The average mom-and-pop grocery store has truly evolved over the years, and much of that evolution has to do with necessity. Both mid-sized corner institutions and large-scale supermarket chains now face a number of grueling challenges in order to stay profitable, one of which is managing their inventory.
Supermarket inventory management used to consist of a physical count and a manual tally of each inventory item. But in recent years, both local and international product lines have grown bigger and more diverse, with more suppliers having entered the arena to vie for customer attention. Competing supermarkets have also started peddling additional fulfillment options to their customers, such as same-day delivery services. To adapt to the challenges of operating in the hypercompetitive supermarket industry, it’s important for a supermarket’s inventory management plan to be efficient, responsive, accessible, and suited for the times.
If you helm a local supermarket, then you must know how exhaustive inventory management must be. The bigger the product mix you have in your supermarket, the more tedious inventory management will seem. But luckily enough, there are several action points you can take in order to craft an efficient supermarket inventory management plan. When you have such a plan in motion, it will contribute significantly to your supermarket’s financial management, customer service, product tracking, and theft control.
Here’s a guide on what constitutes an efficient supermarket inventory plan, the tools that you can use to revamp your inventory planning, and some additional tips on recrafting and future-proofing your inventory management process. This information will help you serve your customers better and give you a fighting chance at growing your business in the Philippines’ supermarket industry.
What Constitutes an Efficient Supermarket Inventory Management Plan?
Can a supermarket business utilize the same inventory management principles today that it used to rely on in the past decade? The answer is both yes and no. Some inventory management principles are timeless and should still be implemented today, no matter how old the supermarket business is or what types of goods it sells. But some approaches to inventory planning could use some refreshing, especially if a supermarket entrepreneur finds themselves up against lither, wealthier, and more technologically-savvy competitors.
The following mix of old and new principles should be incorporated into your supermarket inventory planning process:
A core principle that all supermarkets must maintain when it comes to their inventory management is organization. The inventory system should be as organized, clear, and simple as it can possibly be for everyone who’ll be using it, from managers to supermarket staff. Little mistakes that are a result of a disorganized inventory system can eventually pile up and cause bigger problems, which is what you and your business staff should avoid.
Accurate and Up-to-Date Counting
The twin principle to organization in a supermarket inventory is accuracy. You should aspire to match your item count with what’s on your shelves to your item count as tallied in your inventory system. Both figures should also be as up to date as possible. If you don’t have one already, it will be worth it to upgrade to an inventory solution that will allow you to track real-time updates to your stock.
It is also a huge strength on the part of a supermarket business if its team can accurately forecast supply and demand for products, as well as the factors that affect these. Knowing this, be sure to examine your supermarket inventory for clues on your bestselling products, your most profitable periods, and how much you can expect to make in sales per month or quarter.
Preparation for Losses and Spoilages
No supermarket entrepreneur likes thinking about how much money they’ll lose to product damage, spoilage, or even theft. But it does happen, and the propensity for financial loss increases as a supermarket’s inventory gets larger. It would be foolish to assume that no problems will occur in the business’s inventory management as the months roll by. Even if you trust the system you’re using, always be prepared to account for financial losses. This will put you in a better position to prevent such losses from happening again.
Regular Inventory Reporting
Given how dependent supermarket businesses are on their day-to-day inventory, it’s crucial for the management teams to conduct regular inventory reporting. Regular reporting ensures that the business is transparent and accountable for all the goods that move through its system. It also paves the way for efficient decision-making all throughout the supply chain.
Use of Innovation and Data-Driven Inventory Solutions
Change may initially be painful for a supermarket business team, especially if the team has spent many years doing key tasks like inventory management in the same way. But even a well-established and homegrown supermarket business can benefit from innovating its processes for inventory, warehousing, supply chain management, sales, and accounting. Many supermarket brands have found success with data-driven inventory solutions that make them better at predicting how to improve their bottom line.
Exploration of Omnichannel Fulfillment
Your supermarket business may have started with only physical branches, and it may seem like it’s hard enough to manage your inventory and point of sale (POS) system from your brick-and-mortar locations. But if your business team can master the art of inventory management from an omnichannel perspective, which includes selling from mobile apps or ecommerce platforms, you’ll be able to reach out to a wide customer base. The investment in omnichannel fulfillment methods may ultimately be worth it in the end, as the customers who get to know your brand through apps and ecommerce sites may end up being some of your most loyal ones yet.
Flexible Restocking Options
A rote system for restocking your inventory may have worked in the past, but now may be the best time to tap into more flexible solutions. Instead of always relying on a set weekly or monthly schedule to restock your inventory, which may not always be the profitable thing to do, you can adjust your inventory management approach to be smarter and more adaptive to your actual sales situation. Old habits may die hard, but changing your inventory approach to be more flexible may save your supermarket business a lot of money in terms of carrying cost and warehousing cost.
What Tools and Facilities Should You Use to Create a Working Inventory Management Plan for Your Supermarket?
A sound inventory management plan also relies on the use of the best tools and facilities. The ones you use to manage your inventory can spell the difference between huge profits and devastating business losses. At its core, your inventory planning should utilize the following:
A POS System with Inventory Management Features
Your POS system should be the anchor of your supermarket’s operations, including the processes that have to do with inventory. It’s in your company’s best interest to invest in a fully integrated digital solution that houses inventory management, payment processing, financial reporting, receipt management, and customer relationship management (CRM) features all in one. An integrated solution ensures that your inventory management is always aligned with your sales figures, thus keeping your supermarket staff from scrambling to reconcile the two.
The best kind of POS system for a supermarket and other large retail institution is a terminal POS system, although it’s also good to explore omnichannel POS options. In the near future, it may even be possible for physical supermarkets to use self-checkout kiosks. Don’t rule out the possibility of using a self-service kiosk POS system for your supermarket business when you’re in a position to innovate.
Safe and Organized Warehousing Facilities
Another factor that matters greatly to your inventory management is your warehousing system. Safe, organized, and space-efficient storage facilities are crucial to large-scale supermarket operations. It’s high time for you to revisit the layout of your supermarket warehousing facilities and to check if these are conducive to smooth and timely inventory management operations.
Messy and congested warehousing facilities can drive up the carrying costs for your supermarket’s products. They also increase the chances of spoilage or damage due to mishandling. The converse is also true: warehousing facilities that are carefully managed and organized can significantly reduce inventory costs and maximize the sale of in-demand products.
Scanning and Labeling Hardware
The third component that should feature on your inventory management plan is your arsenal of scanning and labeling hardware. Supermarkets depend on barcodes to identify all the items in their stock, as well as to track the movement of each good before it’s sold. It only follows that a supermarket business needs scanning and labeling equipment that make both of these processes smoother and easier to implement.
Some POS systems already come with barcode scanning and labeling hardware along with the requisite POS software. If you get the chance to upgrade your POS and its attached hardware, you and your staff will enjoy seamless operation between the two.
Additional Notes on Your Supermarket Staff
It’s also important to cultivate the human element of your inventory management plan, which comprises your supermarket staff. You can have the best software services, hardware tools, and facilities on your side, but they will only bear fruit in the hands of well-trained staff members.
Make sure that your staff knows how to handle the various products in your supermarket’s inventory and and are well-supported through the technology they use. Every time you roll out a significant change to the way you do operations, including for inventory, give your staff time to familiarize themselves and to adapt to the new technologies and methods.
What Steps Should You Take to Create an Efficient Supermarket Inventory Management Plan?
Now that you know what principles to adhere to and which tools you can use to manage your growing inventory of products, the only thing left to do is to roll out an enhanced inventory management plan. Here are some of the most important steps that you should follow when drafting your new plan:
Determine Your Sales Goals Per Quarter
It would be good for you and your staff to start each quarter with a meeting on your sales goals. During the meeting, get everyone briefed on new products you’ll be introducing, new supplier relationships you want to maintain, and particular items that you want to move during the season (such as during a summer sale or a Christmas sale). This will set the tone for each major sales period and prepare everyone to manage the inventory accordingly.
Upgrade Your Business Software Solution to Include Inventory Tracking and Management Features
Having a versatile business software solution is the key to mastering complex processes in supermarket operation, like accounting, sales, and inventory management. You can run your supermarket retail business from an all-around enterprise resource planning solution like SAP Business One, or you can install accounting software that works with your supermarket’s POS and that comes with inventory tracking and management features.
Either type of upgrade will increase the speed and efficiency of order processing, as well as enable a bird’s-eye-view of the supermarket’s daily profits. Not only will you be able to track item movement to and from the store in near real-time. You will also be able to trust your system to give you accurate and timely updates on your supermarket’s financials.
Don’t Eliminate the Task of Physical Counting
Inventory management software upgrades don’t render the physical count completely obsolete, however. There are some aspects of inventory management that require a more human perspective, such as checking the physical condition of a set of products and figuring out why they’re susceptible to spoilage or damage. You and your staff should still enact a physical headcount of items on either a weekly or a monthly basis. See to it that the products in your supermarket are all accounted for and that there is minimal damage or spoilage to what’s on the shelf.
Make It Easy for Your Staff to Know What Each Item Is and Where It Belongs
There may be hundreds of different products on each of your aisles, and memorizing what goes where might be a pain at first. You can lessen the logistical burden on your staff by labeling items with a number scheme that’s easy to follow, marking each item’s place on the shelves, and mapping the aisles. The latter will be especially helpful to your staff, and it will allow them to do a good job of referring customers to the products they need.
Foster an Awareness of Products with Short Shelf Lives
One enduring challenge of the supermarket is its perishables section. It is often a race against time to move perishable products out of the shelf before they expire. Of course, such items must be marked with a best-before label. But you can also take on additional measures to forecast spoilage, such as including these sell-by dates in the inventory balance scheme. This way, your staff can easily implement the first-in, first-out (FIFO) method of stock control and flag any potential expirees.
Replenish the Items in Your Inventory Not Just on a Per-Product Basis, but by Group
In some cases, customers enter the supermarket with the intention of purchasing their favorite brand but are quick to choose an alternative of the same category. For example, if a customer needs a kilogram of sugar, they may gravitate toward Brand X at first but won’t hesitate to pick up Brand Y if Brand X isn’t available. The nightmare situation for both the customer and the grocer is if neither X nor Y can be bought. Avoid this situation by understanding how these products behave in a group and by making sure that your inventory allows your customers to have enough good choices.
Collect the History of Your Inventory Data
Lastly, take the time to sit down and review the numbers that your inventory specifies. A regular habit of reviewing your figures will help you cultivate some much-needed insight on periodic supply and demand, what current purchasing trends are like, and what decisions to make in order to prevent both shortage and overstocking. Your inventory data will indicate whether your current approach is profitable or if it needs tweaking. Either way, it’s a good practice that will keep you fully accountable to your inventory plan.
ANSI Information Systems: Helping Filipino Supermarkets Manage Growing Inventories
Ultimately, the keys to efficient supermarket inventory management planning are discipline, foresight, customer responsiveness, and a little tech-savvy. Running a supermarket isn’t easy, and the work will always keep you on your toes. But if you know how to manage your inventory properly and stay committed to offering the best catalog of products that your customers can find, you will surely be able to keep the door open for them for years to come.
For the tech side of your supermarket business operations, consider enlisting the help of software vendor ANSI Information Systems. We are highly respected in the business software solutions industry, and we have won a number of industry awards and accreditations for the work we’ve done for Filipino retail businesses. Get in touch with ANSI today to find a POS solution that suits your business’s needs, and capitalize on inventory management as a way to grow your supermarket’s profits.