Shop Management: Helpful Techniques + Methods

Shop management is a step in the supply chain where inventory and inventory quantities are tracked in and out of your warehouse. The goal of shop management systems is to know where your inventory is at any given time and how much you have available to properly manage inventory levels. Some companies may choose to scan inventory through a barcode reader to increase the efficiency and accuracy of picking routes.

See Some Useful Techniques And Methods For Effective Store Management

Choosing the right shop management techniques for your retail shop is no easy task. The faster your business grows, the more difficult it becomes to manage your foundation inventory from the start, which is again so critical.

  1. Backorder: Backorder refers to a company’s decision to take orders and receive payment for products that are out of stock. It’s a dream for most businesses, but it can also be a logistical nightmare … if you’re not prepared.
    When there is only one item out of stock, it is simply a matter of creating a new purchase order for that item and notifying the customer of the arrival of the outstanding item. When there are dozens or even hundreds of different sales a day, the problems start to pile up.
    However, allowing stock outs means increasing sales, so it’s an act of dexterity that many companies are willing to take.
  • Just in Time (JIT): Just in Time (JIT) inventory management reduces the amount of inventory a business keeps on hand. It is considered a risky technique because you only buy stock a few days before it is needed for distribution or sale.
    JIT helps organizations save on inventory maintenance costs by keeping inventory levels low and eliminates situations where inventory is depleted – in essence, frozen capital sits on the shelves for months and months.
    However, it also requires companies to be very agile and be able to handle a much shorter production cycle.
  • Consignment: Consignment requires a wholesaler to place inventory in the hands of a retailer, but retain ownership of it until the product is sold, at which time the retailer purchases the consumed inventory. Typically, consignment selling involves a high degree of uncertainty in demand from the retailer’s perspective and a high degree of confidence from the wholesaler’s perspective.
  • Drop Shipping & Cross docking: This shop management technique completely eliminates the cost of inventory management. When you have a drop shipping contract, you can transfer customer orders and shipping details directly to the manufacturer or wholesaler, who then ships the goods.
    Similar to drop shipping, cross docking is a practice in which the incoming semi-trailers or railcars unload materials directly onto the outgoing trucks, trailers or railcars.
    Essentially, this means moving goods from one transport vehicle directly to another with little or no storage. Transit areas may be required where inbound items are sorted and stored until outbound shipment is completed. Additionally, you will need a large fleet and network of transport vehicles for the cross dock to work.
  • Inventory cyclic counting: Cyclic counting consists of counting a small amount of stock on a specific day without having to perform a full manual inventory. It is a type of sampling that allows you to see how accurately your inventory records match what you actually have in inventory.
    This method is an integral part of the inventory management practices of many companies because it ultimately helps ensure that customers can get what they want, when they want it, while maintaining the costs of maintaining inventory as low as possible.

Final Thoughts

Whatever your specific approach to counting inventory, here are some of the best practices to follow for your retail shop:

Count one category at a time – Ideally, you want to be able to scroll through your entire inventory periodically. It is best to focus on one category at a time so that you can count efficiently during working hours and not be hampered by operational downtime.

Choose count categories based on seasonality: The purpose of inventory is to be able to correct inventory disparities as they occur. It is best to count products when they are at their peak to ensure that you can resolve any issues immediately.

Mix up your cycle counting schedule: It’s a sad reality that sometimes inventory reduction is due to staff theft, so try varying your schedule to deter employees from “playing the system”.

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