If You're Not Following These Four Inventory Tips, You Could Be Losing Money
Do you know the dollar amount of the inventory that you have in your store right now? Does this amount include any older stock that has depreciated in value? Having a good grasp of these numbers is what inventory management is all about. In the rapidly-changing repair industry, it’s really important to have some systems in place to help you save money and protect your margins. Thankfully, repair shops have plenty of resources available to them that can make their inventory management easy!
What is inventory management?
Inventory Management is the supervision of the flow of products and supplies from your supplier’s warehouse, to your store’s backroom, and eventually, to point of sale. The goal of a proper inventory management system is to help you know exactly where your inventory is at during any step of the process, as well as give you the information needed to properly stock products to manage your levels correctly.
This may seem like a simple task, but in reality, 43% of retailers ranked inventory management as their number 1 day-to-day struggle in their business.
Why is inventory management important for repair shops?
We know that we live in an on-demand world - especially when it comes to broken devices! When a customer is looking for a repair that you don’t have the product for, it could result in a lost sale. 70% of shoppers would rather go to a competitor than wait any length of time for a back-ordered product. It’s important to stock the right products and parts to ensure that customers that walk in your door can walk out with their device working again quickly.
Do you still have iPhone 4 parts in your backroom? Unless you’re still getting these repairs walking in, you’re probably sitting on dead stock. That’s money that you have invested in stocking parts that you can no longer move. A good inventory management system can help you prevent losing money this way.
Additionally, if you have ever found a discrepancy between your documented inventory and your physical inventory, you have dealt with inventory shrinkage. This is caused by anything from miscounts, theft, or not tracking orders or sales properly.
You need to have visibility into the health of your finances being used for inventory so that you can determine successes and make better decisions. Once you have a rock-solid inventory management system, even if you don’t carry much inventory at all, you have already set yourself up for success in other potential revenue streams.
How can repair stores improve their inventory management?
Here are four things you can implement TODAY to strengthen your inventory management efforts.
- Inventory Management Software: This is obvious, but you should make sure that you’re using your inventory management software to its full potential. Many of these providers have tools that do the work for you! If you don’t currently use an inventory management software, look for the most bang for your buck. RepairQ has a POS system, inventory management, and more, all optimized for repair locations. If you want your business to grow, it’s time to move past the Excel spreadsheets and find something more powerful.
- Forecasting & Reporting: Once you have the software, it’s easy to forecast demand to help you know what to stock for the next week, month, etc. Here are some specific factors that go into forecasting:
- Your location / market: How long after a device is launched do the people in your market tend to come into your store needing a repair? Pay attention to the specific behavior of your market.
- Seasonality: What were your sales last month? Last year? This helps you get a better understanding of the volume needed.
- Promotions: If you plan to have a fire sale on your iPhone battery replacements next month to increase door swings, you’ll want to make sure you have the stock of batteries (and accessories for upsells!) to keep up with demand.
- Previous out of stocks: Track lost sales from out of stocks to make a more informed decision on if something should be regularly stocked.
- Depreciation of costs: Alternatively, if a device is brand new, you know that the parts will depreciate very quickly. Keep this in mind before you add a part to your regular stock rotation.
- Automation Tools: We know that retail automation helps stores save time and keep their overhead low. Automation can also help eliminate errors or discrepancies in stock counts or reorders. RepairQ allows you to place orders automatically through their integration with Mobile Defenders once products fall below your desired stock levels, and will adjust the levels for you once the products arrive in your location.
- Scheduled Stock Counts: It’s best practice to perform regular stock counts on higher-cost products to ensure that your documented levels match your physical stock levels. If possible, perform a count every day on products that cost $30 or more. You can also serialize each individual SKU valued at $60 or more to better track its lifecycle.
It’s important to keep in mind that different stores in different markets will implement inventory management strategies that work best for their specific workflow. You may not find a good fit the first time, but keep developing your processes and tools.
What are some of your tried-and-true inventory management strategies? Let us know in our Facebook group, Repair Talk.
If you’d like something to print and reference for later, download our Inventory Management infographic below.