Stock Control

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Stock Control

Automating your replenishment processes

POS SOFTWARE

Most of your suppliers have large numbers of items on catalogue. I would say a typical small client of ours would be selling actively over a year selling over 43,000 lines. That is a lot of work if you order once a week to handle it. Just do a calculation on how much it costs you now to order stock?

Those that do not computerise it, tend to do much of the ordering on gut feel and memory.

However, getting it right is critical to retail business success as what we need to do is get the shopper what they want and when they want it. This is particularly difficult if you deal with products with high decay, eg popular magazines, fresh food, etc. because then we have the problem of availability vs waste.

This is why if possible here we recommend that you consider as the computer can relatively quite cheaply do the ordering that you consider smaller orders and buy frequently. This has the added advantage of keeping your stocks levels tight and your cash requirements down.

This is something where, if you are not already doing it where our software can save you much time and money and in the process, optimise your stock levels. What our software does is looking at your sales history discovers learning algorithms which automates replenishment. Technically its a form of demand processing. 

What it does is looking at your history of sales, create an ideal stock quantity that it thinks you require. 

If you order frequently, the amount of stock you need until the next reorder is less. It then compares this figure to what the actual stock on hand figure you have, it then adds some safety stock, then takes into account the ordering requirement of each supplier and then prints or issues a stock order with almost no work.

This reduces your holding costs, as you are not holding that much in stock.

It also

  • Lower ordering costs - as you are buying only what you need.
  • Improved selling rates - as you are ordering only what you need.
  • Decreased stock out occurrences - as the computer is checking continuously
  • Overstock wastes - this is often caused by people overestimating what they require.
  • Improved stock accuracy - you have a continuous check on your stock.
  • Higher customer satisfaction - you have the stock you require.

You will save a lot of time and almost certainly your shop will do a better job of it.

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Start looking at Christmas ordering

POS SOFTWARE

Managing stock orders is trouble even in the best of times. Christmas season makes its harder.

So let us now use your Point of Sales Software to see what worked well and what did not last year. You 

This is a step by step method for doing this.

Go to register reports and select the top stock report as marked with the red arrow here

 

You get this screen

 

 

Now I suggest you work by the department as it makes it easier to think about similar products.

Now, look at the red arrows as these items need to be changed to the coming Christmas, the dates for 2018. and you also need to put in say 100 items. After 100, it is rarely worth worrying about.

Then I got this report

 

Now you need to examine this list to see what did sell. You may find many items that did not sell, you may want to examine these too.

What I find useful is doing exactly the same analysis for the year before in this case 2017. It will give you an extra comparison.

 

 

 

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Narrow your focus

POS SOFTWARE

Every item on your shelf takes up room. Generally, a good seller takes just as much place as a poor seller. It also takes just as much time and effort in looking after it and possibly even more time in dusting, and it earns less.

Here is a picture of a pen rack

I can guarantee you that only a few pen types here are making most of the sales. When I reported on the pen sales on one brand in a shop over three years, I found that they had sold over 450 different types of pens and something like 80% of the profit was in the top 10% of pens. 

 

Towards the end of this list, sales were like one sale in three years, and there were pages of these items. Consider how much profit they are making on these slower-moving items.

What is also particularly interesting is that the most profitable pen was not mainly a high seller. Looking at this list, it is clear the most popular one is a black pen. I bet people came into the store, with one thought about the pen, I need a simple black pen. It is quite possible the range did not sell much of these pens but the convenience. 

The reality is that we cannot be all things to all people. Maybe fewer products would be better than more. Perhaps some of your space could be used instead of having many mediocre items and replacing them with a new category of things that are outstanding sellers. Could that shelf space be devoted to quicker-moving, more marketable items? 

Want to investigate your stock, here is a step by step method for doing this.

Go to register reports and select the top stock report as marked with the red arrow here.

 

You get this screen

 

In this case, here I used the category of Artline pens, I put in 99 million in to make sure I get everything, and as I like to get a long term view, I selected three years.

Then I got the above report

Once you get this right, if you want to increase your stock range in this category, well you can expand your business later.

 

 

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AI for selling more

POS SOFTWARE

I was invited today to go to the AI FOR BUSINESS SUMMIT  

We have been into AI for many years.

A while ago, I worked out that almost half the out of stock problem in a typical client of ours can be avoided by the use of our AI ordering system in your POS Software.

This can avoid much of the harmful problem in a business such as people coming and walking out because you do not have the product they wanted. What is even worse is if they get frustrated with you not having the stock they want and going elsewhere.

It does not look good either. What do you think of this shop shelf?

What does it say about the business to its clients?

The problem is that 

To be successful today, it is essential that retailers keep in tune with their shop's unique preferences and behaviour. However, there are too many stock items and marketing seasons to do it accurately manually. The best way to do it is with AI. These tools are generally too expensive for small to medium-size retailers unless they have our point-of-sale system because we have embedded it into our software and give it out included in. Others I notice charge for AI or do not have it.

I think it's great system (maybe because I designed it), but I assure you we made it so that it is both simple and reasonably intuitive to use. It does not require much training either to handle. It is less work than manual stock ordering.

An example


Let say you have a basket for tape. You cannot order limitless quantities of tapes.

This is how the tape is set up



Now what happens is the computer tracks the stock on hand, estimates the stock level required for these goods in the period, if it thinks that the stock on hand is too low it can send an order to a supplier with the speed and accuracy that no-one can match.

It is easy to set up, and use for details click here.

With our AI software, you can control your stock with relative ease.

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Using PLU and SKU numbers

POS SOFTWARE

 

PLU (Price Look-Up code)   and SKU (Stock keeping unit) numbers are used to sell items at the cash register without scanning.

Often they are used because many items are not easy to put on a barcode such as alcoholic drinks at a bar, fruit, vegetables, cardboard sheets etc 

I do suggest that if you do use PLU or SKU that you stick to the following convention. 

PLUs generally, are a 4-5-digit number that are supplied by your supplier. On fruit or vegetables at the supermarket, you have probably seen this code on the little stickers on your items as such they are what we call universal as they can be used by many stores, not just your own. There is a series of numbers between  3170–3269 that you can use if you want for your internal use, but our clients do not need to do this as they can use SKU. 

SKU are generally 1-3 digit numbers which you assign yourself. They are as such applicable only to your products and stores. You can customise your SKUs so that you can quickly tell specific information about a product by looking at the number if you want. In my experience, this works very well at the start but after a while gets very messy. So I would recommend you use 1,2,3 etc.

Setting it up is very easy.

1: Open Stock Maintenance and look up the item.
2: Click on the "Prices" tab
3: Scroll to the far right on the pricing grid, and you will see the "PLU" field.
4: Click EDIT and enter a number here (for example, 101 for an SKU and 4152 was the PLU for the apple above)
5: Click SAVE

Now, in the cash register, when you are ringing up a sale enter the PLU into the "price entry" box, and press ENTER and our point of sale will find the item immediately!

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Get your stock turns now!

POS SOFTWARE

Stock turns ( often called the Inventory Turnover) is one of the most commonly used measures used in stock control. What it measures is how many times you turn over your stock.

Now that you have done a stocktake, it is the perfect time to do a full review of your stock turns.

Traditionally it is calculated as 

Stockturn = (Cost of Goods Sold) / (Average Inventory cost)

So say you keep a constant stock of 10 items which is your average inventory, and you sold 50 over the year. You would have a stock turn score of 5.

A score that many retailers often look at here is twelve because they tend to pay monthly, if they sell out monthly then effectively they are not paying for the stock anything under twelve they are paying to keep.  

As a general rule, the higher the score of your stock turns the better. This, however, is not always true, too high a stock turn often shows that you are understocked. Say for example you have an item you could sell one a day, but you order one a week. So every week, you have sold one, so at the end of the year you have a score of 50, which is a great score but you have lost 250 sales that you could have had because you could have sold one a day and all you have sold is one a week.  

How to get your stock turn scores.

Main Menu > Cash Register > Register Reports > expand Stock > select/double click the report “Show Stock Turn by Dissection and Item

 

Now here is the sample I produced that shows the stock turns by department.

What to do now

Take time to analyse what these scores are telling you. This will help you to identify the actions required to improve profitability and return on investment.

Now you need to analyse your stock, check each department see what is working and what is not. A score signals bad sales and that you are more stock than you realistically need at any given time. Maybe you have a pricing or quality issue. What you may have in that department a lot of obsolete stock. If so move the obsolete stock to a different department as it is not going to give you fair figures here.

A high score indicates greater profitability and good return on investment, although as I stated, it may also mean that you are not ordering enough.

Remember every figure has a story.

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Slow-moving stock

POS SOFTWARE

Stock planning in retail is tricky. What you do not want is a shop full of slow-moving stock, you need stuff that sells! Besides the problem that this stock is taking up space and capital, it is also not bringing in customers.

There are several ways to identify what is your slow-moving stock, but as a rule, a stock item that sells under $100/year is slow-moving. The first point before you can do something is to identify all these items.

So go to Register reports > Stock > Slow moving Stock lines

Now I put in a year of sales, and I say anything that I have stock in and have sales of less than $100. 

 

I find it best to work by department separately, so in this shop, I was looking at the stationery department.

Now we got a report of 81 pages of detailed information of all the items that we considered slow-moving. It totalled almost $80,000 worth of worthless stock. 

So we have someplace to start.

Such stock analysis can provide you with insights to improve your decision making that can help you reduce costs and improve sales.

Give it a try.

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A tip, try a BuyBack to get rid of excess stock

POS SOFTWARE

A lot of you now, preparing or having done a stocktake are looking at a lot of stock that you no longer want. One solution often recommended is to discount it heavily and clear it out. It usually works, but it costs.

Here is another alternative to try out.

Have a word to your supplier of this stock, you are buying off them, and they want to be in your good books. This stock may be useful to them even though it is not to you.

I had a client that made a big order and the supplier agreed to credit most but not all of these unwanted items. So yes the rest went into a clearance bin, but the bulk was replaced with sellable stock. They did not even get charged a restocking fee. My client stated to me it was to them, it was like this money they found in the street.

Food for thought?

 

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ABC Analysis and 80/20 Rule

POS SOFTWARE

You have probably come across the ABC inventory analysis called often the 80/20 rule or sometimes the Pareto Principle.

What it is, is that no matter what you measure, website hits, advertising expenditure, pilot kills in war, shop sales, political influence, etc. It all seems to come down to something like this that somewhere about 20% of the total gives about 80% of the results.

So everyone wants to find the 20% because that is giving almost all the results.

* 20% of your customers will bring you 80% of your business

* 20% of your products will bring you 80% of your business 

* 20% of your staff give you 80%

* 20%  of your advertising gives you 80% of the results.

* 20% of the shop fittings give you 80% of your business 

And so.

Now in inventory control, the ABC method identifies this and divide all your stock into three groups.

The first we call the category A-lines. They are the most valuable stock items you have. These are 20% of your lines that give you your 80% sales and profits.

 We then have the category B lines. They do pay for themselves but not a lot.  As a rule, they are about 30% of your lines and account for about 20% of your sales and profit.

Finally, we have the category C lines, which typically are about 50% of your stock lines and give about 5% of your sales and profit. They also usually take up most of the shop's funds.

Now the idea of the ABC stock control method is to identify your A, B and C items and then 

* A lines should be monitored all the time. You do not want any out of stock situations with them. 

* Your C-lines should be pruned if possible if they must be kept then, reduce the stock holding on them

* Your B-lines do pay their way, but you would not go out and order a lot.

Now if you go to stock reports > select stock N sales for a given period, choose now as a number of items 30,000 as we want every item.

Now run this report with a decent period. I would suggest running the report by profit, but this may depend on your business philosophy as some may prefer a number of units sold.

Now the first two pages of the report will be your A-lines, on those you need to concentrate. 

The last 80% of the pages, you should ask yourself, do I need these lines?

I did some reports recently for one of our clients a lottery agency, and I used excel to produce some graphs that will show you I think quite dramatically how it works as it makes interesting reading. They had in the shop 21,000 stock lines.

 

The number of sales ranked in order of top selling lines here.

50% of the sales came from 45 stock lines about 0.21% of the stock lines 

80% of the sales came from 4615 lines approximately 21.76% of the stock lines 

 

Here is the profit percentage by stock lines

 

20% of the profit was from 135 about 0.64% of the stock lines 

50% of the profits came from 1,873 about 9.35% of the stock lines 

80% of the profits came from 7,374 approximately 34.78% of the stock lines 

See how you go and as always let me know if you find something interesting.

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Your duplicate supplier costs

POS SOFTWARE

In a survey in the last "Global Retail Theft Barometer" is released, which is the most significant and authoritarian report in the world on shop theft and supplier losses in retail businesses, it came up with a percentage breakdown in Australia by type.

  • Dishonest employees will be about 25%
  • External - shoplifting (39%)
  • Administrative (accounting mistakes, pricing errors and process failures) about 23%
  • Supplier fraud (no delivering what they said) 13%

The last two, in particular here, what it shows is that in those surveyed about 36% of the total losses are in the supply chain. This shows the importance of a good computer system in retail for stock control. 

Now the first item which I will discuss today on this is the problem of duplicate supplier codes. One problem is that you order and the process by supplier codes. The problem is that many suppliers have for various reasons what you consider different products with the same supplier code. As such you could easily order in the wrong product. 

Now go to reports

Duplicate supplier code menu

 

Select duplicate supplier codes by supplier.

Now select the basic report, we can discuss the extras later.

Now out will appear this report

Duplicate supplier code report

In it, you will have a listing of items by supplier code for you to investigate and hopefully fix.

Best get started with it.

 

 

 

 

One of best functions in pos browser is that it links the stock into your accounts payable section. Because you do that well you have a check so reducing both with we used to do with overpayments and paying twice. Can you please discuss this section more?

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