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10 POS Software Tips to Improve Inventory Control...  Are You Using All 10 Of These Techniques In
Your Business?

- By Bob Twain


It's amazing how few retailers take full advantage of the POS system they have available. This is crazy.

You invested LOTS of time and money in your POS software. Why not get the most from it?

Inventory is one of the primary areas where retailers miss the boat. It's simple. If you're NOT taking full advantage of your POS software to help you manage your inventory, then you're wasting a huge amount of money and time.

To help you get on track, here are 10 very simple tips that will help you reduce inventory costs, reduce lost sales, and get better control of your inventory:

Tip #1 - Count your votes

In order to have an accurate inventory that's not too big, yet not too small, it's critical to count your votes.

Every time a customer buys something from you, they are voting on what they like. Your POS software makes it really easy to track those votes so you know...

  • How much you should be ordering.
  • How often you should be ordering.
  • whether you should be carrying certain merchandise or not (if you have a slow mover, get rid of it put something on your shelf that moves and makes you money).
It's all about having the right amount of inventory at the right time. You must count your votes in order to have a fighting chance.

So just be aware that you need to be tracking this information in your POS software correctly.

Believe it or not, not all retailers count their votes accurately.


Tip #2 - Use your POS software to suggest and create purchase orders

Once you have your inventory order levels set, you can automatically create purchase orders based those levels. Or you also have the choice to create your PO based your actual sales history. This saves a huge amount of time!

Yet it amazes how few retailers actually do this. I can't believe how many people are still hand entering their entire purchase order.

Come on. There's no need to waste time doing this every day. There are better ways.

Most POS systems allow you to create purchase orders based on sales history or your preset inventory order levels.

If you use open to buy (OTB) inventory forecasting techniques, there are still ways to create your purchase orders automatically. More and more POS systems are beginning to support this method. With OTB, you might not want to start out this way. But once you get the hang of things, there's no reason not to use technology to speed up the process.

If you're not creating purchase orders automatically, then why aren't you?


Tip #3 - Transmit your purchase orders electronically.

Once your purchase order is created, you should be able to submit it electronically.

Instead of calling in the order, faxing it, or hand entering products into your supplier's website, it's much easier to submit the order electronically. This is much faster and more accurate than using other, less sophisticated methods.

With the old fashioned ordering methods, you are susceptible to human error and you're more likely to end up receiving the wrong merchandise.

How much money do you lose by not getting the right merchandise? Do you lose sales? Do you lose customers?


Tip #4 - Use your POS to track special orders.

If you take special orders, your POS software makes it easy to track those orders.

The software will remember what you need to order, so you don't forget. It will also track which customer made the order, so you can be reminded to notify them when the special order arrives.

Again, if you're not using this feature, you should start. It's a better way to do things.


Tip #5 - Consider open to buy.

One of the best ways to keep your inventory stocked accurately is by using the open to buy (OTB) method. This is all about forecasting based on your sales history and having merchandise available when you need it and having your inventory low when things slow down.

It takes work and effort to implement this method but it's what the big boys do because it's VERY accurate. More and more mom and pop stores are using open to buy. You might want to consider it too.

There are plenty of consultants that can help you with this. Once you get the hang of things there are also software tools available to help. Some OTB software packages are stand alone, some OTB packages will link to other POS systems, and some POS systems have OTB built in. There are many options available.


Tip #6 - Track your lost sales and check those reports at least once a month

Most POS systems allow you to track lost sales. It goes something like this...

A customer comes into your store asking for a certain product. You don't have it in stock. You offer to special order it, but the customer says, "no thanks". At this point you can record a lost sale for a certain product.

Then, you can view monthly reports to see what products you really should be stocking.


Tip #7 - Take a close look at your top 100 sellers. Make sure those products have the correct order levels.

You should pay extra attention to your top selling products. Make sure you're not ordering too much or ordering too little.

Your POS system should allow you to easily pop out that report. Then go in and look at your sales history for those items. Make sure your order levels are not too high and not too low. Also, double check your pricing. Are you hitting the right pricing point? Can your margins be better?


Tip #8 - Check your sales history as you create purchase orders and decide how much to purchase.

Whether you type in your entire purchase order by hand or you create it automatically, you should keep an eye on your sales history and how much you're ordering.

Many POS systems make it easy to view this information right as you scroll through each item on your purchase order.

Double check the monthly sales history for each product to make sure you're ordering the right amount. You should also check your order levels to make sure they seem correct.


Tip #9 - Check your sales history as you set your inventory stocking levels.

As you're setting your inventory stocking levels, be sure to look at your actual sales history. I'm surprised at how many people still use their gut and take their best guess.

If you're using your gut, I can promise that you are tying up a lot of money in your inventory. It doesn't matter how smart you are. It's been proven that everybody is way off when guessing on how much they should be ordering. The scientific method will save you a lot of money.


Tip #10 - When you receive merchandise, make sure that the receiving documents, the packing slip, and the merchandise all match each other.

All three have to line up. If you ordered three blue shirts, five red and two purple, make sure that you have three blue, five red, and two purple.

This will help you keep the inventory count in your POS software accurate and reduce costs.


To Your Success!

Bob Twain



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