Stock control and operating a wholesale business

So you are operating a wholesale business and you want to know best practices for effective stock control. Everyday people are starting new businesses, often they begin by selling through eBay and then due to sales growth open up a large warehouse. What people then realise is that success is not just about sales it is about effective stock control, margin management, order dispatch and customer management.

So what are some of the keys?
Stock control at its most basic levels requires the management of what stock you have and what stock you need. Now this sounds easy when you say it like that, however when you bring in lots of stock items / products, lots of orders, customers and staff this simple task can become overwhelming. So what you need is systems both software and physical processes.

Let’s start with stock ordering. Stock costs you money and while it sits on the shelf there is a finance cost, so you only want to hold what you need to match your sales volume, this is a key goal of effective stock management. To do this you need access to your current stock levels and also your sales history from previous months and your current sales orders. You use this information to predict sales volume for each stock item and then order stock levels to support this plus a percentage buffer. The level of this buffer needs to take in to account the time it takes from the placement of your purchase order to the receiving of your stock. If you can get stock quickly this buffer can be much small, if stock comes from overseas with a 6 week plus delivery you need bigger buffers. A good software system will provide reports and tools to assist you to make these decisions. Like any prediction based on historical data you will never get it absolutely perfect but it will ensure you minimise the cost of holding to much stock.

Stock control and the receiving of inventory. When the truck arrives it is important that you have systems to process the goods. The best practice is to receive your items in to a bulk location. In many warehouses they will paint lines to clearly show this area. Then you and your staff process the stock and check that what you ordered has been received and then move the stock to the bin or shelve location. Again this is where you need a system that supports tracking the bin location for stock. Bin and shelf numbering is very simple to implement. Basically cut up your warehouse in to areas or eile and label them A, B C, D etc. Then in each area create and label shelf areas with a number so you have bin locations such as A1, A2,A3, C1,C2,C3.

Customer orders, customer management and inventory control – As you receive orders online, via eBay or over the phone or in person you need to be able to view accurate stock levels and be able to confirm delivery timelines. Customers are very demanding and if you have an online store they expect to see stock levels and delivery times. Again success in this area requires software and disciplines practices to ensure your data is accurate. Part of this discipline is order dispatch processes. You need to have access to all your orders and their status as in if they are ready to ship, are waiting on stock or payment is required prior to dispatch. You use this information to keep on top of customer communication and to direct your dispatch staff which may be you as well to get orders out quickly. A good system will also print out order picking lists and show the stock location (bin / shelf) and print these in the order A1, A2, D5 to make picking the order efficient.

The Negative of negative stock levels. One thing to be aware of is the trap of systems that allow negative stock levels. What this means is that some software allows you to dispatch orders when the system has a 0 or less than 0 stock level. As soon as you go down this path your warehouse will quickly get out of control. The reason is you are not forced to record the receiving of stock prior to selling it which then means you can lack discipline and as a result your stock levels are never accurate, which leads to an inability to manage orders and then lots of unhappy customers. So I would strongly encourage you not to purchase a system that allows negative stock.

These are some of the keys to effective stock control. The main thing I encourage you to do quickly is to choose a good software system and to implement physical processes as mentioned above to order, receive and then dispatch your stock. The moment you start taking short cuts in any of these steps you but your goal of effective stock control at risk.

Tips to help you manage stock and to use your stock control software

One of the important steps to manage your stock is manage the core areas of movements. The events of ways that stock moves are as follows:

1. Stock is ordered from your suppliers

2. Stock is received at your store or warehouse

3. Stock is shipped out to other stores

4. Stock is shipped out to customers

5. Stock is sold directly to walk in customers

1. When it comes to good stock control you need to have tools that will help determine what stock you need to purchase. A good stock control software system will provide tools that will give you direction on what stock has hits its re-order levels and also provide you with information on stock movement. This information helps you know what to order and helps you not over stock your stores or your warehouse.

Holding stock costs you money so a good stock control software system will help reduce your stock levels aaving you money.

2. When stock is received at your store or warehouse you need procedures to ensure this stock is received in to your stock control software and that what you have received matches with what you have ordered. To acheive this you need a marked area where stock that has been delivered is kept in this area until it has been received in to your system. To receive your stock your stock control software should allow you to bring up the purchase order (PO) and then scan various items and check the quantity against what was ordered. If there is a variance between the purchase order and what has been delivered then a good stock system will force you to either create a backorder or change the purchase order to match what was received.

3. Stock is moved to other stores. The process of moving stock needs to ensure that the process of stock leaving a location and going to another is tracked. You stock control software needs to support a mechanism for internal transfers where the request for the stock is lodged and the packing, shipping and then receiving of the stock is all tracked.

4. Shipping stock to customers based on their orders. As a wholesaler or person operating an online store it is important that you are able to track all your orders and can see what has been ordered, what orders are still waiting for stock and those orders that are ready to be shipped. The packing and preparation of orders is important role where your staff need to be diligent to ensure what has been ordered has been packed. Good stock control software will provide tools including order dockets to help with the picking, some systems may also support scan packing the order so that each item in the order is scanned.

5. Sales to in store customers. What is important in this area is having mechanism to ensure customers get the stock they have want and that you bill the customer correctly. One of the areas that cost businesses money is stock that gets stolen or damaged. You store needs to have processes and your stock management sofwtare need to help control the process.

There are many more things to consider in the area of stock control software, please refer to the other articles for more details. 

What are some of the reason customers become disatisfied and how can you use your point of sale system to avoid this?

We all know that some customers are just trouble no matter how hard yuo work to please them. However these type of people represent the minority, so we will not focus any time on these types of customers. The question we need to ask though is what turns a normally happy customers in to a disgruntled customer and then when we understand this what steps can we  take to avoid these. Also as this is a blog focused towards the retail and point of sale topic, how can we use our point of sale system to help minimise these issues.

As retailers we need to be aware that a customer who has a good experience may tell 1 or 2 people, a customer who has a bad experience will tell 8 to 10. For this reason we need to all that we can to minimise bad customer experiences through utilising our point of sale database.

 The first point to think through is times when we have become unhappy with the service provided by a retailer. When you think about retail sales the issues all revolve around either the quality of the product or the suitability of the prodeuct to meet the requirements of the customer.

First of all if we first assume that the quality of the product is fine an issue can arise if your staff recommend a product to a customer which does not meet the needs of the customer. For example a customer is going camping and is looking at sleeping bags. Now it is important that the retail staff in this situation find out from the customer their budget and the climatic conditions they plan to camp in. This information is either available via brochures or as a minimum needs to be accessible in your point of sale system so that your staff can advise the customer. Now if your staff advise the customer to purchase a sleeping back rate for 5+ degrees celcius and they go camping and it gets to -2 then the customer is likely to be very unhappy with your business. The problem is not with the product but it is with the non suitability of your product for what the customer needs. Also now because the customer has had a sleepless night, shivering in the cold they will be very unhappy and will come in seeking a refund. This situation could have been avoided if your staff receieved the appropriate training and also knew how to access the information in your point of sale system on the product. In some cases the product information is not available to your staff, so you as a business owner need to ensure you get this information in to your point of sale systems which should have support for an extended description.

Lets now deal with the second scenario when you have a defective product. Despite the best quality control provisions sometimes a product is faulty and so we need to make the process of a customer return as painless as possible for the customer while ensuring we have policies in place to protect the business from abusing our processors. First of all you need to have a clear policy for the return of goods that makes the process straigth forward for the customer to understand. You also need to be aware that this policy cannot remove the customers basic rights under common law and the laws of your state. The next step is that you need to be able to track the customer return in your point of sale system including the followon supplier return. This ensures that the customer cannot ask for more refunds than they are due and that you ensure you get a replacement from the supplier. So many retail businesses are very disorganised in the area of the supplier return which affects their profitability. Another important function is your point of sale supports this functionality is to record notes in the original sale or at least the sales return  on the reasons for the return and any other details that will help in the management of your customers. Another very helpful feature I have seen in some point of sale systems is an event log where you can record the the details of all commuinication in the customer management centre. The number of times having this log of communication can resolve a customer issues is amazing. A customer is complaining and you are able to go and read back to the customer all the steps that have been followed and what the customer has agreed to on a previous occasion soon reminds the customer who has forgotten what has happened in the past or is just being difficult.

Another method where your point of sale system can help avoid problems and help you provide better service is in the area of the customer profile. If you can quickly view purchase history and attribute on the customers interests this can help your staff be more aware of the customers requirements. It also is nice for the customer to get the impression that you know about them and are interested in what they are interested in. This is acheived in your point of sale by having tools to quickly view customer history and to be able to record attributes about the customer in their customer management area.

I hope you have been encouraged to review your point of sale system and think about how you can better use is as a tool to manage your moments of truth with a customer. A moment of truch is how well your business as in your staff deal with every interaction with a customers. The better your systems and the way you use your systems such as your point of sale system the better you manage these moments of truch and the more your business will grow.

Boost sales today with a marketing campaign to your point of sale customer database

Today's article is very practical and is about making contact with your customers and driving them to your web site or your store.

How do you do this

Step 1. Analyse you sales and find out what your customer are interested in. To do this you will use your point of sale reports on what stock is moving. YOu then use this information to note what stock is moving. Now that you know this you then need to find and source related products. You may already have these on your shelves.

Step 2. You need to extract from your point of sale system those customer who have purchased a range of products that are related to the product you are going to offer customers.

Step 3. Formulate your offer and the sale pitch

Step 4. With the list in hand and your offer exeute your point of sale campaign.

The above 4 steps can take minutes or hours depending on the capability of your software to provide the tools you need. A good point of sale system will provide campaign wizards where this process is all very simple.

Checkout the PBSA POS CRM module to see how easy this can be

Today's cafe customers expect prompt efficient service and to do this you need an effective touchscreen cafe system

What touchscreen hardware should I use with my touch screen POS system?

For a cafe I recommend a touchscreen terminal which as the touch screen and the PC as one unit. These terminals are usually fanless, quiet and are resistant to spills

How many touchscreen do I need?

This depends on the volume of your cafe and how you want to manage your preparation areas. First if you have a high volume even if this is just over the lunch period then you may require 2 or more touch screen terminals.

The next questions is how you want to manage your orders.

The order docket approach
With this approach when an order is placed you have various thermal printer located at your preparation aras which print out the order. Your staff place these dockets in order and go about fulfilling the orders. This model has been in use well before touchscreen hardware and touch screen POS systems have been around and people manually wrote orders on a docket or pad.

The order screen approach
Rather than print out a order no a thermal print the orders are shown on a screen in your preparation araas and you store view this and fulfil the order. The benefit of this second approach is that the system can provide alert based on the time the order was placed, it can flash if the order has been waiting for certain perid of time, eveyone including the manager can see what is taking place. Basically this approach although it requires more touchscreen units can make you cafe process more efficient.

If you are a store that gets a rush of morning coffee orders and lunch orders then you need systems to ensure your staff have as much support to ensure they are efficient in their order preparation and management. Customers who have to wait will go down the road or around he corner. SO again the cost may be higher but the benefits may result in happy customers and a happy business owner who is making more money.

So lets exaplin the setup in more details to make you cafe more efficient with a touchscreen.

On the front counter you wil lhave 2 touchscreen terminals with your touch screen POS system.
At your coffee preparation areas you will have another touchscreen where you staff will prepare the orders
At your food preparation areas (1 or mroe loations) you will have another touchscreen.

As the orders are placed they will appear on these other touch screen with informaton on when the order was placed and the priority. YOur staff will be directed by the touch screen system on where to focus their energy. It is the intelligence of the system to direct you staff that will make your cafe more efficient.

For more information on running a cafe and touchscreen POS system stay tuned.

Profits are about managing your margins and the way you do this is via your POS system

To be profitable it is all about selling your goods for more than you paid for them. This tasks as simple as it may sound is not so easy. The reason for this is that the standard retailer can have 500 to many thousands of product lines and it is a difficult task to price all these items and manage your margins.

Lets look as a standard retail scenario. You have a store full or stock and this stock cost you money to hold because you finance your stock or have to pay your suppliers bill via your bank overdraft or you hve to pay interest to your suppliers if you cannot sell the stock within their 30 or 60 day terms. So what this means is that you need access to information on what stock is moving and what stock is not moving. You then need to use this information to determine your pricing. Stock that is not moving you need to find ways to move it, as it is costing you to have it sit on the shelf. To do this you need to know what it cost you and how much you can discount the stock. Sometimes it is of benefit to sell the stock under costs because of the cost of holding the stock.

ON the other side with the stock that is moving you need to maximise your profits by charging your customers as much as you can while mairtaining as much volume as you can. Now different businesses have different models, some are high turnover low margin and others are low turnover but high margins and then everyone else is some where in between.

Ok so how do I use my POS to manage this process.

Well a good POS system will provide you with reports on what stock is moving and what stock is not. You then need to be able to view the stock that is not movng and be able ot quickly view the current price, the average price and last cost price and then be able to adjust the stock levels. Unfortunatelty many POS systems makes this hard as they force you to drill in to a sinple product at a time to alter it price. One of the benefits of the PBSA POS system is the abiility to view in one screen all the products in a particular category including the sotck level, the cost for the stock, the current price and the eGP and EGP%. Then on this same screen you can adjust the price for multiple items and see the changes to the eGP. This is a very powerful feature fo the PBSA POS system that saves you the business owner many, many hours of hard work.

Managing your pricing levels and margins is a daily process and one that is vital to your success. To do this you need to ensure your POS gives you access to the right reports and the gives you tools to use this information to make adjustments quickly and easily.

I loko forward to providing more detaisl on tricks to managing your margins in future articles on POS and POS systems

How does a point of sale system compare with a cash register

Many different stores across the world have cash registers. If you are one of them why should you consider upgrading to a point of sale system?

Benefits of a cash register

1. Cash registers are less expensive than a point of sale system
2. Cash registers are simple to use because all you have to do is ring up the price on the price label

While to some extent the above two statements are correct there is still another side to consider.

1. While a cash register may be less expensive up front, what are the real costs versus a point of sale?

A cash register cannot track your stock levels and most important your margins. Retail store operation is all about knowing what stock is moving and maintaining your margins on this stock. It sounds simlpe that to be profitable all you need to do is sell the majority of your stock for more than you paid for it. This task however is not so easy to implement. You need access to information that tells you what stock is selling, what stock is not selling and what margin you have on this stock. 10 of the same items on the shelf could have a different cost price depending on when and from where they were purchased.

This need for information is where a cash register fails miserably. All a cash register can do is record how much you sold an item for not what it costs you. The cash register cannot tell you anything about the stock movement or the margins. This is where a point of sale system which may have cost you more money at the   start saves you thousands and thousands of dollars. What a point of sale system provides the business owner is instant access to information which they can use to make business decisions.

What about the cost of labelling products. WIth a cash register you need to label each product with the price. This means that if you want to run a special you need to go and label all the items with the changed price. Then when the sale is over you have to go and re-lable them again.

One of the key benefits used by many retails stores using a point of sale is that they now use shelf labels rather than product price labels. This means when you run a sale all you need to do is change the one shelf label and you are done. In addition the point of sale system supports barcode scanning speeds the checkout process and ensure greater control of stock.

What about simplicity of use?

It is true the process of ready a price label and entering the price is as simple as you can get, athough from the point of sale system the scanning of a barcode is just as simple an efficient. What about if you make a mistake on the cash register, the process of removing the item from the sale takes more effort than in the point of sale where you have the ability to easily edit or remove lines items for the sale.

So why should I keep my cash register?
If oyou run a very simple operation that has minimal stock to control then I agree stick with your current cash register. Although I beleive in all cases the power of the informaton the point of sale system will provide makes the real cost of the  cash register to high.

There are many other benefits of a point of sale that you should consider. I will explain these in future articles. 

If you do not know what touch screen hardware to choose read on to find out more

When it comes to touch screen hardware the decision involves looking at

1. The usage and the environment for the touch screen

2. The type of warranty service you want 

3. Your budget

Number 1 what sort of evnironment will you be operating in. Does your retail encironment involve dust, dirt, liquids, food preparation or other preparation. The reason this is important as this determines your requirements in terms of the touch screen.

If the environment is harsh or their is a high proberbility of liquid spills or dirty fingers then you really need a robust, fanless touch screen unit. Most of these units also have different levels of spill resistant screens. Some screens with the correct seals can even take the can of coke or class of water poured directly over the touch screen. Now these units cost more but if you are running a restaruant kitchen, fast food outles or some industrial environment then you really have no other option.

If your environment is not as harsh you can consider less resistant touch screens which are lower in cost.

The other choice you have is if you want the touch screen and the PC as one unit or you want them seperated. The advantage of it being the one unit is that the space usage is very efficient. However a PC seperate from the touch screen unit can save on bench space as the screen is thinner than the touch and terminal combined and you can tuck the PC in under the counter.

What about warranty service?

Again this is where you get what you pay for. If you want good onsite warranty then you are going to pay more than for back to base. The length of the touch screen warranty will also affect the cost as well.

What is your budget for your touch screen?

Your budget is going to determine what you can actually purcahse when is comes to touch screens. If you are looking at saving the most you will go for a less well known brand name, with a back to base warranty. For example the Posiflex 6815 comes with 1GB of Ram and XP pro and this is around 2K.

Now if your budget allows for more you may go for the IBM Sure pos which is around 4+K but comes with 12 months onsite warranty. NCR is also a good option and includes a good onstie warranty.

Lots of things to think about, I hope you got value out of this blog and touchscreen hardware choices

How do you manage your inventory

The amount and the number of product lines can vary greatly between difference business. Some businessses in a niche market may only have 5 or 10 products where other businesses can have thousands and thousands of product lines. Regardless of the number of lines the process to secure and manage inventtory is the same. The factor that size and volume creates is that if you have inefficient processes and systems the problems are compoounded.

At the basic level how do you manage inventory?

Step 1. Inventory is ordered.

To do this you need to work out what you need to order based on the customer demand. You never get your estimate of customer demand perfect but after a period of time you can get close.  So to confirm this step again you need to order the stock that you expect customers to purchase over the next week or month depending on the shelf life of your product and also the financial cost of holding that stock.

This sound pretty easy but in reality this is where so many businesses owners spend many many hours. It is this task of ordering that is one of the most painful. If you get it wrong it can cost you a lot of money.

So what tools does inventory management software need to provide to make this tasks more accurate and efficient?

A good system will include the ability to set minimum stock levels and stock re-order quantities. The software shoudl then be able to show the user what stock has hits its re-order level with tools to quickly add these items to a purchase order.

The other things that is also important is the ability to be able to see what stock is required for sales orders that you do not currently have in stock.

The above two capabilities are the most important tools you should look for in your inventory management software from a purchase order perspective

Step 2. Receive the stock

This step is the simple process of receiving the stock. However what you need here is systems of control to ensure each pallet, crate, and box is checked against the purchase ordered so that you ensure what you have ordered has been received. If there is something missing it needs to be noted in your system and either placed on back order or the purchase order changed.

Your system is only as good as the data entered by you and your staff. if you are not disciplined then you will lose control of your inventory.

Step 3. Sale and dispatch of your orders

This is where sotck leaves your control through sales. Items thorugh the sales prcoess should be scanned to ensure accurate movement of the stock. If you are not giving the product diretly to the customer then you need dispatch procedures to manage the outgoing orders and to ensure all the stock in the order is dispatched accurately and the data recorded in the system.

Step 3. Customer returns and supplier returns

If you stock is faultly then you need to receive the stock back from the customer and then track the process of returning this to the supplier and getting a credit note. So many businesses are laxy in this area and do not have a good inventory managment software system that helps ensure they not only return the stock but get a replacement or a credit note/refund. Do not burn your money here, ensure your systems gives you the abiliyty to track on follow through on supplier returns.

Step 4. Stock adjustments and stock take

Stock will get damaged, lost and sometimes stolen so you need the ability to adjust stock levels to ensure your inventory management system is accurate. This is completed through stock adjustments and then on a larger scale a full stock take. For the stock take process you need to be able to print out your current stock list and then go through the process of counting and recording the stock levels so that the system is accurate.

Note: A good system allows you do complete partial stock takes so that you do not have to do the stock take at the one time or you can do a rolling stock take.

Step 5. Product pricing and stock reports

It is vital that you can quickly get reports on what stock is moving, what stock is not selling and what you are making money on so that you can manage your stock levels and most importantly your margins.

A couple of very important features that you find in PBSA POS is the ability to change prices via the incoming goods screen so that as you see how much you are paying for stock you can adjust the price to maintain your margin levels.

The other feature unique to PBSA POS is the ability to see an entire category of products including the stock levels, the average cost price, the last cost price and your margins with the ability to make bulk changes and individiau changes on the one screen. This re-pricing tools is so valuable and save hours upon hours not to mention boosting profits.

So in summary good inventory management software provides the tools you need to manage the above steps. PBSA POS is one inventory management software system that has additional tools that are designed to save you countless hours each week and to ensure you control your stock levels and expenses in addition to your margin levels.