5 Common Mistakes in Inventory Management in the Retail Sector
Every successful business in the retail sector needs to have an effective inventory (stock) management system in place. From the processes, to the roles and responsibilities to the software and data management – it is crucial to have inventory management which is robust and efficient. It is of paramount importance for retailers to balance demand and supply, minimise costs, always meet and exceed customer expectations and avoid having unnecessary tied up idle capital.
Many retailers end up facing issues and challenges that emanate from common mistakes in inventory management. Below are the five most common mistakes in inventory management in the retail sector.
Reliance on Manual Processes
Over Reliance on manual processes for stock management is a very common mistake. Manual processes are laborious and time consuming, and in addition they are prone to errors. Digitalisation of processes, in this day and age, is key. Automating data entry, order fulfilment and stock replenishment, will free up valuable time which can be used more wisely. Technologies such as RFID tagging and stock management software will enhance accuracy and increase overall efficiency. Invest in a robust stock management system that includes real-time tracking and barcoding and streamline the overall inventory control process/es.
Lack of Stakeholder Communication
Building and maintaining healthy relationships with stakeholders such as suppliers and logistics and transportation service providers is extremely important for successful inventory management. Having reliable suppliers will make the whole supply chain management process more efficient. Prioritise regular communication/s to avoid delayed deliveries and quality issues. The stronger the relationships the more beneficial it is for your business whereby a quasi just in time arrangement would be achievable. Strong relationships can lead to software systems being connected in real-time and when fostering open communication, negotiating mutually beneficial terms comes naturally. Experience has shown that this is crucial to ensure a steady and reliable supply chain.
Inadequate Data Management
A good number of challenges stem from not leveraging the power of data. Data collection is the starting point. Extracting trends and patterns follows. Basing strategic decisions on facts is the result of well captured, queried and presented data. Regular reports and real-time data dashboards are a must in the inventory management ecosystems in today’s digital era.
From historic data, one would be able to accurately forecast demand including seasonality spikes. Failing to understand customer preferences and market trends can lead to overstock or stockouts. Such situations are detrimental to your retail business. Today’s stock management software systems incorporate analytics tools that monitor sales data, helping retailers anticipate demand and optimising inventory levels.
Poorly Controlled Product Catalogue.
Not having an up-to-date database of all the products stocked by your retail business leads to confusion and unwanted errors. The product tree has to be well-maintained, including the product type, category, family and all the relevant attributes and information. Both new and discontinued products are to feature in your product catalogue. Get reliable expert external teams to conduct regular stock takes, at least twice a year.
Lack of Employee Training
Lack of or insufficient training often leads to human errors and inefficiencies in the way stock is managed. Best practices and SOPs need to be well communicated to ensure best practices are adhered to at all times. Regular on the job training will keep employees focused on delivering efficiently and avoiding mistakes. Training on new system/s updates should be scheduled regularly.
Introduce KPIs related to stock levels, turnover rates and lead times, to measure and manage performance of the stock management function, in your SME.
Stay attuned to market trends and reduce costs, while keeping customer satisfaction strong with a top notch stock management function in your retail business. The above mistakes will hinder your long-term success in the dynamic and competitive retail sector in Malta and beyond.
Speak to us today to organise your inventory management department or function.
