Low rate of inventory turnover. A high amount of outdated inventory. Consistent stockouts. High cost of storage.
These are some of the usual inventory management problems you have to deal with when you own a retail store.
Investing in the right piece of technology can help you avoid these issues which always lead to loss of money and sales. They can also cause you to lose customers – the lifeblood of your business.
Radio Frequency Identification or RFID is a type of technology that automatically tracks and identifies tags attached to items.
These tags consist of electronically stored information that you can view on RFID readers through radio waves.
RFID solution companies say that this technology takes over various tedious manual tasks, including asset control and inventory counting and tracking.
It is also a highly versatile technology that can be used for different applications throughout a business. These include managing assets, tracking goods from production to distribution, controlling manufacturing processes, and maintaining and inspecting equipment.
If you are not using an RFID system in your retail business yet, here are four urgent signs that indicate you need to invest in this technology as soon as possible:
1. You always purchase more inventory than you require.
Running out of merchandise is something that you want to avoid at all costs. However, it doesn’t mean that you need to overstock your supplies.
This is a huge mistake that can cost your business a substantial amount of money.
The biggest problems with having too much inventory are that they can get compounded when certain products are sold faster than others and the unsold items are not popular or selling at all.
All these translate to a lot of lost sales and wasted money.
Analyzing and understanding your inventory numbers and trends more efficiently can help you make more cost-effective purchasing decisions.
An inventory management system with RFID enables you to see which of your products are selling fastest, and when. As a result, you will know exactly what to order more of and which ones to buy less of.
Additionally, some RFID solutions can give you exact, real-time numbers of your inventory at any time. As such, you will be able to keep costs down by ordering only the necessary amount of products at the right time, which means no more overstocking and money down the drain.
2. You are continuously losing or missing merchandise.
Shrinkage (or shrink) is a term used in the retail world to describe a decrease in inventory due to shoplifting, employee theft, record keeping and pricing errors, and other factors. It is another inventory management problem that could cost your business a fortune every year.
Most larger retail companies may be able to cover for their shrinkage. However, if you own a small business, the loss can mean a huge difference in your profits.
Overstocking supplies is usually a cause for the unexplained decrease in inventory. Failing to monitor all your merchandise is another factor that contributes to costly shrinkage.
These are factors that you can mitigate if you have an RFID inventory management system.
RFID technology provides impeccable transparency, which means that you will be able to minimize human errors and foul play in your retail store.
You will be able to track the movement of all your inventory, thus ensuring that all products are accounted for. This, in turn, reduces instances of theft, loss, and maldistribution.
3. Your inventory turnover rate is declining.
Products that lie in your storeroom or warehouse for more than six months is a sign that you did not make a smart investment decision. These unsold items show that you are purchasing the wrong merchandise or that you are pricing them incorrectly.
If you spent too much money on the unsold inventory and your capital is tied to them, you won’t be able to buy more of the items your customers want. And this will affect your overall sales operations.
RFID technology can help you get the data you need to make more cost-efficient purchases. You will have access to information that tells you which products are popular and unpopular.
As a result, you will know which items to buy more and less of. For instance, if you sell curtain fabrics, you can invest more of your money in purchasing the brands and types that are consistent top-sellers instead of the ones that are gathering dust in your storeroom or warehouse.
This process ensures you avoid wasting money on inventory that you will end up keeping for months or years in your storeroom.
4. Your store is experiencing frequent order fulfillment delays.
If your retail business has both a physical and online store, managing all orders can become a huge issue, especially during sales and peak seasons.
But no matter how many orders you get, if you can’t fulfill all of them correctly, you will have bigger problems on your hands.
To keep customers happy and encourage them to come back, you have to ensure your products are available for their purchase on the channel of their choice. Additionally, you have to fulfill their orders as soon as possible.
If your customers find shopping online more convenient, you will lose their patronage if the product they are looking for is out of stock.
Keep in mind that online shoppers can quickly look for their preferred products on other websites if they are not available on yours. Because of this, you can lose customers and sales easily if you are not on top of your inventory.
When you have an inventory management system with RFID technology, you can avoid this costly problem any time of the year.
When all your products have RFID tags and you integrate the centralized RFID tracking software system with your company’s inventory system, you will always get accurate numbers of your merchandise.
With real-time and accurate reports, you will know exactly when to replenish your stock. Additionally, you will be able to pinpoint weak spots in your supply chain.
Your ability to manage your inventory properly will help you get new customers and keep them coming back.
When you are experiencing all these problems in your retail store, take the hint and invest in an RFID system now. Doing so will allow you to run your business more efficiently and avoid money-draining issues that can happen in the future.