Inventory management is all about anticipation and timing. Success is often determined months in advance. The farther you can look ahead, the more advantages you have.
Seasonality is also a major determiner of success and customer behavior. There is a time and a place for a hot bowl of clam chowder on the menu, or a cute wool sweater and mitten combo in the window display. Mid-July in 95-degree weather is not that time.
Understanding patterns and predicting your inventory needs will put you ahead of the competition and give you leverage when negotiating with your suppliers. We’ve worked with a lot of small business veterans over the years here at Shopventory. Below are some of the best insights we’ve gleaned:
1. Always put numbers in context
“I sold $10,000 of merchandise yesterday!”
That’s all well and good, but how does that fit into the larger picture? $10,000 of what merchandise? How much do you usually sell per day? How much of that was actual profit?
Knowing the context surrounding the numbers is far more important than the numbers themselves. Always look for a valid comparison.
For example, let’s take a liquor store. They notice a spike in sales for one particular beer. How do they compare to this same time last year? Is there a pattern? You may find out that every year for the last decade, your local area hosts a festival sponsored by this particular beer company and suddenly every store around you is ordering that brand so shipments are getting delayed. You’re too late.
The following year, you’re now armed with that data. You know to place your increased order weeks in advance, and to stack your merchandising displays accordingly. Now you’re not just weathering the storm, you’ve got the upper hand!
2. Use your calendar
Whether digital or paper (or both), your calendar will be your friend if you take good care of it. Setting reminders and deadlines will help you keep the right styles on the racks, the right product on the shelf, and the menu fresh and exciting.
Look ahead. October is no time to place orders for Halloween costumes. The farther out you can anticipate, the lower your costs are going to be. Recurring annual reminders on tools like Outlook or Google Calendar could end up saving a considerable amount.
3. Track your costs
Every lot of units you receive comes in at its own separate cost. Make sure you have a tool like Shopventory that can track the proper cost of the various lots (received shipments) over time. More information is going to give you more leverage when negotiating with your vendors.
If you are looking at costs over time, you’ll also be able to anticipate seasonal price increases before they happen. It may be a good idea to order early and dedicate some storage space for a few weeks if it means you avoid paying a higher price for a later shipment.
Many discounts simply need to be requested. This is where having good historical data comes into play. “Can I get a discount?,” is fairly weak compared to, “My purchases from you have increased 50% year-over-year for this item. What can you do on the price?” or better yet, “I see by my records that [competing supplier] sold me __ units for $_.__ only 3 weeks ago. Can you match their pricing?”
Wholesale vendors love a steady customer and are often competitive. Keeping them honest with detailed record-keeping will give you the upper hand when it comes time to restock.
Look for competitors. Ideally, every product in your store should be supplied by at least 2 vendors. This way, you always have a fallback, and you can always appeal to their sense of competition.
Beware of taking this too far, however. You may spend more of your time than it’s worth chasing down a negligible discount, or you may end up antagonizing suppliers who also need to make a profit.
5. Be aware of shipping and fulfillment times
It’s great to get a price break on next-day delivery… but not if it takes 3 days for the order to be “processed”. Keep track of your suppliers’ habits. Make easily accessible notes so you don’t forget.
That’s another perk of being aware. You don’t have to pay extra for rushed shipping. Anticipating in advance means you know it will take your supplier those 2 extra days to get it onto the truck, plus 4 days for ground shipping. That means you can easily avoid having to check 75 lbs of meat into the freezer in the middle of a Friday lunch rush.
Timing can make all the difference, in terms of competition, convenience, and profitability. Good timing in the middle of summer could make all the difference on your Christmas bonus. Likewise, poor timing can leave you at a competitive disadvantage; paying higher prices for inventory, paying for faster shipping, and most importantly running the risk of empty space on your shelves
The ideal inventory management system will have the records you need, when you need them, going back as far as possible. That’s what we’ve built here at Shopventory. Every shipment is tracked, every cost is recorded, every vendor is noted and assigned.
Knowledge is power and Shopventory puts you in the driver’s seat. No more getting caught off-guard and giving up your competitive advantages. Shopventory will have your back, giving you the inventory data you need when you need it to make the best decisions.
Shopventory offers plans for as low as 79¢ per day. Right now, you can sign up for a 30-day full-featured free trial of Shopventory with no credit card required. We also back Shopventory with a 30-day money back guarantee. That means a total of 60 days risk-free!
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