Effective inventory management is a crucial part of keeping businesses profitable and helping customers stay happy and loyal. With today’s extensive API integration options, it’s easy to integrate additional functionality into your inventory management software within a day, and at least semi-automate your workflow. Here’s a look at some proven ways to keep track of inventory and some point-of-of-service (POS) inventory management tools that could help, as well as the recommended APIs to enhance your inventory management platform.
What Are the Best Inventory Management Techniques?
There’s no single best way to manage inventory. Selecting the most appropriate systems requires staying aware of your company’s operations and its product flows. However, here are some of the options we’ve identified as consistently reliable and worth exploring.
1. Just-in-Time Inventory Management
This approach involves only producing or ordering products if and when the demand exists. Companies keep minimal stock levels on hand at any time, reducing the chances of overstocks, obsolete inventory and spoiled goods. Plus, this option supports healthy cash flow because business representatives do not place unnecessary orders.
2. First-In-First-Out (FIFO) and Last-In-First-Out (LIFO)
These similar but opposite inventory management strategies concern the order businesses use goods. With FIFO, the goal is to get rid of the oldest stock first by prioritizing those items as the first to use or make available to customers. LIFO means focusing on putting out the products received most recently.
Businesses dealing with perishable goods or products that otherwise have short shelf lives frequently use the FIFO strategy. It prevents them from having a surplus of goods that are closer than desired to their sell or use-by dates.
3. ABC Analysis
This option requires splitting products into three groups depending on how quickly they sell and how much it costs to keep them.
- A Group: The best-selling items that are also not cost-intensive to store and don’t take up much warehouse space.
- B Group: These products sell moderately well and cost more to keep on hand than the A-group items.
- C Group: The goods in this final group are the most cost-intensive to keep in inventory and the products least advantageous for the bottom line.
An ABC analysis helps company leaders highlight the items they need to reorder most frequently due to their associated rapid sales. It also identifies issues where the company might be unnecessarily keeping products in inventory without the customer demand to justify that decision.
4. The 80/20 Rule
This method comes from the belief that 20% of products generate 80% of a company’s overall sales. Succeeding with it starts by finding the best-selling items and tracking how many get sold in a day, week or month. Use that data to determine when to reorder to avoid sell-out situations.
5. Perpetual Inventory Management
Companies that use this tracking method embrace a so-called inventory system. They get real-time data whenever a sale occurs, new inventory arrives or supplies are used. Authorized employees use cloud-based tools to access that information at any time. We think this method aligns particularly well with POS inventory management tools.
How Can an Inventory POS System Help a Business Meet Goals?
Research shows that more than 66% of consumers leave stores without purchasing anything because retailers don’t have what they need. A POS tool with inventory management systems can prevent that from happening, keeping shoppers coming back and feeling satisfied overall with their experiences at a business. Such platforms also lower company costs.
Leah Walkiewicz, product manager at Square for Retail, explained, "When a retailer purchases new inventory, [they] need a way to receive it into their inventory management system. Once that inventory has been received, they need a way to ensure that their quantities on hand remain accurate over time. When inventory management is done effectively, businesses can reduce the costs of carrying excess inventory while maximizing sales."
A POS inventory management solution can also provide better visibility across all company locations. Real-time visibility enables getting products to the places where they’re most likely to sell. It also stops many issues from becoming catastrophic.
When a business continually collects reliable data, opportunities open to explore new technologies that grow the organization or make it more resilient. For example, a highly trained machine learning algorithm can evaluate tens of millions of options in a second, supplementing human decision-making.
What Are the Best POS Systems With Inventory Tracking Features?
A wide assortment of POS inventory management tools are available, and interested persons should always consider their current and future business needs before finalizing a decision. However, here are some popular options we think are worth a look.
Shopify is such a widely used platform because it offers an app store filled with add-ons that help users customize what the POS can do. One of them is Stocky, a smart inventory management tool available for Shopify Pro users. It assists with planning via an intelligent forecasting feature. Analytics tools help users make data-backed decisions, while the app also shows full visibility across all company locations.
With all its convenience, Shopify needs relevant addresses for trouble-free operation. In case the software fails to complete Shopify address validation, it won’t fulfill the order. Then, you will either have to fix the address manually or request the customer to update the delivery details. To match the shipment provider’s requirements (e.g., USPS, UPS, Canada Post, DHL, or Sender), you will need to standardize records. For more information on address formats, check out this page.
There are also lots of other Shopify apps for users on different subscriber tiers. They can give real-time low-stock notifications or help retailers tell customers the products they want are back in stock. Shopify’s administrative panel also has an Inventory tab. From there, users can update counts, transfer inventory to different locations, see stock levels for particular branches and more.
Square provides a wide assortment of payment solutions and business management products, including two POS systems for retail and restaurant operations. The associated inventory management features include a daily email alerting users to low or out-of-stock items. It’s also possible to export all inventory data to a printable spreadsheet.
People can edit item names or prices directly from the Square dashboard or a POS tool. The Square for Retail upgrade provides a suite of additional inventory management capabilities.
For example, an iPad or iPhone-based counting app offers a mobile solution for updating, reviewing, and verifying inventory levels. An intelligent stock forecasting feature suggests when people should reorder based on the current selling pace. We also like how Square for Retail automatically generates purchase orders for low-stock items and sends them to users for review.
Vend is an inventory management POS option primarily designed for retailers. We appreciate how this product provides multichannel support, making it ideal for companies with e-commerce and physical operations. Vend also has a cloud-based feature that gives real-time data regarding which products a store has on hand now and which are on the way. People can keep track of goods transferred between locations, too.
An aptly named feature called Scanner also converts a sales floor team member’s smartphone into a barcode scanner. They can then immediately verify whether the stockroom has specific quantities of an item available. There’s even an online order fulfillment feature built directly into the POS interface, reducing delays with getting products to their destinations.
Clover is a POS system with apps that help people customize the tool’s functionality for their needs. On the inventory management side of things, this product lets users track sales levels of individual items, helping them make informed decisions about when to reorder.
The Inventory app allows people to work with their stock levels in numerous valuable ways. They can add, edit or remove items, and Clover allows adding item modifiers, too. If you make an item available to customers in several versions, it’s easy to monitor how they sell. That’s especially handy for restaurants, coffee shops and other businesses that often encourage patrons to customize their orders.
Some POS inventory management systems require users to store some data locally and another portion of it in the cloud. However, Revel is a cloud-native solution that works on iPads and iPhones. Like another product we mentioned above, Revel turns a person’s phone into a scanner. It also automatically syncs the mobile app data with the computer interface, so information is always up-to-date and trustworthy, no matter how and where people use the product.
Revel can generate purchase orders for low-stock products and automatically distribute them to vendors. Another feature allows people to customize alerts so product outages will never take them by surprise again. Intuitive inventory organization options mean people can group products into categories and display them per certain characteristics — such as size or color — in the system.