Finding the balance between stock levels and demand is a constant challenge that all retailers must overcome. Poor stock control can lead to lost custom, reduced revenue, and severe cash flow difficulties – but smart stock management can help to maximise revenue and profit margins while reducing the proportion of your cash that’s tied up in stock.
These stock management mistakes can often crop up, but there are ways to avoid them…
Failing to forecast demand
Forecasting is notoriously difficult, and an unexpected spike in demand for certain SKUs can catch businesses off-guard. It’s unlikely that the customer will wait until you have the item in stock again to purchase – instead, they’ll go elsewhere.
To accurately forecast demand, you need to look at two sources of data. First, the data provided by your stock control software. Look at current sales trends and if they mirror a similar period in the past. Secondly, speak to your trade customers. If you have strong relationships with your biggest trade customers, they may let you know if and when they’re expecting to need a large order.
Unnecessary human error
Unless every business moves to an Amazon-style world where the entire supply chain is controlled by robots, there’s always bound to be an element of human error in stock control. However, some retailers needlessly introduce human error by failing to utilise technology in stock management. Relying on a manually updated spreadsheet whilst your competitors use stock control software puts you at a huge disadvantage. Even if human errors occur once every 1000 instances of data entry, these mistakes soon add up. Taking advantage of software such as Trader can help restrict human error and keep up with competitors.
Wrong reorder points
You should have set ‘reorder points’ in your software so that purchase orders are automatically generated when stock reaches certain levels. However, it’s easy to set reorder points too low or too high. You may end up with a surplus of stock for some items (particularly seasonal items), or find that you’re short on your top sellers at a critical time.
We recommend reviewing these stock thresholds on a regular basis, and adjusting them based on seasonal variations and staff and customer feedback. You may also need to revisit them if you switch suppliers. Trader will notify you if your stock levels are out of stock or running low and can automatically raise an order at the end of each day to save you time.
No contingency plans
You may run highly efficient stock control systems and processes on a daily basis, but what happens if something goes wrong? Lack of contingency planning can be extremely damaging for retailers.
It’s certainly worth spending the time creating contingency plans for stock control disruptions. What if a supplier goes bust? What if there’s a break-in? What if there’s a sudden spike in demand for a certain product? Take the time to outline these plans so that dealing with a crisis is a little easier.
No software training
Investing in a stock control system is a significant decision for retailers, yet many fail to adequately train staff in its use. This leads to the software being underused or misused, significantly reducing its potential value to the business.
Quite simply, to avoid this problem, take the time to properly train staff in the software’s use. It may also be worth providing refresher sessions on a regular basis. Your software provider should be able to offer training sessions to meet your needs. It also helps if your software isn’t over complicated and difficult to train new people on. Trader is highly recommended by our customers as being simple and easy to use for all staff.
If you’re struggling with stock control, take at Integrity’s comprehensive point-of-sale and stock control solutions.
We provide a range of training and support services for every budget and business. Get in touch to learn more.
Trader is an easy to use electronic point of sale system designed for the unique requirements of building, plumbing and timber merchants, hardware and DIY stores in the UK and Ireland.
Our team are ready to help with any queries or arrange a demo for you.