Gather information frequently and diligently. Counting your inventory once a year does not cut it. Purchasing trends change seasonally and demand can be fickle. Stay up-to-date with your store’s inner workings by frequently running reports and keeping track of your physical inventory on a regular basis.
Use data to make decisions. Whether you’re deciding how much of a certain product to order or determining which items are popular and profitable, utilize the mass amounts of data at your disposal to generate reports to inform your decisions.
Control on-hand inventory accuracy. Manage non-sellable inventory, correct negative on-hand inventory, and perform physical inventories to ensure inventory data accuracy.
You can find these items in RICS here:
- Non-Sellable Inventory: Inventory :: Non-Sellable :: (RMA) Manage Non-Sellable
- Negative On-Hand: Reporting:: Inventory / Purchase Orders :: Stock Status
- Physical Inventory: Inventory :: Physical Inventory
Measure turns and increase turn rate (sell-through percentage) to move product steadily through the purchase cycle. In order to maximize the profit potential of a product, it is imperative that products are swiftly transferred from the stock room to the sales floor where they can be sold.
The rate at which inventory is sold within a certain time frame, inventory turnover (or turn), indicates how efficiently a product is moving through a sales cycle. The standard equation for calculating inventory turnover is:
INVENTORY TURNOVER = COST OF GOODS SOLD / AVERAGE INVENTORY
This provides you with data to show which products sell most quickly and make you the most money. On the flip side, you can view which products have slow inventory turnover and lead to lost opportunities. And just like that, you have immediate access to what’s making money and what’s losing money