By Jeff Grant
Hear that? It’s the sinister whisper of poor inventory control sucking dollars out of your bottom line. In fact, inventory control and management can often be the decider between whether a small business succeeds or fails. How does this happen?

The basic mechanism is uncomplicated. A customer comes in to buy an item and it’s out of stock and you lose the sale. You could be ordering too much of the wrong item and wasting valuable shelf space or not keeping enough of the right item on the shelf, but too many lost sales, and the end result is the same: You’re out of business.

“It’s common, especially when a small retailer is expanding her business, to lose sight of just how important keeping track of inventory is,” says Sasha Unruh, TRIO Display’s resident inventory control guru. “Scaling up your inventory management system to meet the demands of growing retail space sometimes requires a complete shift in how you handle inventory. Successful businesses make the jump; unsuccessful businesses merely enlarge their existing system.”

The Basics of Inventory Management
What you want to do with inventory is ensure that every item earns its place in the storeroom. You’re looking to weigh the cost of storing the inventory versus the profit of the sale. The longer an item sits on the shelf, the more it eats into the profit (except in the case of wine and antiques, natch).

Okay, so beyond the obvious aim to make sure that you have just enough inventory, not too much or too little, there are other considerations. Here are some…

• Keeping a good selection of stock without spreading the best sellers too shallow.
• Encouraging stock inventory turnover without detracting from service.
• Ordering enough inventory to qualify for volume discounts without ordering items that don’t move.

There are several basic inventory methods. All have their positives and negatives.

• Visual Control: You visually assess your stock to determine whether you need to reorder or not.
• Tickler Control: Count a representative sample from your inventory every day on a rotating basis.
• Stub Control: Retain part of the price tag each time an item is sold.

Rudimentary and open to error, these methods are only recommended for retailers with small amounts of inventory, SKUs, and employees. If you’re running a jewelry shop by yourself, this might work, but retail moves so fast that if you plan on growing your business, you’ll want a more robust system.

That’s where a Point-of-Sale system comes into play. A POS system complemented by the right software connects cash management (the cash register) with back-office operations to create seamless inventory management. Programs such as Keystroke will keep a detailed audit trail, store a complete transaction history, automate ordering and receiving, and, of course, have real-time quantity and cost updating. The software tracks and accounts for gift cards, sales, and coupons. Some POS systems will even “speak” to your supplier’s computer and automatically notify it that product needs to be shipped. (Click to see TRIO’s complete line of POS systems.) The future of retail is moving toward a day when every retailer, large and small, will need to have a POS system that incorporates accounts receivables, sales information, and individual customer histories in one place.

Securing Inventory
No conversation about inventory management is complete without a mention of security. Loss prevention is a pillar of good inventory management, whether that loss is coming through employee theft or shoplifting. Keeping an accurate count of stock is one way to foil employee theft, but tagging your product with security labels and using a radio transceiver security system is a great way to combat both. (Click to read here The Retailer’s Guide to Preventing Shoplifting.)

Quick Tips for Improving Your Inventory Management
When you receive goods…
• Confirm the number matches the delivery receipt.
• Look for damage to the outside of the delivery box.
• Open boxes and inspect merchandise for damage.

If merchandise is damaged…
• Keep damaged merchandise at the drop-off point.
• Notify carrier of damage.
• Take notes.

When the carrier arrives…
• Read carrier’s damage report before signing.
• Do not use or throw-way merchandise without carrier’s permission.
• Obtain written authorization from the manufacturer before returning merchandise.