One of the most important aspects of a successful retail business is accurate inventory tracking. Inventory tracking is about much more than knowing how much of an item you currently have in the warehouse. It is also about tracking business sales, reducing warehouse waste, and understanding your business’s financials. A good inventory tracking software program is important for the following purposes.
To accurately evaluate sales and profits
In order to get a full picture of your business’s sales and profits, you need to consider every piece of inventory. Inventory sitting in a warehouse is an asset because you can sell it eventually for a cost. If you want to get a business loan to expand the business or for any other business purpose, you will have to provide detailed financial information. Without advanced inventory tracking software, it will be difficult to obtain an accurate document.
To push inventory off the shelves before losing money
It might seem ideal to leave items in storage that are not currently selling for the listed price. However, it is important to remember that those items are taking up valuable warehouse space, space that is being paid for. Additionally, if you wait too long and the item becomes outdated or expired, you could end up paying to get rid of it. U.S. retailers are currently sitting on about $1.43 in inventory for every $1 of sales they make. When you have a detailed inventory tracking software program, you can use it for asset tracking. When items get close to their expiration date, sell them at a highly discounted price.
To reduce the possibility of theft
When you have a large quantity of product, it can be difficult to identify theft. A warehouse worker could easily take a couple of high volume products, without ever raising any red flags. But, when you use audit automation tools, each and every item is documented. Once an item leaves the warehouse, it is scanned. After it arrives at the physical storefront, it is scanned again. Once the item is sold and the funds are completed, the item is scanned a final time and the product is moved into a sold folder. If any item goes missing during this process, it is easy to track down the last time it was scanned and then look for the theft.
In addition to theft, there is also the possibility of human error. When humans are solely responsible for documenting and tracking inventory, it is likely that there is some amount of human error present. In fact, statistics show that a typical warehouse management inventory tracking software system can decrease errors by as much as 70%.
To calculate additional costs
There are many costs to factor into the final cost of a product. A business owner needs to set a price that is based on covering all incurred costs, while also turning a small profit. Just a few of the costs to consider include storage fees, transportation fees, employee costs, and the actual manufacturing cost of the product. If you are not accurately tracking all of these costs, you could actually be losing money on your sales. A WMS can potentially save 10 to 20% of transportation costs, which have slowly crept above 10% of the overall costs of an order.
There are many different types of audit software programs to choose from. The type is not as important as the features that are offered in the program. Choose an inventory tracking software program that includes accurate financials, inventory cost tracking, a reduction in human error, and allows the business owner to calculate all costs involved in a regular sale process.