Module 9 : Dealing with the Management of Stock

We begin by describing more accurately what we mean by stock management as this is a fundamental
part of running a store.

Without it, you are going to run into a number of
issues since you can easily get to a point whereby you have a large quantity of a product that you do not sell
enough of and too little of a popular product.

In other words, stock management is where you keep
control of the products within your store, either on the shop floor or stored
in the warehouse, and replenish the stock after items have been purchased. It also means that you keep a
close eye on the number of products that have been damaged in some way, products that have been returned and why,
and also the actual ordering of new
products from suppliers so they can get to you on time.

However, this is quite a basic explanation of a
process that is actually slightly more complex than you would perhaps
expect, although how complex it becomes will depend on the store in question.

The reason why this is possible
is because of the way in which the stock management, or the inventory, should
correlate with the number of sales you have had of a particular item. If there
is a difference, then you could have a problem and it is something that you
will only be able to find with adequate control over your stock management.

It is easy to explain why this is so important
within the setting of a retail store because clearly if you no longer have the stock available, then you are unable to make those sales. However,
we will go into this detail in the next part of this module.

That is not to say that one is more important than
the other, and indeed it could be argued that stock management is even more essential for a smaller store where
there is less scope for mistakes to be made and where every
single small sale counts for so much.
Indeed, it could
be argued that if you are
the retail manager
of a small store, you must pay closer attention
than ever before with the stock management and have a better understanding of what
is and is not selling pretty much on a daily
basis. By doing this, you will reduce the amount of money that is being
wasted which is always important for
any business no matter its size.

9.2   
The Problems
that Arise from Not Maintaining Stock Management

Even though stock management does sound rather
complex, it is actually a lot easier than you may have initially thought.

However, there are clearly going to be a number of
potential problems that can and do arise by simply
not keeping on top of things when it comes to controlling your stock

In some markets this problem can be more costly
than others, so we will cover a range of problems to really stress the need to keep on top of stock management.

To stress the problems that can arise in this
instance we take you through an example of how it affects an individual store, keeping in mind that the basic
points can be applied to different industries.

No stock for people to purchase

It will reflect poorly on your store if there tends to be too little of one product and too much of another. It will make your store appear
poorly organised and that is not a good way to be viewed. No stock will also mean no sales, resulting
in a dip in your sales figures which can reflect badly on your ability as a manager. Knowing your
inventory and the numbers involved will be the easiest way to avoid this from becoming an issue.

Too much of the same product

You have to remember that as the manager you will
also be responsible for the budget for the store and the one thing that you must avoid is having too much wasted
stock.

This occurs when you have poor control
over your stock management simply because you can then end up ordering too much
of an item that is just not selling at the levels it should be. Now, even in
clothes stores this can be difficult as you have seasons to deal with, but when
you are talking about products that have a sell-by
date, then life can become even harder.

Inability to look ahead
with ordering of stock and not foreseeing issues with delivery

The idea of stock management is to see what is
selling and in what quantity so you can get the replacement stock there
on time and at the correct levels.
However, if you are not on top of your stock management, then you are left
scrambling around for stock and can wait some time for it to be processed by head office and sent to you.
In the meantime, your customers have gone elsewhere and you have lost that business.

Your staff has no idea what is going on

You may very well work in a retail environment
where you are using computers that allow staff members to find out what is in
stock. However, if you are not keeping up to date with the stock management, then there is a very good chance
that the staff
will be unsure
as to what is going
on with the stock. This means that they are constantly checking details
for the customers which reflects badly
on your store as you come across as being disorganised.

There are clearly
a number of problems that can crop up as a direct
result of poor stock
management. However, thanks to technology, stock management is easy to keep
track of and it does not even have to take up a
considerable amount of your time.

9.3    How to Control
Stock Levels

Now, we need to look at how you can keep control of
the stock levels at a point where it is beneficial for your store and does not
put too much pressure on the products that are for sale.

This part of the process has become a lot easier
thanks to technology as most stores now have
electronic point of sales that are able to tap into the database of the
stock management software. This, in
turn, will provide you with the information on the number of certain items that
are within the confines of the store
itself, whether it be on the shop floor or in storage. Furthermore, the software now available can provide you
with information on how many items have been sold over a certain period of time and if you delve deeper, you can begin to see the ebb and flow of the sales to see if there are any small trends that
you need to be aware of.

So, in order to control stock levels, you need to be able to do several key actions.

Pay
attention to sales

When we talk about paying close attention to sales,
we do not mean that you just see how much money
the store has brought in. What we mean is that you go deeper than this because
there is a real need for you to
understand how much of certain products are selling at any given time. You must be aware of which products are your
best sellers and which are just not moving at all. By getting this information, you will then be able to ascertain as
to whether or not you need to have more of a product
delivered, or make changes to improve sales
of items that are not selling.

Pay attention to trends

Trends are a great way of predicting what will sell
and what will fall out of fashion, allowing you to look at your stock levels and take the appropriate action well
in advance to avoid being caught out. You need to
think how poorly it would reflect on your store if your stock management is not
up to scratch and people have to go to your competitor for this new trendy
product. This will reflect poorly on your ability
as a manager and it can all be avoided
by paying close
attention to your stock levels.

Be aware of upcoming promotions

Another important point is to understand what will
happen with upcoming promotions for your store. Obviously, if something is to be reduced in price or made more attractive, then you have to
understand how that has an impact on your stock levels and to take the appropriate action as early as
possible. Stock management will allow you to decide how much you have to order for the sake of the promotion, and also what you have
in storage to stop you from building up too much of a product that is a slow seller.

Do a regular stock check

Even though you are using technology to help keep
track of the stock, there is still a requirement throughout the year for you to conduct a physical stock check to make sure that what is appearing on the database is accurate.
This involves getting the staff to physically count every one of the products in the store and to enter the totals into a handheld computer.
This also includes
the barcode of a product being scanned, or the description entered, with
this information then being compared to what is on file. With luck, the two will balance out, although that is not always the case.

Understand your software

Finally, you need to be able to understand your
software and to correctly interpret what it can and cannot do. You need to know what it is showing you, but at the
same time you also need to understand
the age old manual way of managing stock levels should something go wrong with
the technology. Exactly how that
happens will vary depending on the company or industry in question, but you are
best to prepare yourself for doing this manually.

However, by combining technology with a physical
count, it will mean that you will find it easier when it comes to the stock management
because you can be assured that you have the real picture of what is in your store.

 FACT

 When confronted with a promotional display we are
more likely to purchase something from it if it looks as though other
shoppers have bought
into the deal first. This is known
as 'social proofing'

Source: campaignlive.co.uk

9.4    The Impact of Poor Stock Management

Finally, we look at the impact on your store if you
are guilty of not keeping a close eye on stock management levels.

Failing to do this will reflect poorly on your
ability to manage a store and it can affect the future of your career if things are left
unaddressed.

As you can imagine, the impact of poor stock management is pretty obvious in a number of ways.

Next, poor stock management leading to those gaps
on the shelves will reflect poorly on your retail outlet in general.
In next to no time,
you will notice
that you get a rather
poor reputation as the
place where you can never purchase the products that you want. Also, people will go elsewhere and if they discover that the stock
management is better at another store, then they will become their loyal customer rather than yours.

It is also worth noting that poor stock management
can lead to a real increase in wasted products. This is something that is very important in a supermarket where
there are items with sell-by or best before dates. Stock management may not
tell you the individual dates, but this is another aspect of controlling the stock, which
deals with how things are organised on the shelves.

In
this instance, the stock management is closely connected to the merchandising
of the products in the store.

It is important that the stock is handled
correctly, so that those with the shortest date are placed at the front and the longest date at the back. When the stock is replenished, the new stock goes at the
back once again. This is stock management the way it was intended before
technology got to grips with it all
and it is certainly a method that still works.

MODULE SUMMARY

In this module we have focused on something that lies at the absolute heart of running a successfulretail outlet, stock management. It is essential
that you are aware of stock levels at all times and also
of what is selling well and what is perhaps struggling somewhat.

By keeping abreast of the stock in your
store it prevents you from stocking incorrect items at the wrong time. This
would cost your store more money and it is important to remember that, as the
manager, you need to keep on top of the costs as that is undoubtedly part of your responsibility.