Retail inventory management can often seem intrinsically chaotic. It’s difficult to predict supply and demand, effectively organize extensive stock, and track supplies.
And there’s no one way to go about store inventory management — every retailer requires a unique approach that considers the company’s size, industry, and scaling plans.
But no matter your approach, working with a comprehensive and flexible inventory management platform like Fishbowl sets you up for success. Read on to learn store inventory control best practices and how Fishbowl can help.
What’s store inventory control?
Store inventory control involves tracking stock levels in a retail setting. This applies to both eCommerce and brick-and-mortar stores and covers everything from purchasing new inventory to receiving orders and selling stock to customers.
By improving how you track the inbound and outbound flow of goods, you gain a greater understanding of customer demand, inventory levels, and how often you need to reorder. This knowledge helps you avoid stockouts and overordering, thereby improving business liquidity and overall agility.
Benefits of effective store inventory control
In the fast-paced retail industry, you can’t rely on guesswork or old data, to guide your stock control strategy. You need real-time insights about stock levels, purchasing trends, and items wasting space in storage rooms.
Here are a few more pointed benefits of establishing an efficient and effective stock control process.
Monitor stock count
The best store inventory control methods leverage frequent (often real-time) stock-counting strategies. At any given moment, you should know what items you have in stock, how many units are available, and how those levels compare with demand.
Taking the mystery out of stock management makes everyone’s life easier — less overworking, more efficient use of time, fewer misunderstandings — while ensuring you can adapt to shifting consumer preferences.
Adequate quality control
When you have control over your inventory, it becomes easier to keep an eye on your goods and monitor their condition. Optimizing quality control is particularly vital when dealing with perishable goods, like groceries and consumables. In the event of a recall, you’ll know precisely where everything is, so you can send back any dangerous or tainted goods.
Better supply management
Optimized store inventory control helps you avoid under or overselling. As stock levels approach minimum thresholds, you can re-up on in-demand items to avoid stock outs.
Store inventory control also sets the stage for better warehouse efficiency. There’s a symbiotic relationship between every supply chain step — suppliers rely on manufacturers and vice versa. If your stock control strategy runs like a well-oiled machine, your suppliers will also benefit.
More flexibility
Consumer demands can shift without warning. With sound store inventory control processes in place, you’ll be better prepared to adapt, even if an emerging trend catches you by surprise. You can scale up orders for a hot product, while offloading a less popular item to open space in your storage rooms.
Challenges of store inventory control
Store inventory management isn’t easy — what follows are just some of the obstacles that come with greater control and visibility. While many of them aren’t under your direct control, it’s up to you to decide how to respond to unforeseen challenges.
Supply chain headaches
When your supply chain is disrupted, there aren’t many options for creative problem-solving. That’s why it’s good to have a diverse supply chain and trading partners you can pivot to, if you find yourself in a tough spot.
Space limitations
If space is at a premium, you won’t be able to carry much on-site inventory. Instead, you’ll need to rely on third-party warehouses, distribution centers, and supply partners.
Customer demand
Retailers are at the mercy of consumers, and the latter can be unforgiving. Without notice, a once-popular product might plummet in demand, leaving you with lots of dead inventory. Or another item may become an overnight sensation, leading to instant shortages.
Subpar communication
If you and your supply chain partners struggle to exchange information in a timely fashion, it might be time for a tech upgrade. Effective inventory management tools can immediately improve team transparency, communication, and efficiency.
7 store inventory management methods
There’s no one-size-fits-all approach to inventory control — the trick is to choose the method that works for your business. Let’s explore seven of the most effective inventory control methods worth considering.
1. First in, first out (FIFO)
Under the FIFO method, you sell the oldest stock first. This is a great way to avoid dead stock and determine when to reorder. Food and beverage retailers favor the FIFO method, as it helps them prevent waste and keep items fresh.
But you can still benefit from the FIFO method, even if you don’t sell perishable goods. With FIFO, products don’t sit on store shelves nearly as long. As a result, there’s less chance of damage to the packaging or the product itself.
2. ABC analysis
The ABC approach divides products into one of three categories:
A: These are your most valuable products, the ones that yield the highest profit.
B: These items fall somewhere in the middle, offering good but not great profit.
C: These are your least valuable products, which generate a small but steady profit.
The ABC analysis helps you decide which products to prioritize, if you’re facing a space-related or budgetary jam. Let’s say a stock out is inevitable, and you can only order a shipment of an “A” or “C” product. In this scenario, ordering the “A” product would yield a better return and result in less profit losses.
3. Last in, first out (LIFO)
Opposite to the FIFO method, here you’ll send out stock related to the most recent orders. Many retailers shy away from this method as it increases the risk of dead stock. Also, if prices rise, the goods you just ordered will come at the highest cost. And when you sell off last-in inventory, you’ll generate less profit but have a lower taxable income.
4. Bulk ordering
Bulk ordering taps into large shipment volume discounts. This approach is a good fit if you have a high stock turnover. You’ll have to order less often because you’ll have a sizable amount of inventory on hand until stock levels reach minimum thresholds. The drawback is that you’ll rack up more inventory costs, since bulk orders take up lots of warehouse space.
5. Just in time (JIT)
The JIT method is based on Toyota’s famous inventory control model, which minimizes inventory space consumption by postponing orders until they’re absolutely necessary. The goal is to have your shipments arrive precisely when you need them — not too early or too late. If a shipment is delayed, though, you’re guaranteed to face shortages.
6. Minimum order quantity (MOQ)
MOQ defines the fewest number of units a supplier will sell in a single transaction. This approach involves only ordering this number of units from your supplies, making it a popular method among small and mid-sized retailers. It’s also a good strategy if you’re testing a new product and want to gauge customer interest before committing to a large order.
7. Radio frequency identification (RFID)
RFID tags allow you to track products across each link in the supply chain. These systems use radio waves to locate products, relay information to your inventory management software, and keep you in the loop about the status and estimated arrival time of various products.
Integrating RFID technology can accelerate inventory data exchange and promote end-to-end supply transparency. You’ll also receive an advanced notice about any delays, allowing more time to pivot in an effort to avoid stockouts or shortages.
Optimize your store inventory control with Fishbowl
Store inventory control is — and will always be — a challenge. The good news is that there are several ways to make your business more agile and resilient.
Make sure you’re using the right inventory management strategies based on your business model and organizational needs. And cultivate a network of dependable trading and logistics partners.
Perhaps most importantly, adopt a robust inventory management software, like Fishbowl. With Fishbowl, you can effortlessly control retail inventory across multiple locations, track sales, and tap into actionable insights. Connect with our team today to learn more.