Optimizing Inventory Reconciliation with a Retail Software Solution
You look at the shelf and then double-check the tablet in your hand. The retail software system says you should have five widgets in stock, but the shelf’s empty. If this kind of discrepancy occurs frequently in your business, you may have an inventory management problem: a setup problem in the point-of-sale software, incorrect barcodes, operational errors, or even theft.
Inventory reconciliation requires coordinating complex data and functions, and then adjusting to what your enterprise resource planning system (ERP) thinks you have to reflect what’s actually on the shelf or your online store. A unified commerce platform that connects your retail software system and your ERP is essential for managing inventory. And, how you configure your retail software solution significantly impacts operational efficiency and data accuracy at any given time. Below are three factors to consider when using a retail software system for inventory reconciliation.
1. Manual vs. Automated Inventory Reconciliation Processes
Retailers cover a broad continuum regarding methods for checking actual inventory against what the ERP system reflects. In a manual process, your staff goes through the store, counting items and recording the inventory, using anything from a simple worksheet to a barcode scanner or a mobile device connected to your ERP system. Such a manual process depends on how good your staff is at counting everything. For example, if one employee forgets to count additional stock stored in a closet, that oversight could cause an inventory discrepancy. When the next employee does remember to count the stock in the closet, it could create another discrepancy.
On the other end of the spectrum, retailers may implement active radio-frequency identification (RFID) systems that automatically track exactly what’s in the store (and where it is) at all times. Active RFID technology can geotag and track products from warehouse to retail store and then to the consumer. Active RFID tags are more expensive than passive RFID technology, which can make the technology prohibitive for most mid-market retailers.
2. Avoiding Unnecessary Complexity
The more items you carry, the more difficult inventory reconciliation becomes, especially if your inventory includes many similar items that differ in color and size. It’s important to ensure that your processes don’t make reconciliation even more complex. When retailers generate their own barcodes for items instead of using the manufacturer’s tags, it tends to introduce inefficiencies and errors.
Some complexity is very useful, however. For instance, if you stock electronics and appliances, such as stereo components and washing machines, you might want to track individual serial numbers. When items come in from your vendor with serial numbers, these numbers go into your retail software system so that you know how many items you have and which specific items you’re tracking. If one goes missing, you can track the item’s history. This level of specificity might not make sense with $20 shirts, but $2,000 electronics merit greater inventory control.
3. Database Architecture
Another important factor to consider is how your retail software system stores and syncs data with your ERP system, and why a unified platform is essential as retailers move toward omnichannel business models. Every time you make an inventory transaction, data should be reflected in a single, central database, or recorded first in the store’s database and then transferred to the main office’s database. Generally speaking, everyone should access the same database through the retail sales system. In practice, however, network outages and slow data speeds may necessitate running offline, which means the store has its own database that synchronizes with the home database. This sync could occur in batches or process individual transactions as they occur. Eventually, the inventory data ends up in one place, but how it gets there depends on whether your system is in an online or offline mode.
In the end, inventory reconciliation produces two sets of complex data — what should be available and what’s actually present — and this process must find ways to address differences in the data. How your system records and syncs inventory data affects your reconciliation processes’ efficiency. A good system should automate routine tasks as much as possible, freeing up employees for more complex inventory control tasks, such as problem-solving, to limit damage, theft, vendor error, and other issues.
How Does a Unified Platform and Omnichannel Retail System Work?
ArcherPoint’s experienced consultants can examine your pain points and offer solutions to transition your business to a unified retail software system. Schedule now for your retail strategy assessment with ArcherPoint.