Inventory Management Techniques for Business Growth

In this article, we will be revealing the techniques required for the effective management of your inventory. The article will help you understand why Inventory Management is important for the growth of your business and how taking steps to effectively manage your inventory is what positions your business for profit-making.

What is Inventory Management?

Inventory management encompasses all the processes involved in the ordering and storing of raw materials and finished products. It involves the warehousing and processing of such items. Primarily, the goal of inventory management is to minimize the cost of holding goods by helping business owners know the right time to stock or restock on their goods.

man in a warehouse holding a device for inventory management

Why Is Inventory Management important?

Effective inventory management is essential because it requires you to keep tabs on goods by monitoring their weight, amount, and even location. 

Here are some reasons why inventory management is important:

  1. Helps to ensure you never run out of stock: One of the key roles inventory management plays is figuring out how much inventory your store should always have on hand. Too much will leave you at the risk of storing “Dead Stock” i.e. outdated stocks. Too little and you run the risk of running out of stock, thereby failing to meet customers’ demands and thus missing out on potential opportunities.
  2. It helps you avoid spoilage: Stocking on products that have short expiry dates (such as consumables or makeup) leaves you with the possibility of having a lot of expired products that you won’t be able to sell. Proper inventory management will ensure you never get into this situation.
  3. It shows a variance in your customer’s behavior: Keeping track of what inventory sells the fastest versus what sells the least can share vital insights on your customers’ buying pattern. You can also gauge the effectiveness of some product promotion and launches by accessing inventory levels before and after the promotion period.
  4. Helps you spend less on storage: Warehousing is often a variable cost, meaning it fluctuates based on how much product you’re storing. When you store too much product at once, your storage costs will go up. Avoiding this will save you money.
  5. Inventory management improves cash flow: When you have a concrete inventory system, you’ll know exactly how much product you have and based on sales you can project when you’ll run out thereby making sure you replace it on time. Not only does this help ensure you don’t lose sales, but it also lets you plan for buying more so you can ensure you have enough cash set aside.

Inventory Management Techniques

Inventory management often differs for different businesses. So it should essentially be modified and customized to suit each business.

Businesses should strive to remove human error from inventory management as much as possible. This means taking advantage of Inventory management software like the Omega Software or ICG Software. 

The following techniques will help you improve your inventory management:

1. First-In-First-Out (FIFO)

“First-in first-out” or FIFO simply means your oldest stock (first-in) gets sold first (first-out), as opposed to your newest stock. This is especially important for perishable and expirable products, so you do not end up with spoilt products. Practicing FIFO for non-perishable products is also advisable because packaging designs often change over time. You do not want to end up with goods you can not sell because it has gone obsolete.

2. Set Par levels/Reorder Points: 

Par level is the minimum quantity of each product that must be on hand at all times. When your stock drops below the par level, you know it is time for you to reorder. This technique makes inventory management easier. Inventory reorder vary by products and is essentially based on how quickly the items sell. Setting a par level requires some upfront analysis such as the time it takes for your supplier to deliver your products. It is advisable to check your par level from time to time especially before peak times like holidays. During peak times, it is recommended to hold a safety-stock in the event of a heavy spike in demand or unforeseen circumstances.

3. Manage relationships: 

Creating a business relationship with suppliers and manufacturers helps you communicate your needs. Great relationships with suppliers will make them more than willing to work with you to solve problems that may arise with ordering or delivery. When this kind of relationship exists, suppliers will be willing to collect slow-selling items and replace them for other fast-moving items.

4. Regular Auditing:

Regular stock reconciliation is vital. In most cases, businesses rely on their software to know how much product you have in stock. However, it’s important to make sure the facts match up. It is recommended to take a physical count of all stocks periodically such as once a year. You can also consider spot-checking i.e. choosing a specific product, counting it and comparing the number to what it is supposed to be. It is, however, advisable to spot check fast-moving products.

5. Accurate forecasting: 

The ability to accurately predict future demands plays a huge part in a good inventory management system. Understanding market trends, knowing what promotions will draw customers in, etc., will help you in accessing your future sales accurately.

6Use of software:

Get software (such as ICG) that is designed to help manage your inventory. This helps you avoid losing money, drop in stock levels or having unsold products. It can also help automate some of the techniques above, saving you time and potential human error.

 

In conclusion, an effective inventory management system will help

  • reduce costs
  • keep the profitability of your business high 
  • help analyze sales patterns
  • predict future sales 
  • and prepare your business for unpredicted challenges 

Take charge of your inventory management by using the above techniques and watch your business grow remarkably. 

Customer Loyalty Program; A Way to Improve Customer Relationship

MOBILE HONE SHWING COUPON BASED CUSTOMER LOYALTY SYSTEM

For a business to succeed you need the right amount of people to be interested in the goods on offer or the services you render. Asides training your staff members on providing good customer service, having a good customer loyalty program is another way to improve your customer relationship.

Customers are the backbone of any thriving business. They are often regarded as the most important part of the business. Having no customer means there will be no brand or business. Thus it is important to always treat them right. Good customer service is about forming a good relationship with customers and sending them away happy – happy enough to give positive feedback about your business along to others. Having good customer service and an effective customer loyalty program show the customers that they rank high on the minds of the business owners.

What is Customer Loyalty?

 When a customer is devoted to a brand or product of a company, such customers can be said to be loyal. Customer Loyalty can, therefore, be called “the willingness of your customer to always patronize your products”. So, how does a company get to a stage where it has loyal customers? There are three important things a business should do to create loyal customers. These three things are; 

  • A wow experience: Blow their minds on their first visit and they will always return
  • A high level of satisfaction: Ensure that the product or service you sell to them is of the utmost top quality
  • Value for Money: Your product may be expensive; that’s not a problem. What will be seen as a problem is when your customers can’t measure the amount paid for such products with the benefits they derive from such a product.

Benefits of Customer Loyalty

Mastering the art of customer loyalty is a crucial component of business success. Here are some benefits a loyalty program can bring to your business.

  • Nurture meaningful relationships: this will help to stand the test of time and repel attacks from your competition.
  • loyal customers can become advocates of your brand: Apart from returning to you time and again, they are likely to recommend your products to their friends, relatives, and even strangers at times. This is because your potential customers are more likely to trust the recommendations of existing users.
  • A good loyalty program can transform a business into a customer-focused profit machine. Customers spend more on brands they’re loyal to.

Types of  loyalty programs you can use for your business

1. The Spend Program: This allows customers to get loyalty cards based on the amount the customer has spent on the business.

2. Tier Program: The Tiered loyalty program allows customers to enjoy permanent perks and benefits depending on their tier, the competitive spirit in customers are raised by attaching higher-value rewards & benefits to the top tiers and implementing different reward mechanisms per tier.

3. A simple points-based system: This system makes use of discounts and price coupon. 

4. The Point Program:  Loyalty point programs let customers acquire points that can be redeemed for rewards or free products/services.

5. The Paid Program: Paid loyalty programs provide an exclusive feel by integrating a monthly or yearly fee that members pay for access to special services, and VIP benefits. It is often termed the VIP Program.

6. Partner Program: This involves partnering with another company to provide all-inclusive offers. It facilitates the building of new business relationships.  

TWO FEMALES SMILING AFTER RECEIVING EXTRA POINTS VIA CUSTOMER LOYALTY PROGRAM

Already have a Customer Loyalty System? Here is how to Improve it

When executed well, a loyalty program can be a driving force for increased customer patronage and more. If you have an existing customer loyalty program, some important things can help you improve on the system you already have in place. Some of these things are;

  • Communicating with the right customers: know the right audience to approach with a particular product. 
  • Rewarding non-transitional behavior; e.g., gifts for referrals.
  • Modifying your loyalty program based on feedback from customers: You can tailor your promotion based on demographics, product preference, and buying habits.
  • Using your social media page to alert people of your new customer loyalty program.
  • Putting time limit incentives so customers can act before it’s too late.
  • Using messaging tools and social media to remind your customers about your customer loyalty program.

A loyal customer will most likely spend much more than the average client. This is why a well thought out plan is important. A well thought out customer loyalty program will help you concentrate on your existing customers, extend the period for which they remain your customers, and ultimately help foster a solid relationship that will leave them satisfied. 

Using POS Software to Generate reports: How effective?

Running a successful business requires you to consider many things: you need to identify your target market, know your competitors, learn from the competition and manage your finances properly. To manage your finances properly, you need a constantly updated report to have proper information on how your business is faring and know areas you need to improve on. The Point of Sales (POS) software comes with a reporting feature that allows business owners to generate reports based on the data gathered by the software. These reports are designed to help make better and informed decisions compared with when such information is not available. The information produced by these reports is often detailed and covers a wide area. 

pos software report temlate image

With a POS software, you can spool reports relating to sales, payments, collections, employee, inventory, and customer. A sales report, for example, will cover the name of the customer, type of goods bought, the number of items bought, amount paid, etc. While the inventory report will have the number of goods in stock before and at the end of the period requested. Other examples of information which can be gotten from a POS report are most popular items sold, the mean, median and mode of the goods bought, change in inventory, current inventory, number of promotional transactions (e.g. transactions using coupons, gift cards, sales, special offers, etc.), individual customer loyalty statistics and so on. These reporting functions offer limitless potential in analyzing one’s business data, overall customers’ experience, and loyalty, etc. It is also a good way to get an unbiased report on what is happening at the cash point.

You can come up with an array of reports using the POS software such as detailed invoices, tax, and user-defined reports. You can also customize all of these to suit your preference. 

Cutting edge POS software makes data available to licensed remote users allowing managers and owners to pull data into a comprehensive, detailed report from any location with an internet connection. An example is ICG Analytics.

What you can do with these reports 

Sales Report: The POS reporting feature gives an extensive report on sales such as profit of the day, sales by POS stand, sales by individual employee, and your busiest/ slowest hours. it also generates detailed reports that identify not only your best-selling items and categories but also show costs and gross margin so that you can measure the effectiveness of your pricing.

Track your Inventory: POS reports let you access all your inventory with full precision and ease, these reports help to reveal if your sales match the stock listed and will help you see if products are missing. 

Employee Management: With the POS reporting feature you can track your employees’ progress and shortcomings. Wondering if your employees are working effectively? by running a simple report on employee’s performance you can see which employee is meeting their KPIs and which is slacking off.

Customer Loyalty Reports: Sometimes you wonder how often your best customers shop? What kind of product do they tend to favor when they come? Etc. All of these can be gotten in a Customer Loyalty Report. It is no secret that the better you know your customers, the more loyal they’ll be. Identifying their buying habits also help you communicate your new stock to the right people.

How Effective is POS Reporting?

  • It helps you detect fraud. 
  • It saves you the time, money and energy you would otherwise have spent trying to fix the mistakes an employee made.
  • It keeps you updated with your daily cash-flow activities, which can come in handy when preparing a management report at the end of the week or month. It also allows you to see how you are measuring up to short-term goals, allowing you to address problems as they arise, rather than after the fact. 

In Conclusion

The POS software reporting feature is very beneficial to the growth of your business because not only does it assist with sales management, it extends to the general management of your business activities. 

In-Store versus Online Shopping: Pros and Cons

stocked shelves in a retail store for instore shopping, a hand holding a mobile device for online shopping

Before e-commerce became widely known and accepted, going into stores to get consumers products like shoes, bags, groceries, etc., was an accepted norm. While some considered it fun and interesting, others considered it a chore, something they just tick off their to-do list. However, with the advance in technology and innovations that brought about online shopping, we have multiple options to pick from. So which do you prefer – in-store or online shopping? Here are the pros and cons of each.

Pros of In-Store Shopping

  1. Better Prices: Buying in-store can help you get the best price because you have an opportunity to bargain and get deals that fit your budget.
  2. Opportunity to Socialize: Shopping in-store can afford you the opportunity to meet new people and create a new experience with friends. You get the opportunity to request other’s opinions on what you’re about to buy.
  3. Traction: You can see and feel the quality of the material you’re about to buy up-close. You also can test out different sizes before deciding on the one perfect for you. There’s some sort of thrill that comes with trying products out before buying.
  4. You get your products immediately: This eliminates the apprehension that comes with expecting an item to be delivered to you. 
  5. No Shipping Fee: You avoid shipping fees when you shop in-store, although some stores offer free shipping for some products.

Cons of In-Store Shopping

  1. It consumes time most especially if you have to enter multiple stores to compare prices.
  2. Finding the right store for what you are looking for can be a hassle.
  3. You might not find your size at local stores and might have to go back.

Pros of Shopping Online 

  1. Convenience: You can shop at any time, this is because the internet never sleeps, you can make orders wherever and whenever you want.
  2. Ordering for Friends and Family: When you order online, you can have gifts delivered directly to its recipient. This eliminates the need of you wrapping and then sending through a courier or the post office. 
  3. Saves Time: All you have to do is click through different e-commerce stores to look for what you need.
  4. Shopping Cart: You can put things you intend buying for later into your shopping cart.
  5. Wider varieties: Shopping online gives you a wider variety of things and sellers to be sure you get the best price and quality. 

Cons of Shopping Online

  1. Shopping on an unsecured website can open you to fraud. 
  2. Sometimes, what you see is usually not what you get.
  3. It might take a long time for your products to get delivered to you.

Online and Offline shopping both have their advantages and disadvantages. Note that shopping preferences can change depending on a person’s situation at the moment. For example, a person that works at a place that barely affords them time for themselves would prefer to shop online, compared to someone who works remotely. In-store or online shopping? Pick a style that suits you best and find a way to work around its pitfalls.

What to look out for when Purchasing a POS System

pos system - cash point having an embedded touchscreen, pos receipt printer, scanner, cash drawer and keyboard

Thanks to the increasing need to improve customer flexibility and the overall need to improve customers’ experience at every stage of a business transaction, the need for purchasing a POS (Point Of Sales) system is on the rise.

Trying to get a good quality product comes with some sort of apprehension. The process of checking websites for reviews or asking friends about their experience can be exhausting. You often wish there is a way you can easily find out everything you need to know about the best product that can meet your exact needs at a certain time.

Are you a business owner? Do you recognize the importance of quality and excellent service? Are you trying to ease your Sales and Inventory Management processes? Are you thinking of getting the right Point-Of-Sales (POS) device? this article is designed for you. 

What is a Point of Sale system (POS)?

 A Point of sales system is a combination of both hardware and software that provides you with the necessary tools to track your sales and inventory. It is like a hub where everything that revolves around sales is contained. Thus, a POS system holds a pivotal role in your business

Components of a Point of Sale system

For a POS system to function properly, you need both the software and hardware to work cohesively. Below are the major components you should look out for when purchasing a POS system.

                                                                                                                         

Hardware

1.  The pos touchscreen terminal: 

six touchscreen terminals - pos system

A touchscreen terminal is an input device that allows its user input information and react to what is displayed using a stylus pen or finger. Touch screen systems are very pivotal to retail and hospitality businesses. Employees can touch a part of the touch screen instead of using a mouse, saving time and reducing clutter in the POS area. This is most useful in restaurants where images of the menu items can be displayed on the sales screen for easy identification. Hence, reducing errors usually made when picking items and also fastens the sales process.   

2. Cash drawer: This is a mechanical or electrical compartment used for storing cash and other valuables, It slides in and out of its lockable box and is secured by a spring-loaded catch. When a transaction that involves cash is completed, the drawer opens automatically. It can be set-up this way also for receipts from card transactions.

pos system - cash drawer

3. The Receipt printer: Receipt printers are an important part of a point of sale (POS) system. They are used in retail environments to print credit card slips and customer receipts. In restaurants, it can be used to print ordering slips in the bar and kitchen. It helps with keeping a good track of each sale and for pos reconciliations. this way you can properly handle the accounting of a business.

STAR TSP100 pos receipt printer

4.  Scanner: Scanners plays a predominant role in the efficient operation of your business. This device reads barcodes and enters product information directly to your item list. It helps in simplifying the sales process and reducing check out time.

pos system barcode scanner - honeywell fusion scanner

Software

The functionality of your business is largely dependent on the kind of software you use. Point-Of-Sales software helps with inventory tracking, customer loyalty management, sales monitoring, employee management and so much more. This is why more people regard it as sales and inventory management software. 

They are customized for various types of businesses. For example, we have the ICG front rest for the Hospitality Industry and the ICG front retail for retail businesses. When purchasing a POS system, these are the things you should look out for in the pos software component:

Ø Comprehensive data storage

Ø Allows for mobile support

Ø Extra features (Plug-ins e.g. SMS and e-commerce)

Ø Flexibility (Ability to tweak its configuration, customization)

Ø Training and support on POS software

Ø Cloud-based Service

Ø User-friendly

A superb point of sales system is a marriage between the software and hardware systems. Investing in a suitable system would not only push your business to be better by bringing in new customers but also help you manage your process and reduce your stress level. There are different brands of POS out there, which may vary slightly in functionality but generally, a good POS should have all that was listed above.

Is Point of Sales System an Investment or an Expense?


For a growing business, longevity and expansion are always a primary focus. Having a structured system that helps improve sales and customers’ experience is very paramount for business owners. The use of the Point of Sales system is especially recommended for retail and hospitality businesses to achieve this.

It is logical for businesses to make a priority list of the cost needed to purchase tools and resources. When prioritizing costs, viewing everything as an expense can result in some tools being pushed to the bottom of the priority list. This “everything is an expense” mindset can create more expenses for a business rather than cut down costs. The reason is that once every cost is viewed as an expense, decisions made will be based on a survival mode rather than a growth model. The key is to know and understand the difference between what is an expense to the business and what is an investment in the business. Businesses gain more in weighing each cost using a Return On Investment (ROI) model applicable to each.

What is the ROI of a Point of Sales (POS) System?

A Point of Sales (POS) System is an integration of both hardware and software. The POS System provides essential tools to track, measure and manage sales and inventory operations. Thus the ROI of a Point of Sales system is based on its impact on revenue or profit. In determining the ROI of a POS System,

1) look at the features of the particular point of sales system being offered and

2) check how it aids achieving the primary goal of increased revenue and profit

picture of a retail store with several point of sales systems

What makes a Point of Sales system an investment?

1. Inventory and Supplier Management

The inventory processes in a Point of Sales Software help track stock in warehouses. This provides statistical information that helps with production, supplier management, inventory control, stock variances, minimum and maximum stock levels, etc.

2. Accurate Reporting for Business Decisions

A POS system is very important to all businesses because it structures processes thus minimizing human errors. Point of Sales (POS) systems provide accurate reporting on inventories, shows you the top-selling/least selling products, gross profit, taxes, sales activity, highest selling location/cashier, trial balance, income statement, etc. By knowing what sells best, what items are most profitable, what seasons, day or time of the week have the most traffic, etc., businesses can make decisions that help improve their product offerings and service delivery.

3. Employee Management

Time and Attendance function,user-defined rights, and privileges, top seller, audit control are features that help streamline processes to limit fraud and excesses.

4. Ability to handle multiple branches

In the past, a business owner with multiple chain stores would find it hard getting accurate reports from various branches. But with a good POS software like the ICG software, businesses can manage multiple locations, and multi-companies remotely. With just a click you know how well each store is doing without having to be there physically. Also, a business looking to expand would be better off investing in a point of sales solution that is scalable and extendable as the business grows.  The solution should have the capacity to include add-ons or extra modules as needed.

5. Customer Relationship Management

Improving the customer experience through the quality and speed of service offered is one thing businesses in the retail and hospitality sector do not overlook. If a customer had to wait too long on a queue to pay for their purchase they would most likely leave dissatisfied and be less inclined to come back a second time. This is the reason investing in a Point of Sales System is important. It helps reduce wait time and unnecessary queues. With Point of Sales solutions, reward consistent customers through loyalty benefits and promos. This helps retain current customers and grow sales.

 

In conclusion, though POS systems come at a cost, it helps control expenses. Using statistical information from the POS system, businesses can plan their inventory and sales strategy for overall growth and profit. By understanding what sells best, what items are most profitable, what seasons, day or time of the week have the most traffic. A POS system is a valuable investment in technology because it takes a certain amount of strain off your shoulder. It may seem a little costly at first… eventually, it helps save so much more. Considering the outweighing benefits, whether a cloud or an on-premise solution, it is definitely worth it.