The goal: NO EXCESS INVENTORY

These days, independent retailers cannot afford one piece of excess inventory. Storage costs, insurance, pilferage, damage, depreciation, taxes and interest on loans add up to 30 percent annually to the cost of the goods you carry. Because those costs continue to rise, tight inventory control is still one of the best investments you can make – especially during the buying season.

How Do You Achieve the Ideal Inventory Control? 

The essence of an inventory control program is planning your stock levels more stringently by using weeks-of-supply inventory maxims. 

Maintain the Balance  
Retailing is a delicate balance between merchandise and cash. Independent retailers usually must take one of two risks: commit themselves to large quantities of inventory and possibly end up with an excess, or commit to less and later find goods unavailable. Given the current economic situation, it’s probably better to go with the second risk.

If you hold inventory in proportion to your projected sales for the weeks of supply, you will have a greater share of fresh merchandise. In addition, timing the inflow of merchandise as closely as possible to the start of the selling season will, in most cases, be more profitable than taking goods far in advance, even if vendors grant dating or other price concessions. The other costs of carrying inventory will almost always wipe out whatever savings you realize by taking goods early. 

Inventory control requires disciplined effort. It takes work to maintain a steady flow of fresh merchandise while keeping stock quantities proportionate to your ideal turnover rate. But if you do shape up your inventory turnover rate, it will improve your income statement, balance sheet and your bottom line. And that’s a program worth doing! 

You don’t necessarily have to increase your sales to improve your profits. What matters is how much each inventory rupees produces  

As a retailer, your primary means for earning profits is your inventory investment. So it only makes sense to put your inventory rupees into merchandise that will give you the greatest return on your investment. But how do you know whether you should, for example, cut back on running shoes and build up your collection of cycling shoes?  
GMROI – GMROF – GMROL can be a very useful tool in your analysis. 

GMROI (also known as GMROII) stands for Gross Margin Return On Inventory Investment – a measure of inventory productivity that expresses the relationship between your total sales, the gross profit margin you earn on those sales, and the number of rupees you invest in inventory. 

GMROI is expressed as a percentage or a rupees multiple, telling you how many times you’ve gotten your original inventory investment back during a specified period. 

GMROF stands for Gross Margin Return On Footage – a measure of inventory productivity that expresses the relationship between your gross margin, and the area allotted to the inventory. 

GMROF is expressed as a percentage or a rupees multiple, telling you how much returns you’ve gotten per area (selling feet) during a specified period. 

GMROL stands for Gross Margin Return On Labor – a measure of inventory productivity that expresses the relationship between your gross margin, and the full time employee. 

GMROF is expressed as a percentage or a rupees multiple, telling you how much returns you’ve gotten from each piece of full time employee during a specified period.

Retailing is a delicate balance between merchandise and cash.

It’s a high stakes balancing act: commit money early to large quantities of merchandise, and possibly end up with too much; or, commit less up front, saving cash for later, and take the risk of not being able to get the goods when you need them. 

How to achieve the right balance between merchandise and cash? 
Projections and planning are essential, enabling you to meet inventory needs on a regular basis and avoid too much inventory when you don’t want it.

For this traditional system ask for

• Reorder Level
• Safety Level 
• Re-order Quantity 
• Minimum Order Qty 

Isn’t this is a tedious job to input these data for 1000s of SKUs.

For the Retail Method of Inventory Accounting, Pre-Purchase Order (PPO) or Automatic Purchase Order (APO) is an instrument through which the tentative plan of order placement to the vendor is done for the whole season as soon as the inventory planning is completed.

FusionRetail have a powerful Auto Purchase Order system which asks you few questions to generate a purchase order based on your last transactions.

Your purchase entry operator is left and It’s difficult for you to train the new person to identify the products while doing stock in.

If he does not find one SKU then he will create a new one.
 
It’s even more difficult to find what was the last purchase detail like cost price, sales price, mark up and margins.

Solution: Use the following steps to identify and create the products at the time of purchase entry.

1. Make a basket of single piece  of each product to be stock in
2. Simply scan the UPC/EAN of  each product in FusionRetail Purchase Module
3. It will identify the product using the UPC/EAN present in the database.
4. It will also show you the past transaction displaying cost, sale price, markup and margins.
5. If a item is not present it will ask you to create new master.
6. From the same screen you can check the similar products for categorization used.