- Restaurants and retailers need to manage their inventory.
- You can manage your inventory efficiently if you choose the right point of sale (POS) system.
- If you have fewer mis-shipments, out-of-stocks, and deadstock (obsolete items or unsellable), your inventory management will be successful.
This article was written for small-business owners who are interested in installing a POS system that will help inventory management. You must manage your inventory if you sell physical products. Inefficient inventory management can lead to a variety of problems such as high warehouse costs, insufficient products for customers, products not being available, products placed in the wrong places, and too many products, which could cause you to sell at a discounted price.
Continue reading to learn how the right POS software & hardware can help you improve inventory management, increase profits, and improve customer satisfaction.
What is inventory management?
Inventory management is about having enough products to satisfy demand and making sure your products are available when you need them.
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You can’t store too many products. This could lead to storage fees or warehouse charges. It may also result in you having to sell your leftovers at a lower cost, which will reduce your profit margin.
You’ll lose sales if you don’t have enough product. Customers will shop with your competitors and customer satisfaction will drop.
These are the key components of inventory management.
- Visibility: Be aware of what products you have and where they are located.
- Inventory: Estimate the amount of each item that you will need to satisfy demand in a given time frame.
- Purchasing/replenishing: Know when stock must be purchased in order to arrive in time to meet demand.
- Storage: Determine how much space you need to store inventory and then send your products to the appropriate storage area.
- Analysis: Get insight into the data that will help you order your inventory more efficiently in the future.
- Multichannel tracking: Allocate inventory levels between physical locations and fulfillment centers for e-commerce orders and shift inventory as necessary
Who has the need for inventory management?
Retailers and restaurants are the most in-demand for inventory management, both among small and medium businesses. Many products retail stores carry can vary in size, material, and color. A business’s success depends on its ability to keep track of all the items and make sure they are available when customers want them.
Restaurants face a slightly different problem because they have to stock all the ingredients. Customers will be disappointed if a single ingredient is not available. Bars that offer mixed drinks must also follow the same rules. Restaurants also need to manage seasonality. Good inventory management systems can help ensure that all ingredients are available.
Inventory management techniques
To optimize inventory levels, business owners can use a variety of inventory management methods. The most basic method is perpetual inventor management. This means that inventory is counted as soon as it arrives, and then subtracts when items are lost or damaged. This system can be combined with demand forecasting which uses historical sales data to predict future demand and order the quantities that should go.
To reduce storage costs, some companies use just-in-time inventory management. While this works well when the supply chain runs smoothly, it can lead to problems if there are any issues along the way.
Some businesses use safety inventory to avoid stock-outs. This is where an extra inventory that exceeds the expected demand is ordered to keep in reserve. The reorder formula is another technique that can be used to ensure consistent sales of certain products over time. This method triggers reordering when stock levels drop below a certain point, or before a period of high demand based on sales data.
POS inventory management
Inventory management can be difficult and time-consuming if done manually. However, inventory management software can simplify the process greatly. Small businesses especially can take advantage of the inventory management capabilities built into POS systems.
What is a POS System?
A POS system, which is a combination of hardware and software, is used by a cashier to process sales payments. While there are third-party POS systems, the majority of POS systems are bought directly from payment processing businesses.
Depending on the company and components, POS hardware costs can range from $299 up to $1,400. POS software can cost between $20 and $272 per monthly. The cost rises based on how many registers use the software.
POS hardware usually includes a touchscreen device, credit card reader, and cash drawer as well as a receipt printer and (for retailers), a handheld scanner.
POS software, at its most basic, accepts various payment methods and allows the cashier to select items from a product listing. It displays prices and calculates sales taxes. Additionally, it allows for discounts, promotions, and other charges. Modern POS software systems offer more advanced capabilities such as inventory management.
How a POS system could help inventory management
To set up a POS system that allows inventory management, you will need to import information about your inventory and products, including descriptions, product names, descriptions, and barcode numbers.
The software automatically adjusts the inventory levels every time you open a sale. This software offers many benefits.
- Automatic inventory tracking: This saves time and eliminates the need to manually count inventory.
- Report generation: View your sales and inventory levels according to location or time period. This will help you decide when to reorder or run a promotional. Valuable POS Sales Report Insights includes information about your bestsellers, slow-moving items, most profitable products, and items that are low.
- Quick visibility: This system allows employees to quickly check if an item has been ordered. It also makes it easy to keep track of inventory levels and prevent stock-outs.
- Remote management: This system allows you to view inventory levels in every location and channel of your business without ever having to physically visit them.
- Dynamic inventory Management: Businesses can use better information to manage inventory such as just-in-time, perpetual inventory, and reorder point, to reduce costs and maximize sales.
Even though the best inventory management systems automate the process, it is still important to keep track of inventory to prevent theft or damage. This can be done manually or using a handheld scanner.
Top POS inventory management systems
Some POS systems do not have inventory management capabilities. These are our top choices for POS systems with inventory management.
Square offers three versions of its POS system: SquarePOS (free), Square for Retail, and Square for Restaurants. A free point of sale inventory software such as Square POS is a great option for startups and small businesses where every dollar matters. It can also be scaled to grow with your company. You can download reports and get daily alerts about low stock or out-of-stock items.
Square inventory system supports thousands of SKUs. However, it is best for small businesses with simple inventory requirements (inventory on-hand, reordering, and shifting inventory between different locations). For businesses with more complicated inventory management requirements, it does not support complex tasks such as bundling parts and assembling.
Square POS inventory can integrate with third-party POS inventory management software providers like Shopventory and SKU IQ. The transaction processing fee is 2.6% plus 10c.
Hike’s POS system is compatible with multi-location stores. It also provides granular reporting, which allows you to drill down into details about sales and inventory. It’s easy to use and has advanced features like variant management, composite product administration, layaway.
This point of sale inventory management software affordable plans start at $69 per month and can be scaled up or down. This makes it a great choice for seasonal retailers as well as pop-up shops. It can be loaded on an iPad to create an iPad POS system. You can take it with you wherever you go.
The hike is not the right choice if you are selling online and in stores. Only its $89/month plans support eCommerce. Higher-priced plans include integrated label printing, multiple delivery address profiles, multi-outlet support, and multi-outlet features such as stock transfer or outlet-based user accessibility.
Hike, unlike other POS systems providers, is not a payment processor. You’d need to use a third party to process credit cards and other non-cash payments. Hike can integrate with Square, Worldpay, and Clearent as well as Clearent, Clearent, Clearent, PayJunction Elavon, PayJunction, Elavon, and PayPal.
Lightspeed for Retail can help retailers with complex inventories improve their inventory management. Lightspeed for Retail allows retailers to manage inventory at a granular level. It also lets them sell unique product variants and bundles.
Its supplier network is a standout feature. This allows you to find new products, reorder and buy products, as well as track your shipments. You will find more than 40 customizable reports, graphs, and tips within the app.
Lightspeed offers a free trial but there is no free plan. For one register, plans start at $69 per mo. Additional registers cost $29 per month. Payment processing fees are 2.6% plus 10 cents per transaction. How does a pos system work, check it out.
4. xtraCHEF by Toast
Toast is a POS system specifically made for restaurants. It has many industry-specific capabilities.
xtraCHEF is Toast’s inventory management system. It integrates with Toast’s POS system and other systems. Toast’s xtraCHEF provides detailed inventory tracking and control. It also offers an excellent menu analysis report that includes food cost calculators and recipe calculations to help you plan your future menus.
It tracks ingredient freshness by determining when they were bought and provides countdowns for out-of-stock products. The app allows you to order ingredients, manage distributors, create purchase orders, and import distributor invoices.
Another notable feature is an analysis of the cost per unit of goods sold, reports on food waste, and product mix reports. A shelf layout map shows where your actual kitchen inventory is located.
xtraCHEF is available as a free download. However, the Starter and CHEF’s Choice paid versions to include inventory management. The company does not publish pricing information. You will need to request a quote. Toast’s monthly pricing starts at $79 for one terminal and $50 for each additional.