Issue No. 40 - April/ /
How to manage retail stock levels
by Mr Shayne Bakewell
Knowing what information to produce and how to interpret that information is the cornerstone of improving your inventory management.
Martin Haese, MD, of Retail IQ Recruitment and founder of Youthworks, describes the steps required to create an effective inventory management reporting system.
It first pays to thoroughly review the information you need to extract from your retail business. Doing that, you gain an understanding of how that information can help you build a stronger, more profitable business.
Retailers benefit from generating and interpreting a wide variety of management reports on subjects such as stock on hand, inventory performance, open to buy, sales performance, wages, outgoings, average selling price, multiple sales, customer visitation, profitability, operating expenses, cash flow, the effectiveness of promotions and so on.
We will focus on the reports that produce the greatest value for the SME retailer.
We will demystify the jargon and help you make a more informed decision about implementing a retail reporting system that works for you.
The product tree
Stock is often the single largest asset of a retail business, so it is important to establish an effective reporting system to manage it. The exact nature of the reports retailers need will vary depending on market sector and the POS software being used. However, most SME retailers will have similar needs.
Before extracting any reports the first, and often most important step is to divide your inventory into relevant categories and sub-categories. This is known as establishing a ‘product tree’. For specialist retailers this will be relatively straightforward exercise. For multi-purpose retailers with a wide variety of product lines it could be a larger task.
The goal is to divide your inventory into categories that will best provide you with useful and informative reports.
Example: A boutique which has three major c...