Perhaps one of the most important assets of a product-based business is their inventory. It is also one of the hardest aspects to manage perfectly, especially in an inventory-heavy business. Like many things in running a business, if not done right, poor inventory management could yield in losses. On the other hand, effective inventory management allows you always to know where your stock is located, meet delivery dates, make re-orders more efficiently, and close every sale possible. Here are some best practices that you can implement for better inventory management:
- Set up your stock with necessary data
One of the best things you can do for your business is to set the appropriate data for your inventory on your QuickBooks POS system and to do so correctly. Giving focus to this yields an organized inventory system that will make it easier for you and your staff to locate stock. Make sure you set up your inventory with the following data:
- Stock keeping unit (SKU)
- Cost
- Manufacturer or supplier (QuickBooks POS allows multiple vendors tied to a single item)
- Location
- Category
It also helps to tag your inventory with other useful information such as color, brand, season (if applicable), selling price, etc. This aids your sales team to locate the items on the POS easily. For example, a jewelry retail company that sells multiple kinds of jewelry (earrings, necklaces, rings, etc.) also tags their products by color. They can now cross-sell to their customers by searching through QuickBooks POS by color to see what else is in stock. Additionally, Inventory should be entered into your POS system as soon as it is received without delay.
2. Be religious and vigilant with inventory transfers
If your business has more than one location, it is not uncommon to find yourself transferring stock to another branch. When you do this, it is crucial that you are vigilant with recording the transfer of stock. Otherwise, there will be anomalies in two of your location’s inventory levels. The good news is, QuickBooks POS Multi-Store has a feature to transfer goods to different locations, where a report is created and sent to the receiving branch containing all the stock in transit. Upon receipt, the stock is “received” in QuickBooks POS by entering SKUs or scanning barcodes, which the system references from the transfer report. Any anomalies will then be highlighted.
Transferring stock may seem like a straightforward process and that errors are unlikely. However, it is actually very easy to make a mistake that will throw off your stock levels. To minimize mistakes when making transfers, it would be a good idea to establish and implement a standard operating procedure (SOP) and train your staff accordingly. The SOP should have measures to prevent discrepancies. For example, if you are sending multiple boxes, create separate transfer reports for each box you are sending to make it easier for the receiving end to cross-reference it to what they had actually received.
3. Record items returned to the manufacturer or supplier
There may be times that you will return some goods to the manufacturer or supplier — be it a return, repair, or exchange. When you do this, you will want to keep tabs of items that are in your system but are not on your floor. It is actually very easy to lose track and forget about these items, but an “out of sight, out of mind” mentality will incur avoidable losses for your business. To prevent this, record the return in your POS. Naturally, when it comes back, you will want to enter that in as well. You can also take extra measure by creating a register (separate from your POS) for you to document and file all stock that is returned to your supplier.
4. Maximize the use of your Quickbooks POS system
Maximize the reporting built in to QuickBooks POS. Which of your products sell the most? Which item seems to be moving slower than others? Use your reporting features to analyze how your products are performing. You can then leverage this information to scale your orders. The last thing you’d want is to end up with a stock room full of slow-moving goods, and no best sellers available. Additionally, share your analysis with your suppliers. Let them know how their products are performing and if they are willing to share, get information about how your stores are performing compared to your competitors.
5. Conduct periodical stocktakes
Stocktakes can be quite a tedious process. However, it must be done periodically to ensure that your stock levels remain accurate and correct. There are several reasons why there could be discrepancies in your stock:
- Errors when finalizing a sale
- Errors when entering stock into the system
- Theft
- Returns or repairs to a supplier that have not been properly recorded
- Spoilage that was not recorded
- Others
Conducting periodical stock takes allows you to catch any discrepancies before it gets too big to handle. Have a schedule that you will adhere to and count absolutely everything (no guesswork allowed). Though it may not be an easy task, it is surely worth it to know that your inventory is in proper order.
6. Safeguard your inventory from mistakes
There is a saying that goes, “human error is inevitable when humans are involved.” Although QuickBooks POS is mention to minimize opportunity for error, there is human interaction involved, and mistakes are bound to happen. To minimize this, implement a check-and-balance system where two different employees check each other’s work. Now, this may seem like double handling; however, running an extra set of eyes on things can catch anomalies and inconsistencies much easier and faster, which will save you time and money in the future.
Effective inventory management is about keeping stock moving through your stores smoothly, without tying up resources. Although it can be a challenge, there are best practices to implement to make this process easier for you.
