Top Tips for Inventory Control Policies that Work

Once you’ve invested in a point-of-sale system and worked on taking your inventory live, you’re going to need to put policies in place to keep your inventory from backsliding to zombie status. Setting up these policies is easy, and you should have no trouble in getting your staff to adhere to them. As with all changes, though, it’s better to lead by example.

Why You Need to Stay On Track

Preparing and executing the detailed work involved in starting a live inventory is a hassle. It takes time, staff hours, and sometimes even overtime not to mention the cash needed to pay everyone’s wages. Depending on how much you have to do, you might need to close for a day or three just to make sure that everything’s accurate, and then spend time reconciling that data with what you have on the books. Why on Earth would you want to do any of that all over again? Especially since the Houston Chronicle states that these kinds of information systems can help keep your business healthy by reducing or stopping shrinkage. Here are some tips to keep you on point with your new program:

  1. Designate who has access to what parts of the system. For instance, your sales people can ring up orders, check prices, and other basic functions, but a manager would have to verify returns, refunds, discounts, voids, and “no sale” statuses. Your stockroom clerks would have permissions to move inventory from the stockroom to the showroom, but your stockroom manager would be the only one able to enter items into inventory. You and your bookkeeper might want to be the only ones able to access sales reports, though.
  2. Always require that sales are entered through the point-of-sale, and not by any other means. No “catching it up later” after generating a manual, handwritten sale. Doing this will throw off your accounting and inventory, and cause wider discrepancies as the practice continues.
  3. Enter all merchandise into inventory with your barcode scanner, and if your items don’t come with a barcode, then make one. Using a barcode label printer, you can create your own UPC code. It might seem like nit-picking, but scanning codes eliminate the possibility of user error or miskeying an entry.
  4. Never move anything from stockroom to storefront, or remove merchandise from stock for any reason without first noting the action in the POS. Skipping this step means that your inventory for the storefront and stockroom will be off. You’ll be undercounted in the stockroom and over in the storefront.
  5. Audit, audit, audit. Showing your staff that you are keeping an eye on the store is the best way to make sure that they adhere to the new policies. Cycle counts are a good way to keep tabs on your inventory without having to run a full-scale inventory when you suspect things are being allowed to slide. Cycle counting is an inventory control method where you pick inventory from a certain location and count it, then compare your count to your live inventory. While this can’t show you the root causes of inventory errors, it can help you find them.
  6. Run your reports often. Look at what items are moving and what items are sitting. What hours of the sales week are you experiencing lulls in customer traffic and when are you busy? What staffers seem to be taking the initiative to get more sales? Which promotions are working for your customers? Is an item blazing out the door at your retail location, but not even getting a click in your Shopify store?
  7. Consider setting minimum stock alerts of fast moving items. That way you’ll know to reorder before you run out. Don’t forget to take transportation time into account when setting the reorder minimums, or you risk running out even though you’ve already reordered.
  8. Listen to your staff’s suggestions as they become familiar and comfortable with the new policies and procedures. They might have an idea to streamline the process without compromising the inventory data, and it could save you money, too.

Keep It 101

Remember, your goal with inventory control should be simple. According to Logistics Management, you need to refine your ordering procedures so that you avoid excess stock while at the same time minimizing the amount of your cash flow that you’re paying out in order to acquire the stock. Reuters news wire projects that despite the summer slowdown in the retail sector, that the economy is still moving steadily ahead. With more jobs putting more money back into the economy, the retail sector will still experience growth – though as a gradual upslope rather than a vertical takeoff. Pumping up your know-how with the best information system you can afford will help you get in on a piece of the action.