How to Do Your Inventory Management

How to Do Your Inventory Management

A beauty supply store in Essex, Maryland counts and records all and every hair products in the store once every week. This is a “real time-consuming task” in addition to all the papers and printer inks it requires. All hands must report for work for this weekly ritual. When it comes to hair product, it includes all kinds of track hairs, myriads of braiding hairs, wigs, ponytails, buns, and bang pieces. The official reason for doing this is inventory management for placing orders efficiently, but the underlying cause is that the owner does not like the staff members hanging around and sitting all day. This task of counting all hair products all week long became an important routine. The store even prioritizes counting hair products over receiving and assisting paying customers. The good side of this is that a newbie in the beauty industry could simply start working there, and after counting and taking a note of all hair products repeatedly they becomes a beauty expert in months. A manager who previously worked at the shop would become a highly sought-after employee for other beauty supplies. It is not to say that all stores should be doing this. This is just an extreme case of inventory management. Some do in a way, and others in another. However, inventory management should never be neglected. Your inventory management is one of critical things that have direct consequences on your profit margin.


Let’s take down the essentials of inventory management.

Checking overstock items and regular restocking

A week consists of seven days. Aside from regular orders and ad hoc stocking, there should be fixed-schedule tasks at a beauty retail store. For seven days a week, you have ample time to restock all overstock items in the storage. For a starter, you should reorganize all the leftovers in the storage room or drawers, and you should have a set schedule to stock items by category or brand for replenishment. For example, on Monday you do cosmetics, Tuesday beauty accessories, Wednesday haircare products, Thursday other accessories, and so on. If you regularly take out overstock items and display them, you can reduce overstocks or deadweights in your business. In addition, you can neatly maintain the retail floor as well as the storage space. You need to have a plan and be very precise on what products to be focused on depending on the situation with individual stores including the manager’s capacity.


Create an order chart for accessories

While you have tens of thousands of different goods in a store, there are a wholesaler or a few of them who carry a specific item. To run a retail business, you should at least know exactly which wholesaler caries what. Nonetheless, even the smartest manager cannot remember it for all tens of thousands of items. Hence, you should create an order chart per wholesaler using MS Office Excel, keep it up-to-date, and keep it side-by-side with your order sheets instead of eyeballing it. This will reduce mistakes such as neglecting an item or two or redundant orders. It will be a good habit to make it a routine to replace a backordered item with a substitute order with another wholesaler based on the chart. You are now a step closer to the perfect inventory management.


Minimize redundant orders

Many beauty supplies, especially bigger ones, carry multiple brands for a type of product, often up to 5-6 identical items from different brands, but this is really not necessary. Although wholesalers are competing for a store shelf and you may sympathize with them, beauty supplies are not for an exhibition. You have museums for that. Your goal is to maximize profit by selling more products. If you carry too many similar products, some of them will stay on the shelves for too long, which will in turn need to be returned, sold at loss, or even discarded in an extreme case. For a same or similar item, you will benefit from carrying up to two brands considering backorders, maybe three for bigger stores, based on popularity of the brands.


Managing wigs, braids, track hairs, ponytails, and buns

Especially, hair products, on which more than half of your revenue depends on, will require your special attention to prevent items going out of stock. Your manager or an assigned staff member should prioritize checking in-stock status of braiding and track hairs and restock items if necessary to minimize missing an opportunity on potential sales, and basic colors of hair products with higher turnover should be checked in the morning and again in the afternoon for restocking. When placing orders for hair products, different managers have different ways. In some cases, they consult with sales associates from suppliers while ordering. In an extreme situation, they would delegate the selection entirely to the sales associate. The rule of thumb is to check the inventory before placing any orders. Delegating it to a sales associate who knows little about your inventory is a high-risk behavior. Sales associate who works on salary might not surprise you with excessive orders, but those who work on commission might go against your gut for their personal gain. Even in a busy season and difficult times, managers should pay attention to the orders. That should be a standard practice for beauty supply management. In so doing, you can adjust orders to your current sales stats and avoid unnecessary returns.


Beauty accessories, other accessories, cosmetics, and haircare products

For these, you will likely end up with a pile of items in the storage room or drawers because you keep placing orders for unnecessary items. You should do inventory and restock them on a set day of week, and if you can, you should consider assigning items to individual staff members so that they can take responsibility for them. In the beginning, they might not rise up to the manager’s standard, but practice makes perfection. You just need to have them repeat. When it comes to overstock management, these categories are a big part because it has so many types, sizes and variations, making it hard to manage. The relationship with sales associates will play a critical role for these products. Beauty and other accessories, cosmetics, and haircare products should be managed on the day before the sales associate’s visit. You should open up the storage place to restock all low stocked items on the sales floor. This will make sure you do not make redundant orders and locking your business cash in the storage. Good sales associates will make sure to notify a manager of their visit in advance. If that’s not the case, the manager should call up the sales associate for an appointment or request an advance notice before a visit. If you stock up the display on the day before, you can reduce the size of orders and subsequently minimize returns for the sake of both parties. In terms of inventory management of popular items, it would also help to request sales associate in advance to allow a large quantity orders especially in times like this when it’s hard to get enough supplies.


African whitening skincare products

For retail stores who carry whitening skincare products popular among dark-skinned Europeans, you should pay an extra attention to handling of these products. They often have a very short shelf life, and consumers are highly sensitive to the quality as they are being applied directly to their skin. You definitely want to avoid contributing skin troubles with expired products. When you place orders, you should not go overboard with the size unless it has especially high inventory turnover. Frequent small orders are always the safe bet.

Inventory and overstock management goes hand-in-hand with procurements, and order sizes are tied to sales revenue. These are indeed a critical part of making profit in business. Detail-oriented and highly organized owners and managers tend to pay a lot of attention to inventory tracking and management and minimize overstock, but stores with poorly managed inventory often go down the road where “you should open another store with that” as people often joke about. It would be a little easier if you utilize computer database system or POS system for inventory, but majority of stores still manage inventory using handwritten books and manual systems. From wigs to beauty and other accessories, cosmetics, haircare products, skincare products, braiding hairs, track hairs, ponytails, buns, and so on, nothing deserves less of your attention. Your business is structured to make money only when you sell an item. You should pay more attention to inventory tracking and management, and especially in times like today where it’s hard to get enough supply because of backorders, you should be keen on your order placing.


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