Inventory management in retail is crucial for retailers and restaurants. If you choose the right Point of Sale (POS) system for your business, you'll be able to effectively manage your inventory.
Your inventory management is successful if you have fewer incorrect shipments, out-of-stock items, and dead stock (obsolete or unsellable items). This article is aimed at all businesses interested in implementing a POS system to assist with inventory management at the point of sale.
If your company sells physical products, you need to manage inventory. Inefficient inventory management can cause a range of issues, such as high storage costs, unavailability of products for customers, misplaced items, and excess stock, compelling you to sell at a discount.
Keep reading to discover how the right POS system can improve your inventory management, increase profits, and enhance customer satisfaction. Apart from supporting better organization and increased productivity, they tend to be simple and easy to learn. In this article, we explain what an inventory management system is and delve into the benefits of using one.
Retail Inventory Management System in a POS
While inventory management can be complex and error-prone when done manually, inventory management software solutions can significantly streamline the process. Small businesses, in particular, can benefit from the integrated inventory management functionality in some POS systems.
What is a POS System?
A POS inventory system is a combination of hardware and software that a cashier uses to process sales payments. Although there are third-party POS systems, most POS systems are purchased directly from payment processing companies.
POS hardware typically includes a touchscreen device on a stand, a credit card reader, a cash drawer, a receipt printer, and (for retailers) a handheld scanner.
In its most basic form, POS software accepts various types of payments and allows the cashier to select items being sold from a list of products.
It displays item prices, calculates sales tax, and implements discounts, promotions, and additional charges. Many modern POS software systems have more advanced capabilities, including inventory management.
7 Benefits of Integrating Inventory Management into a Point of Sale
When setting up a POS system with inventory management capabilities, you'll need to load information about your products and current inventory into the system, including product names, descriptions, categories, supply prices, retail prices, SKU numbers, barcode numbers, quantities, and suppliers.
Each time you make a sale, the software will automatically adjust the inventory levels of the items. Here are some benefits of integrating an inventory management system into your point of sale:
1.Automated Inventory Tracking
This reduces the time employees need to spend checking stock and the need to manually count inventory, which is prone to errors.
It is one of the first benefits you'll get with a POS system configured correctly to an integrated inventory management system, as you'll have much more accurate order preparation in the warehouse.
You can see your top purchases and conveniently spot any pattern in those products to know exactly when to pick and pack those items for timely shipping and delivery.
2.Report Generation
View sales and inventory levels by location or period to know when to reorder or run a promotion. Valuable insights from POS sales reports include information on top sellers, slow-moving products, most profitable items, and items running low.
3.Quick Visibility
Purchase orders can be generated when stock falls below an optimal level defined by the user, and stock can be timely transferred from a warehouse to the production floor. If there are multiple branches, stock levels in all branches can be viewed and transferred if necessary.
This type of inventory control prevents stock shortages that mean lost sales and even lost customers. Accurate tracking of any stock item with serial or batch numbers can be performed.
According to IRI research cited in a Veeqo infographic, over 70% of online shoppers and 66% of traditional shoppers who go directly to the store would look for an item elsewhere if it wasn't available rather than wait until it's available again.
Therefore, reports and statistics can be extracted on stock sales showing items in stock and also best-selling items, seasonal demands, and other vital information for the owner and business managers.
4.Remote Management
If your business has multiple locations or channels (e-commerce and physical), the system will allow you to see product inventory levels at each location and channel without having to go there physically.
5.Cost Reduction
A point of sale can help reduce operating costs. According to an Intuit Market Research study, a retailer with revenues of €300,000 can cut costs by nearly 10%, saving €30,000 a year by having a POS system.
It's a good way to save money and redistribute it to other business activities.
6.Dynamic Inventory Management
Better information allows businesses to use inventory management techniques like just-in-time inventory, perpetual inventory, and reorder point to minimize costs and maximize sales.
A POS system means that transactions are captured and updated as sales are made. Because the system is integrated with barcode scanning or with new technologies like RFID, a wealth of accurate, real-time information about the business can be obtained.
7.Customer Information
An integrated POS system will integrate with the customer database. This allows granting special discounts to specific customers and enabling the implementation of loyalty programs. Linking customers to the POS system allows extracting information about the company's customers, such as who buys what products, etc.
Knowing more about your customers enables a company to target advertising more effectively, as well as build better relationships with customers, ensuring customer satisfaction and business.
References:
entrepreneur.com. (n.d.). Point of Sale System Basics for Retailers. Entrepreneur. Retrieved [Access Date], from https://www.entrepreneur.com/science-technology/point-of-sale-system-basics-for-retailers-entrepreneurcom/77960
Veeqo.com. (n.d.). What is Inventory Management? A Guide For Retailers (2022). Veeqo. Retrieved [Access Date], from https://www.veeqo.com/inventory-management"