An excellent purchasing management system is essential for a successful retail operation. Inventory solutions need to be provided in real time, product orders need around-the-clock tracking, and customers need to connect with the products they desire now — not later. In order to ensure retail businesses are running as efficiently as possible, it’s time to understand what an effective purchasing management system offers in terms of productivity, profitability, and accurate product forecasting.
Reaping the Benefits of Effective Inventory Management
Many retailers either fail to have a purchase management system or simply overstock goods, leading to a huge amount of inventory overload. One report cited by Harvard Business Review places the value of inventory in the United States at $2 trillion. This capital should be used in valuable ways, such as technological investments.
That’s one of the reasons a real-time purchase management system is so valuable. Retailers can effectively keep track of each product purchase in real time. This allows them to not only know exactly when to reorder important items but also to effectively predict how much inventory will be needed in the future. Retailers can thus implement a lean inventory strategy while ensuring that customers have the items they want every time.
This technology also reduces costly stock balancing. Stock rebalancing often results in retailers having to drastically cut prices on unwanted inventory. Instead of lost profit on stock rebalancing, a purchasing management system helps keep inventory levels “just right” through accurate inventory forecasting. In fact, a Triple Point study showed that every 1 percent improvement in accurate forecasting leads to a 1 to 2 percent reduction in inventory levels. Real-time POS systems that network directly with inventory databases play an integral role for accurate forecasting strategy.
Proactive Response to Inventory Needs
Purchasing management isn’t just about one store either. An effective system can network across all stores, warehouses and suppliers to help owners understand the big picture.
To achieve this big-picture overview, it’s important to have a system that sends real-time alerts about low inventory levels, produces analytical reports with detailed data and tracks merchandise across different channels, including both brick-and-mortar locations and eCommerce inventories.
A professional-grade purchasing management system also facilitates quick generation of purchasing orders for central receiving or drop orders, thus ensuring products are sent exactly where they need to be. After all, the stakes for missing inventory or late shipments couldn’t be higher. In a poll by Parature, 65 percent of consumers indicated that they would cut ties with a brand even after just one poor experience.
Data Driven Performance Reports
The ability to analyze and create reports based on performance is crucial for merchants. A purchase management system should allow retailers to generate reports that allow them to analyze sales performance and project future ordering requirements. This can allow retailers to improve efficiency and store stock with the ability to maximize purchase orders with pre- and post-receiving distribution plans, ability to reorder most popular merchandise and more.
Ultimately, the right purchase management system is the game changer many retail operations need and is why businesses that adopt the right POS system have a long-lasting competitive advantage.
Sources:
- http://www.parature.com/startling-custserv-statistics/
- http://www.tpt.com/resources/docs/resources/Demand-Planning-RS.pdf
- https://hbr.org/2011/08/excess-inventory-wastes-carbon.html