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Stay ahead of the digital curve with POS and barcode inventory management.
Key takeaways:- Different types of inventory and valuation methods play a crucial role in effective management.
- Combining POS and barcode systems optimizes retail operations, though it comes with challenges that can be overcome.
- Leveraging real-time updates and data analytics enhances decision-making and inventory accuracy.
- Implementing automation, AI, and machine learning streamlines inventory processes and improves efficiency.
- Striving for precise inventory levels and avoiding overstock or understock situations is essential for cost efficiency.
- Implementing robust security measures and embracing eco-friendly practices are vital for modern retail businesses.
- Preparing for current challenges and upcoming trends is key to staying competitive and successful in the retail industry.
Understanding inventory fundamentals
Before delving into how to use POS and barcodes to manage inventory, let’s look at common valuation techniques retailers use to account for goods sold.- First in, first out (FIFO) assumes the first products you sell are from the first stock you purchased and values inventory accordingly. This approach is beneficial when you want to report good earnings to please shareholders or attract new investors.
- Last in, first out (LIFO) makes the opposite assumption: the newest items in your inventory are sold first. The LIFO valuation technique is ideal when you want to cut your tax liability.
- Weighted average cost (WAC) assigns an average cost to all items in your retail store. The average cost is calculated by dividing the total cost of goods purchased by the total number of units. WAC is ideal when dealing with identical items or when you want to simplify accounting.
- Specific identification tracks each product from purchase to sale. It's ideal when you want to know the cost and selling prices of every unit, like when you’re handling high-value, one-of-a-kind items such as art or classic cars.
POS & barcode inventory management: integration for efficiency
Retail inventory management gets more complex as you grow. Monitoring and managing inventory is extremely time-consuming, cumbersome, and error-prone without the right tools. That’s why every retailer needs a reliable POS and barcode inventory management system. Barcoding lets you assign a unique number to each product you sell. You can associate several data points to the number, including the supplier, product weight, dimension, and even variable data, such as how many items are in stock. It also lets you assign locations to each product, such as bins and shelves in a retail store or stockroom. When an item is placed in a particular area, employees can scan both the item and the location codes to record the location data in the POS system. You can think of a barcode like a car’s license plate. XYZ000 (An example plate number) has no real connection to the car’s make, model, year, or ownership. However, the number is stored in a database with information about the car, such as the owner’s name, address, and outstanding tickets. Similarly, a barcode encodes product information that can be viewed in the POS system—whether it’s a white XL shirt or a wireless mouse and keyboard, how much it costs, and how many similar items are in stock. Store attendants can decode this information with a barcode scanner at the point of sale, automatically label an item as sold, and adjust inventory levels accordingly.Strategies to stay ahead using POS & barcode inventory management
1. Set up your POS system properly Get it right from the start. Properly install your POS system and barcode scanners. Create a product list with prices, SKUs, and other relevant details. Remember to configure critical inventory settings such as minimum stock levels and reorder points. 2. Leverage real-time tracking and data analysis Regularly monitor inventory levels. This should be easy with modern POS systems' real-time tracking and report-generating capabilities. Track which items are selling well, which need restocking, and how much to order. Go a step further and use your POS system’s inventory forecasting feature to predict product demand. Analyze past trends and sales data to determine how many products customers will want to buy from you in the foreseeable future. This will provide the right mix of products at every point in time, ensuring you don’t understock or overstock. 3. Adopt automation Most modern POS systems have an automatic reordering feature to help you streamline inventory and improve efficiency. Leverage it to reorder items promptly when they reach preset minimum acceptable thresholds. This will keep inventory levels balanced and help you avoid stockouts. 4. Conduct regular inventory audits Inventory audits can help you identify inefficiencies, budget appropriately, and ensure appropriate inventory levels. It can also help you identify forgotten or damaged goods and more nefarious activities like theft. There are two ways to approach inventory audits: cycle and physical counts. A mix of both is desirable. Cycle counts let you compare samples of the inventory with data in the retail inventory management system, noting any differences. You can perform these counts daily, weekly, monthly, or quarterly based on your preference. Physical counts involve checking all the items in store against POS system records. They are more accurate than cyclical counts but are usually time-consuming and disruptive. So, limit full counts to once a year at your company’s financial statement period-end. 5. Establish robust POS security measures Cybercriminals can use various attack vectors to compromise your POS system. They can steal data by accessing the system remotely, or by physically planting malware. Attacks can also come from insiders such as disgruntled employees. Therefore, it's essential to protect your business from all possible POS intrusions. Consider implementing these POS security best practices:- Use end-to-end encryption to ensure customer and company data is never exposed to hackers.
- Install antivirus on the POS system to protect it from harmful malware.
- Account for all POS devices at the end of every business day. If you’re using portable POS devices like iPads, lock them down in a secure, restricted area.
- Never connect your POS system to external networks as they are more susceptible to hacking.
- Comply with the Payment Card Industry Data Security Standards (PCI DSS) across all online shopping carts, servers, routers, networks, card readers, and even paper files.
