce your turnover rates.
Some of your products might be flying off the shelves, which indicates a high rate of turnover. That’s good, right? Not necessarily. You may have a pricing problem or not enough products to cover demand.
Time to Optimize Inventory Turnover
If you’re experiencing low or high rates of turnover, then these 10 tips will help you get your inventory back under control.
1. Streamline Your Supply Chain
Vendors with the best prices might not be the best choice for you. Delivery costs and in-transit times will affect your turnover rates. So, start thinking about how you can consolidate the amount of vendors you work with in order to maximize your discounts and possibly save on delivery fees.
2. Pricing Strategy
Lowering prices to match your competition is a short term strategy, often costing you more money in the end. Think about how seasonal trends, premium products, and bargains need to be a part of your strategy, because developing a pricing strategy eliminates the need to chase your competition.
3. Top Selling Products
Check your sales reports to know exactly which products are your bestsellers. In order to increase turnover rates, start focusing on those top-selling products and other products in the same category.
4. Increase Demand
What does your marketing plan look like? It’s the first place you need to look when you want to increase demand. You can develop a low-cost, customer engagement plan that will bring in new customers while catering to loyal ones.
5. Get Rid of Old Inventory
Clearance sales are great for bargain hunters. But, what do you do with dead stock? Get in contact with local charities and other organizations in need of those items that won’t move on your shelves.
6. Adjust Inventory Levels
Reducing inventory and safety stock will improve your turnover rates. This means more frequent deliveries with fewer products. You will be able to do this once you’ve optimized your supply chain and developed better relationships with your vendors.
7. Your Point of Sale Matters
Spreadsheets and unsupported point of sale systems have a negative impact on inventory management. They cost you time and money, because you’re doing all of the work. Smartwerks POS manages your inventory and provides accounting functions, too, so you can concentrate on what matters more for your business.
8. Improve Forecasting
Again, your point of sale matters a lot when it comes to forecasting. Sales and inventory reports will guide you with data-driven decisions, so you can be more confident in your forecasts.
9. Automate Your POs
Sometimes we get too busy and forget to send our purchase orders out in a timely manner. Getting an automated alert on low inventory levels will keep your shelves fully stocked. Having an inventory management system that will automatically generate a PO for you to review will reduce errors.
10. Store Layout
Within a minute of browsing your store, customers should have a full picture of what you have to offer. This reduces confusion and simplifies the purchase process.
Data Guides Your Plan
Getting your inventory under control is no simple task. It’s a process that takes lots of planning and plenty of resources. When you collect sales and inventory data, you start making better decisions that will help you optimize inventory turnover for your store.