Knowing what products you have available to sell and other inventory management concerns is one of the MOST important aspects of running a retail business. Without products you can’t make money.
Raad Mobrem CEO of online inventory Lettuce has some tips to help.
- Every product in your catalog should have a unique identifier known as a SKU number (also known as Stock Keeping Unit). Even for products that are almost identical, but vary in terms of size, color, style, or anything else, they should have their own SKU number. Many systems that work with inventory (either your customers systems or your own) work through SKU numbers and it has become an industry standard. It is a very simple way to look up and account for different products.
- Have a smart system for creating SKU numbers. For example, don’t assign a pair of large grey jeans a SKU number 423430403. Instead use some sort of systematic approach to naming. For example, a pair of large grey jeans should be called J-1000-G-L. The J stands for Jeans, the 1000 is a safe number convention (in case you add thousands of different kinds of jeans), the G stands for the grey, and the L stands for Large. So if we had the same pair of jeans in black and small, it would be called J-1000-B-S. It will make your life and your wholesale customers lives much easier because it’s easier to look up.
- Use barcodes that represent UPC numbers (also known as a Universal Product Code). These barcodes allow for other businesses that work with you to easily scan inventory into their systems (if they have a barcode system). When you are dealing with larger customers, they are getting thousands of purchase orders delivered and they are also shipping out thousands of orders every day, thus they need a very fast and simple method for what comes and goes through their distribution center. Barcodes helps solve this challenge effectively. In addition, the UPC number is a true unique identifier because another vendor works with your customer may have a SKU number that is identical to yours. The UPC code originates from one company (GS1) and they maintains a database of all products, so they will never give out the same code to different companies.
- Doing a quarterly audit of your inventory. Count through your entire warehouse and make sure that your numbers match with the numbers in the system. You have to account for number discrepancies (0.1%-10%) in inventory due to human error and these audits helps your business have a much better understanding of your true inventory count. The worst thing you can do is get an order, accept it based on the numbers in your system, and then not be able to fulfill it because you physically do not have those products in stock. Audits help eliminate these scenarios.
- Use a cloud based software dedicated to inventory and order management. With a system that helps you keep track of your inventory and your orders, you will have a much easier time managing your business and not doing manual tasks. Many businesses use excel or don’t even use anything at all and just wing it. Excel is great, but it is also very manual and easy to make human error. And not having a system at all is like driving a car with your left hand covering your eyes…an accident waiting to happen. Be smart and use software to manage your business so that you can focus on things that you enjoy, such as new products or growth.