Inventory is one of the most controllable expenses in retail, so tracking it is essential if you want to maximize your revenue. Shrinkage is the biggest contributor to inventory loss. This refers to everything from theft and SKU entry errors to receiving errors and improper exchange handling – all of which can lead to significant losses. Therefore, keeping track of inventory properly can boost your bottom line.
If you’re balking at the idea of a full physical count, fear not: cycle counting – in which you count just a portion of your inventory every month – can work just as well. Here are some good practices all businesses should institute when it comes to inventory cycle counts.
First, choose one category to count each month. This should mean you’re counting everything more than once per year; divide your categories in a way that makes this feasible. You also need to ensure your cycle counts won’t require closing the store. They should be something you can manage during regular business hours, with maybe an extra hour or two after closing if needed.
When it comes to assigning categories to months, it’s important to be strategic here. If you’re a clothing retailer, don’t count swimsuits in December. You want to respond before a season ends and fix errors on products that are currently selling.
Divide and Conquer
Some businesses like to assign one person to each area of the store. That person is responsible for keeping their section maintained, cleaned, and merchandised, in addition to doing the cycle count. Of course, you should also have a manager helping out with all of the counting so everyone stays accountable and to avoid theft.
To be successful in cycle counting, try not to overdo it and turn the whole process into a mini inventory each month. Make a habit of breaking off small chunks regularly, and your business will benefit.
This blog post was based off of an article by The Balance Small Business. Read the full article here.