For many retailers in the educational supply industry, the busiest time of year is just a few weeks away. During the back-to-school rush, keeping the right products in stock is a never-ending battle. Keeping track of inventory is important year-round, but it becomes even more critical when customers may not have time to wait for special orders.
The most efficient way to keep a handle on your inventory is through the use of a point-of-sale (POS) system. There are many different brands on the market, all of which have their advantages and disadvantages. If you do not have a POS system, I strongly recommend that you get one. Retailers who use them agree that the benefits of a POS system greatly outweigh the cost.
The system we have at the Education Station plays an integral part in helping us manage inventory. Each morning it generates a list of items that are either out of stock or running low. How the out-of-stock items are added to the list is self-explanatory, but the low-stock items are assigned to this report based on our settings. Each item is assigned a reorder point. For some items, this point is zero, while other items are set at a quantity of 10 or 12. When an item’s quantity-on-hand level falls below this set point, the item will appear on the POS report until the quantity on hand is greater than the reorder set point. From this report, purchase orders are generated. Depending on the nature of the items, they may be generated daily, or it may take a few days to accrue enough items to meet manufacturer minimums.
At any time, the reorder point for items in the POS system can be adjusted based on what’s happening in the supply chain. Lead times, product availability, and trends in our store sales are all critical factors to consider. At back-to-school we usually set reorder points on the “must have” items higher than they are during the rest of the year to help prevent us from being out of stock on those items. For example, in the off season we may set the reorder point for an item at three, but during back-to-school it might be set at six or eight. This is not a foolproof system, but it works for us most of the time. Of course we cannot predict when a single customer will come in and purchase all the stock we have of an item.
Once an order has been placed, there are several forces that influence whether the stock will be received in a timely manner. During back-to-school season, the lead times for order processing increase dramatically for some manufacturers, while others’ lead times only increase slightly, if at all. In addition to longer lead times, product availability is also an issue. Just like at your store, many of the most popular items go out of stock rapidly at the manufacturer’s warehouse. If this happens, check with your wholesalers or another dealer, as they may have it. On the NSSEA website, www.nssea.org, member dealers may post messages about products they’re looking for in a product-search forum. If another dealer has the item, he can sell it to the person who posted the message.
Our buyer makes sure to inform the sales staff of any popular items that are on backorder from the manufacturer or wholesaler. That way, the sales staff can give customers information that is as accurate as possible. As the list of backordered items grows, the buyer posts a spreadsheet in the stockroom for all staff to refer to as needed.
As handy as our POS system is for us, there are some pitfalls we have to watch out for when using it. For example, our system does not tell us when to restock the shelves with product from the stockroom. To stay on top of this, we encourage our sales staff to look at the list of backordered items each day (if there is one), and also to check what is in the storage room. At least three times a day during back-to-school, our sales staff makes sweeps through the store specifically looking for items that are out of place as well as open shelf spaces that need to be restocked. When they find an empty space, they check to see if we have the missing item in the stockroom. If it’s there, they restock the shelves. If not, they pass this information on to the buyer. If the item is not on the buyer’s POS report, he does a stock check to see why it was omitted. If needed, the buyer makes the necessary adjustments to the reorder point and quantity-on-hand report, and adds the item to the reorder list.
Keeping up with the ever-changing inventory during one of the busiest times of the year is not an easy task. Using a point-of-sale system is an invaluable tool in my opinion. My motto is: “Empty shelves mean loss of sales.”
John MacGregor is vice president of The Education Station, a parent-teacher store in Le Mars, Iowa. John is a member of the NSSEA Retail Store Council and also works as an emergency medical technician for his local ambulance service. |
