If your business entails selling tangible goods, you need a reliable system to track inventory. Inventory is money sitting on your store shelves, and inventory shrinkage constitutes a major financial loss to small businesses. According to Forbes, U.S. retailers lose $60 billion a year to inventory shrinkage. Fortunately, technology is coming to the rescue. Smart points of sale such as the Poynt terminal offer the business owner a streamlined system to process payments and manage inventory with an integrated suite of tools.
So how does your inventory shrink? Some items get lost or broken. If you deal with perishable goods, a sizeable portion of inventory may end up in the dumpster. Especially in the food industry, where much of the inventory is not only perishable but also transitory, tracking inventory can be a nightmare. Ingredients get combined with other ingredients to become prepared food. Both Ingredients and prepared food spoil. Picky customers return food they find unsatisfactory and staff indulge in a bite of food or a drink. So how much food was actually sold versus what came in? How much inventory does your business lose? As the business model becomes more complex and includes more points of possible loss, it becomes even more important to hone your internal inventory management system, and increasingly, cloud-based software is the way this is done.
Another major source of shrinkage is theft. If you don’t have a reliable inventory management system, chances are you have no idea how much inventory is walking out the front door of your store. Shoplifting operations have become increasingly sophisticated, often involving multiple individuals. And it’s not just shoplifters you have to contend with. Fortune magazine reports that 43% of lost retail revenue in the U.S. results from employee theft. Internal theft might include employees taking items for themselves, failing to charge friends, offering unauthorized discounts at checkout, or otherwise working in tandem with shoplifters.
Relying solely on employees to conduct physical inventories leaves you especially vulnerable to insider theft. A dishonest employee may intentionally miscount inventory to cover theft. Even with honest staff, using pen and paper to conduct inventories leaves a lot of room for human error.
Utilizing an integrated POS like the Poynt terminal alongside integrated inventory management tools eliminates a lot of room for both intentional and unintentional inventory mismanagement. It also saves you time, allowing you to focus on enhancing your business. Importantly, with cloud-based technology, you’re able to track inventories across multiple sales channels, such as when you have a warehouse, multiple locations, or if you sell online. This complexity necessitates a modern inventory management solution.
Effective inventory management is your best tool to reduce loss. In the retail business, where margins are often thin, decreasing inventory shrinkage will keep your business robust and position you for your next phase of growth.