Inventory is the lifeblood of a retail business. Managing it well is critical. Poor inventory management is one of the top 10 reasons small businesses fail, according to the SBA.
What goes wrong? Usually, a cascade of errors leads to bad decisions. In an environment of fierce competition and low margins, small businesses simply can’t afford such miscalculations.
If you overestimate demand, inventory builds up, costing money to store and eventually hitting the sell-by date or going out of style before it’s sold. Conversely, underestimating demand frustrates customers, who may give up and go elsewhere.
Of course, you can never forecast demand with 100% accuracy, but if you don’t have correct, up-to-date numbers to start with, you don’t have a chance of getting it right. Unfortunately, that’s often the case. In a Management Science study, 65% of 370,000 retail inventory numbers in 37 stores were found to be inaccurate.
Why so many mistakes? Forty-three percent of small business owners are still using pen-and-paper systems or spreadsheets to track inventory, a Wasp Barcode report found. Manual systems are rife with data-entry errors that lead to shipping mistakes costing time and money. Worse, they lead to incorrect forecasting, which can be catastrophic.
The Software Solution
Point-of-sale software systems provide pinpoint accuracy, but small businesses often fear the expense of investing in technology like barcode scanners or RFID tags.
No matter how comprehensive your resource planning is, if your inventory data is wrong, it won’t help you. Though inventory software can be pricey, software vendors face heavy competition—just as retailers do—and many offer solutions and pricing attractive to small businesses.
If inventory software is cloud-based, it allows business owners to see their stock in real time, either at a single store or across multiple locations. Dashboards help managers visualize information in a variety of formats, and they can access the system anywhere from a PC or mobile device.
Inventory software can be integrated with an ERP system to make forecasting easier and more accurate. It can also work with online sales, making it especially helpful in today’s omnichannel environment. Some retailers pass inventory data to online customers, who can find out how many items are left for a product they’re interested in, or whether a specialty item is available at a specific store.
As retailers scale, their cloud-based software can grow along with them, switching seamlessly to new shippers or scanning systems and calculating prices differently for larger accounts.
While these powerful systems are easy to use once they’re set up, making decisions about which features to deploy and how to integrate them can be complex. Today’s omnichannel strategies incorporate many different technologies for mobility, social media, logistics, and data analytics. The scope of knowledge required to implement them is often beyond the capability of the average retail IT shop, which is why retailers are increasingly outsourcing the work.
Inventory management is crucial to retail success. Whether it means upgrading to cloud-based software or getting help to manage complex systems, today’s retailers are not just hoping for a bright future, they’re investing in it and how Connection helps. Our team of IT experts can help retailers streamline inventory management, leveraging a mix of bar code and RFID technology, cloud-based software solutions, and critical updates to infrastructure to optimize forecasts and save time and money.