What is POS Inventory Management System
- Restaurants and retailers need to manage their inventory.
- You can manage your inventory efficiently if you choose the right point of sale (POS) system.
- If you have fewer mis-shipments, out-of-stocks, and deadstock (obsolete items or unsellable), your inventory management will be successful.
This article was written for small-business owners who are interested in installing a POS system that will help inventory management. You must manage your inventory if you sell physical products. Inefficient inventory management can lead to a variety of problems such as high warehouse costs, insufficient products for customers, products not being available, products placed in the wrong places, and too many products, which could cause you to sell at a discounted price.
Continue reading to learn how the right POS software can help you improve inventory management, increase profits, and improve customer satisfaction.
What is inventory management?
Inventory management is about having enough products to satisfy demand and making sure your products are available when you need them.
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You can’t store too many products. This could lead to storage fees or warehouse charges. It may also result in you having to sell your leftovers at a lower cost, which will reduce your profit margin.
You’ll lose sales if you don’t have enough product. Customers will shop with your competitors and customer satisfaction will drop.
These are the key components of inventory management.
- Visibility: Be aware of what products you have and where they are located.
- Inventory: Estimate the amount of each item that you will need to satisfy demand in a given time frame.
- Purchasing/replenishing: Know when stock must be purchased in order to arrive in time to meet demand.
- Storage: Determine how much space you need to store inventory and then send your products to the appropriate storage area.
- Analysis: Get insight into the data that will help you order your inventory more efficiently in the future.
- Multichannel tracking: Allocate inventory levels between physical locations and fulfillment centers for e-commerce orders and shift inventory as necessary
Who has the need for inventory management?
Retailers and restaurants are the most in-demand for inventory management, both among small and medium businesses. Many products retail stores carry can vary in size, material, and color. A business’s success depends on its ability to keep track of all the items and make sure they are available when customers want them.
Restaurants face a slightly different problem because they have to stock all the ingredients. Customers will be disappointed if a single ingredient is not available. Bars that offer mixed drinks must also follow the same rules. Restaurants also need to manage seasonality. Good inventory management systems can help ensure that all ingredients are available.
Inventory management techniques
To optimize inventory levels, business owners can use a variety of inventory management methods. The most basic method is perpetual inventor management. This means that inventory is counted as soon as it arrives, and then subtracts when items are lost or damaged. This system can be combined with demand forecasting which uses historical sales data to predict future demand and order the quantities that should go.
To reduce storage costs, some companies use just-in-time inventory management. While this works well when the supply chain runs smoothly, it can lead to problems if there are any issues along the way.
Some businesses use safety inventory to avoid stock-outs. This is where an extra inventory that exceeds the expected demand is ordered to keep in reserve. The reorder formula is another technique that can be used to ensure consistent sales of certain products over time. This method triggers reordering when stock levels drop below a certain point, or before a period of high demand based on sales data.
POS inventory management
Inventory management can be difficult and time-consuming if done manually. However, inventory management software can simplify the process greatly. Small businesses especially can take advantage of the inventory management capabilities built into POS systems.
What is a POS System?
A POS system, which is a combination of hardware and software, is used by a cashier to process sales payments. While there are third-party POS systems, the majority of POS systems are bought directly from payment processing businesses.
Depending on the company and components, POS hardware costs can range from $299 up to $1,400. POS software can cost between $20 and $272 per monthly. The cost rises based on how many registers use the software.
POS hardware usually includes a touchscreen device, credit card reader, and cash drawer as well as a receipt printer and (for retailers), a handheld scanner.
POS software, at its most basic, accepts various payment methods and allows the cashier to select items from a product listing. It displays prices and calculates sales taxes. Additionally, it allows for discounts, promotions, and other charges. Modern POS software systems offer more advanced capabilities such as inventory management.
Originally published on The Tech Trend