When working in a retail setting, it’s essential to know how much product is ordered and sold. Cafes and restaurants need to examine their stock levels often, as the amount of product available can quickly shift day to day based on promotions, seasonal trends and customer spikes. For online businesses, knowing how much stock you have helps avoid accidentally selling unavailable items. And for grocery stores, stock replenishment is a balancing act as managers must select appropriate stock levels to keep in store while also keeping expiration dates in mind.
Fortunately, with a proper stock replenishment system, you can navigate inventory troubles with ease. Discover some tips for stock replenishment below.
What Is Stock Replenishment?
Stock replenishment means ensuring products are available when needed. There are many methods to keeping track of inventory levels. The best stock replenishment strategies include systems for anticipating the amount of product required at any given time so you purchase or produce only what you need.
Stock replenishment systems can improve any business that sells goods. Whether your supply needs are examined daily or every few months, stock replenishment helps ensure you have access to the right amount of product at any given time. And by properly managing your supply chain, you can dramatically reduce costs associated with stock-outs and overstocking.
Here are some examples of standard stock replenishment methods:
- Periodic method: For businesses with large warehouses full of nonperishable or long-lasting items, the periodic method helps keep stock levels in check while using time as efficiently as possible. In this method, stock levels are only reviewed after a certain amount of time has passed, which can be days or weeks, depending on the flow of the product.
- Reorder point method: With this method, you select a reorder point, the minimum quantity of goods on hand that will trigger a reorder.
- Top-off method: This method takes full advantage of in-store downtime by replenishing stock during low periods to prepare for sale during high-traffic periods.
- Demand method: If retailers have a strong understanding of their product’s demand, they can utilize the demand method to anticipate the customers’ needs. In this method, retailers prioritize stocking high-selling products over goods that are less likely to sell. The demand method works exceptionally well for businesses with seasonal promotions because they can spend fewer resources on products that are unlikely to sell at that time of year.
Why Is Stock Replenishment Important?
Proper stock replenishment strategies can elevate a retail business into a highly profitable one. Here are some reasons why stock replenishment is so essential:
- Saves money: By accurately anticipating stock levels and demand, you reduce the risk of ordering too much product. Predicting stock levels is especially helpful for perishable products, where overstock and misjudged safety stock results in a net loss if unsold within the sell-by period.
- Reduces the chance of stock-outs: Forecasting demand allows you to order stock confidently, knowing you will be ready when customers want to buy. Every item a customer is unable to purchase is also a missed opportunity for profit.
- Empowers employees: When you guarantee necessary stock is available when needed, employees feel empowered to help customers find what they’re looking for.
- Encourages customers: With appropriate stock levels, customers are more likely to find their favorite product. If the customer frequently runs into stock issues, they are more likely to find another source for that product.
Stock Replenishment Best Practices: 5 Tips
Here are five tips on how to make a great stock replenishment strategy:
1. Track Landed Costs
When you purchase goods from suppliers, the actual cost is typically more than what the supplier charges you. Landed costs are the hidden fees of conducting business, like freight costs, insurance and import duty. Pinning the costs to individual products can be tricky because landed costs usually apply to whole shipments instead of single pieces.
Many business owners include these costs into their analyses well after making a sale, though a better strategy is to incorporate those costs into your product sale price. That way, products are appropriately priced for profitability, which helps you analyze profits accurately.
2. Use Wireless Barcode Scanning
By using a warehouse barcode inventory management system, you can boost warehouse productivity in many ways. These systems are easier to use than manual inventory tracking systems, so new employees can quickly learn how they work. They allow staff to quickly find any product no matter the location in the warehouse, increasing your operational efficiency.
Scanning systems also reduce picking errors by electronically verifying product locations. And by removing paper from the equation, you reduce mathematical errors and increase stock level accuracy.
3. Anticipate Customer Demand with Data
While some customer trends are easy to predict, like increased purchase behavior during the holidays, other areas of customer demand can be difficult to gauge without seeing a clear picture of their spending habits. The best way to anticipate customer demand is through historical purchasing data. By graphing how much of a product has sold over specific periods, you can reorder products based on the likelihood of selling again.
4. Replenish Inventory Levels Automatically
Rather than constantly worrying about available inventory, consider using stock and replenishment methods to take the stress out of managing inventory replenishment. Whether you stock based on customer demand or use a reorder point system to decide when to purchase, inventory management software can help you choose when and how much to buy. With the help of intelligent software solutions, you can automatically calculate reorder points based on your supplier’s lead times and your sales velocity.
5. Examine Stock Levels Regularly
Even the sharpest employees can make errors in stock levels, and sometimes damaged items in a warehouse can fall through the cracks. With regular stock audits, you can find discrepancies between the reported inventory and what is available for customers to purchase.
Using inventory control software, you can even see a record of past sales directly compared to available stock. The software also helps identify stock audit issues based on who stocked certain items and where the error occurred.
Use Finale Inventory to Save Time on Stock Replenishment
Proper stock replenishment is essential for business success, and the best way to manage your products is with a cloud-based purchase order system. Finale Inventory is the best cloud inventory software available, offering multichannel inventory management for your growing business.
Our purchasing inventory software allows you to track sales from when you receive your shipment to when the customer makes a purchase. With a wide variety of purchasing and stock-replenishing features, Finale Inventory can help you save time on inventory management, improve order accuracy, automate ordering and understand the landed costs of each product.