Two Simple Ways Your POS Can Help Control Your Inventory
- By Jeff Haefner
(And save you from making costly ordering mistakes...)
Imagine this scenario: you own a small women's boutique, and it's time to place your big fall order. You think you remember the red cashmere cardigan selling really well last year, so you order 30 to get you through Christmas. They're pricey, but your instinct is telling you to do it, so you jump.
When they come in you fill the front windows with red cashmere and wait for the throngs of customers to start pouring in, waving their credit cards and checkbooks. You're going to make a killing!
Now, let's fast forward. It's two months later and they're still sitting there. You've sold three, and now you've got 27 very expensive sweaters that are doing nothing but taking up space and tying up cash. Ouch.
All retailers have been in this situation at least one point or another. It's never fun, and can even be downright dangerous for your business.
With a POS system and the willingness to look at a few reports, however, you can help ensure that this cash-draining situation doesn't happen in your own store.
There are hundreds of ways a good POS system can help retailers control inventory, but one of the easiest is by taking advantage of the Last Year Report.
Last Year Reports can help you avoid tying up cash in inventory that isn't going to move. You can see clearly exactly what sold well the year before, as well as what bombed. Because you're looking at hard data (instead of going off your gut instinct), you can make better, more informed decisions when it comes to your ordering.
If you'd had access to a Last Year Report in your women's boutique, you could have found out in seconds that the red cashmere actually didn't sell that great last fall; it was the angora line, and you just got them confused. You would not have made the mistake of ordering so much of something that was doomed to gather dust on your shelves.
A good POS inventory system also works in the opposite direction.
Let's go back to our women's boutique. Just as the red cashmere sweater is doing nothing but sitting on your shelves, imagine you carry a certain brand of denim jacket that you can't keep in stock. As soon as you get a new batch of these jackets in, they're sold. You always have customers coming in to look for this jacket, but most of the time you're waiting for the next shipment to come in.
Every time a customer walks in to buy but leaves empty handed because you don't have what they're looking for in stock, it's called a Lost Sale. Do you know how many Lost Sales you have right now, each month? That's money that's walking out the door.
Think of how much more you could be making if you had a clear idea. For example, if you have 15 customers a month that come in looking for your denim jacket, but leave because it's out of stock, that's 15 additional sales you could be making if you had a better handle on your ordering.
A good POS inventory system can help your ordering process by recording Lost Sales. Looking at Lost Sales each month can tell you that you need to be ordering at least 15 more jackets than you are right now. And once you do, that's 15 more sales you're making each month.
Inventory is the life-blood of your business, there's no doubt that managing it takes hard work and finesse. But having a good POS system can quickly help you feel more in control, and give you the tools you need to make smart decisions about your ordering. And for any business-owner, this means reduced expenses and increased profits.
To Your Success!
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