5 proven tips for maintaining inventory accuracy and reducing shrinkage

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Helping retailers operate winning inventory systems is something we’re super passionate about here at Vend.

That’s why we’ve put together a few key tips to consider for maintaining inventory accuracy and reducing shrinkage. If your a current Vend user you can start applying some of these recommendations straight away.

Tip 1: Use product categories.

Using product categories is often something that retailers skip due to time constraints, or because they think it’s unnecessary. It’s usually an afterthought that you’ll, “Get around to later”. However, applying the right product categories can drastically improve your entire business.

Key benefits include having the ability to generate filtered detailed report breakdowns, and increased efficiency of partial cyclical inventory counts. Most POS systems, including Vend, have entire product category attributes. You can see how this looks in Vend below.

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My top tip is that before you even start anything, involve key stakeholders from the beginning. Understand what the problem is you’re trying to solve. Cross-check whether your approach meets the needs and requirements of the company.

Applying consistent tags across entire product ranges is key. Have a think about how you will structure these. In Vend for example, you can have multiple tags per product and SKU for a single type. One product type maybe ‘jeans’ with the tag ‘women’ and ‘Winter14’. By applying those attributes to count specific products in your inventory list, you are benefiting from filtered reporting and the ability to run partial inventory counts. Here’s another example below of how this looks in Vend.

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Next step is to understand the uses of your tags and categories to set them up correctly. Understand what you want to achieve out of this to breakdown reports on specific sets of information. Say you want to figure out how well last season’s jeans are selling compared to this season. If you’ve applied the right types and tags, you can easily filter your reports down.

Order automation is also key for maintaining inventory accuracy. Within Vend, you can automatically generate stock orders whenever a product drops below your preset levels with customizable reorder points.

Tip 2: Set user permissions based on the individual, not their job title.

Most modern point-of-sale systems allow you to set user permissions to enable or restrict certain tasks from being carried out. That’s why if you haven’t done so yet, check with your POS solution provider and see how you can update user permissions in your store.

It’s best to allocate user permissions based on the individual instead of the job title. I see a lot of companies applying the same permissions for all managers or for all admins. But what you should do instead is assign permissions based on the tasks you want each employee to perform and restrict them from doing tasks outside their job description.

You should also be vigilant when it comes to who can process voided sales, as this is a very easy way to steal stock.

Tip 3: Look into RFID — it’s no longer just for the big boys.

Radio Frequency Identification (RFID) is a great technology to use for maintaining inventory accuracies, improving customer experiences, and even up-selling to shoppers. Better yet, the cost of RFID continues to drop, making it more accessible for everyone.

How exactly does the technology work? RFID can store and track product information using a chip embedded in an item’s tag or packaging. It enables merchants to count, monitor, and search for merchandise using a scanner or chip detector, making it faster and easier for them to track down where each item is.

Brick & mortar retailers are increasingly using RFID technologies to create a better customer experience. Check-out screens outside changing rooms enable customers to request different sizes or colours without having to wait for a shop assistant to attend to their needs. Plus, it can also be used as a up-sell tool when suggesting matching items.

Here’s a great video to check out RFID in action creating a better customer experience.

Tip 4:  Say no to ‘misc’ products.

Often, gifts and freebies are processed as Misc. sales. But bear in mind that these still have a supply price or cost associated with them, so you should still be recording such sales in your inventory system.

There’s always going to be Misc. sales, but implementing a system to correct inventory levels when those sales are made will reduce headaches and inaccuracies. If you don’t do so already, create an end-of-day report for all Misc. sales either for yourself or your store manager to make the adjustments on their end.Having more rigorous barcoding or simply removing the Misc. product quick key should also be considered.

Tip 5:  Pay attention to your inventory data.

If you’re not tracking inventory data such as stock turn, GMROI, and shrink, you’re missing out. These metrics provide you with a wealth of insights that you can use to make important decisions such as what to stock up on, how to price your merchandise, and when to mark down items.

What’s the best way to stay on top of inventory metrics? Ideally, your POS or inventory management system would have the analytics capabilities to give you the data you need. Check with your retail solution provider and ask them about any reporting capabilities they have available.

That said, you can also use third party tools or templates to fit your stock taking needs. You can, for instance, handle inventory management using Excel, if your system doesn’t have the necessary reporting features.

Whatever you decide to use, the important thing to do is to collect the right data. Gone are the days when you could rely on intuition or guesswork to make decisions. With the retail landscape being even more competitive than ever, it’s crucial that merchants make data-backed business decisions.

Bottom line

We hope this post helps you streamline your inventory and prevent shrink. Most of these pointers are quite easy to implement, so we encourage you to get started immediately. To recap, here are the things you need to remember to stay on top of your inventory:

  • Before you start setting up product categories, involve key stakeholders to agree on what the problem is your trying to solve.
  • Apply consistent tags across entire product ranges. If you’ve applied the right types and tags, you can easily filter your reports down.
  • Base user permissions on the individual not the job title.
  • Order automation is key for maintaining inventory accuracy
  • RFID is now more affordable tool to consider for maintaining inventory accuracies, creating a better customer experience and up-selling to shoppers.
  • Avoid “miscellaneous” products. Implement a system to  correct inventory levels when miscellaneous sales are made.
  • Always rely on data when making inventory decisions. If your POS or inventory system has reporting capabilities, make sure that you’re taking advantage of those features. Alternatively, you can get yourself an inventory management template that can help you extract that information you need.

Continue to be the world’s best retailer. Check out all of our tips, tricks, and guides at Vend University, or get in touch with one of our Retail Solutions Specialists here – we’d love to talk.

About Francesca Nicasio

Francesca Nicasio is Vend's Retail Expert and Content Strategist. She writes about trends, tips, and other cool things that enable retailers to increase sales, serve customers better, and be more awesome overall. She's also the author of Retail Survival of the Fittest, a free eBook to help retailers future-proof their stores. Connect with her on LinkedIn, Twitter, or Google+.

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