Small businesses are often affected by constraints and issues that don’t plague larger organizations with deeper pockets. For example, the holiday season is a very real threat. While the chance for increased sales is great, a sudden influx of orders can spell doom for your inventory levels. That’s why it’s important to have a holiday season inventory management plan before the imminent shopping craze strikes.
The Challenge of the Holiday Season
The 2014 holiday season was the biggest since 2011, according to the National Retail Federation (NRF). November and December sales were up four percent to $616.1 billion. That number was fairly consistent with the NRF’s original projections of 4.1 percent growth. But what will 2015 hold? As the economy continues to improve and the average household has more discretionary spending money, will we see a larger increase? Which industries will be most heavily impacted?
As a retailer, these are questions you certainly want answers to. The holiday season is a double-edged sword. On the one hand, the uptick in sales is awesome for a company’s bottom line. On the other, it can lead to out of stock items, unhappy customers, and inaccurate forecasting.
6 Tips for Managing Inventory During the Holiday Season
While you may not be able to predict the future, you can better prepare for this November and December by following these six helpful inventory management tips:
1. Keep an Inventory Reserve
If there was ever a time to stock up on extra inventory, it’s now. According to an Emory University study, customers aren’t afraid to go to a direct competitor if one business is out of stock. “Overall, our study suggests retailers can lose nearly half of intended purchases when customers encounter stock-outs,” the report reads. “Those abandoned purchases translate into sales losses of about 4% for a typical retailer.”
For businesses that do millions of dollars in sales during the holiday season, this could translate to hundreds of thousands of dollars in losses. That’s not a game you want to play. If your business can afford it, go ahead and increase your stock reserves. You may also get some tax benefits from purchasing more inventory before the conclusion of Q4.
2. Plan for Shrinkage
Whether you like it or not, shrinkage will happen during the holiday season. The number of lost, stolen, and misplaced items seem to scale accordingly with the increase in sales. While you can’t control certain aspects of shrinkage, you can be more cautious about your inventory counting processes to ensure you aren’t losing large amounts. Every now and then, give a manual count a try. It takes time, but is a good way to verify all of your systems are accurate.
3. Prep Partners for Last-Minute Orders
If you know your sales forecast is a shot in the dark, you should contact your suppliers or manufacturers and tell them the situation. Let them know that you really don’t know what to expect this year and may have future orders coming in. Ask them about how much heads up they need and if they have the ability to rush orders. Letting them know in advance may give you some added flexibility should you discover that demand is greater than you initially thought.
4. Keep Warehouses Organized
Before the holiday season arrives, consider reorganizing your warehouse and clearing up any issues. Having accurate numbers going into November and December will relieve a lot of the stress that sometimes accompanies this time of year.
The last thing you want to do is lose sales because of a disheveled warehouse. Make organization a priority during the month of October and take an “all hands on deck” mentality. The better organized the warehouse, the faster the picking process, and the more sales can be delivered on time. It may seem like a small detail in the grand scheme of things, but a single misplaced item can hamper the entire process.
5. Have Part-Time Labor On Call
In addition to notifying suppliers and manufacturers that you may need more orders fulfilled during the holiday season, it’s also smart to contact some local part-time labor. If things get really hectic, you’ll need more pickers and packers. Having part-time labor on call at all hours of the day can allow you to scale according to your needs.
The key is not to make promises. Find labor that’s willing to be on call. Over hiring can kill your bottom line if your projections are wrong. Lots of college students are willing to take on seasonal jobs during their month-long breaks. Try to find a few of these workers and use them as needed.
6. Have the Right Inventory Management Solution
Finally, you need the right inventory management solution. If you’re still doing everything on your own, or filling in cumbersome spreadsheets and hoping everything works out, you’re essentially playing with fire. In 2015, you need an automated solution. There are so many different options on the market – and it’s quite cost-effective – that you’d be foolish not to.
Not only do these inventory management solutions enhance accuracy, but they also save you time and money. Instead of hiring half a dozen different employees to manually track inventory levels, you simply hire one or two and train them on the software. Almost anyone can do it.
Contact QStock Inventory Today
QStock Inventory enables businesses in a variety of different industries to gain a clear top-down view of inventory levels and management processes. Whether you’re preparing for a huge holiday season or simply looking to get a jump on 2016, now is the perfect time to align your business with QStock. We’re a turnkey solution provider, proudly offering real-time, web based integration with Intacct, as well as QuickBooks.
Whatever your needs are, we can help. For additional information regarding our solutions, please contact us today. We’d be happy to further explain the ins and outs of our robust software platform, as well as answer any questions you may have!