Scanner also syncs completed counts with your Vend account, so once you’re done counting, you can easily update your stock levels. Just scan an item’s barcode using your phone’s camera and Scanner will automatically record the SKU for you. Want to make inventory counts easier for yourself and your staff? Check out Scanner by Vend, a nifty mobile app that lets you conduct physical inventory counts using your iPhone, iPad or iPod Touch. Set aside time to physically count your products and aim to count every item at least once every quarter. This should give you an indication of how well your store is doing when it comes to inventory accuracy.Ĭounting your inventory regularly is critical to spotting, preventing, and addressing shrinkage. Measure shrinkage in your own store and see how you stack up against other retailers. Specialty men’s and women’s apparel – 1.2%ĭiscount, mass merchandise or supercenter retailers – 1.1% It’s important to note that data varies from one retail sector to the next. Shrinkage % = Shrinkage / Sales x 100Īccording to a survey by the National Retail Federation, the average inventory shrink as a percentage of sales was 1.38% in 2015. Shrinkage can also be expressed as a percentage - i.e. The formula for shrinkage is: Ending Inventory Value – Physically Counted Inventory Value The common causes of shrinkage include employee theft, shoplifting, administrative errors, and supplier fraud. It’s a reduction in inventory that isn’t caused by legit sales. This refers to the difference between the amount of stock that you have on paper and the actual stock you have available. Knowing the answers to such questions will enable you to make better decisions when it comes to what products to stock up on or which items to discontinue. “For example, if you have limited space in your warehouse what was the profit generated per square foot of storage space occupied? If you are short on cash, what was the profit generated per average value of stock held?” Once you’ve determined the GMROI of your products, go a step further and “work out how much profit you make as a proportion of your scarce resources.” That’s the advice of Damon Shinnie, the Finance Manager at Find Me a Gift. Its GMROI is 1.83, and that means the store earns $1.83 for every dollar in inventory. So let’s say a retail store has a gross margin of $55,000 and an average inventory cost of $30,000. The formula for figuring out your GMROI is: Gross Margin / Average Inventory Cost It answers questions such as, “How many gross margin dollars did I make from my inventory investment?” or “For every dollar invested in inventory, how many dollars did I get back?” GMROI measures your profit return on the funds invested in your stock. ROI) for every dollar you spent on inventory. This stands for Gross Margin Return on Investment, and it tells you the amount of money you got back (i.e. In this post, we’ll shed light on the top inventory metrics to keep an eye on. Why track your inventory management metrics?īy tracking your stock control data and metrics on a continuous basis enables you to spot trends and gain insights that can help you make better decisions for your inventory. But there is one practical step you can take to minimize stock control issues, and that is to look at your inventory data. Look, no silver bullet can fix your inventory management woes. Stores often struggle with stock control, and problems like shrinkage, excess inventory, and stockouts are common. You don’t deal with surplus inventory, and you never run out of the products your customers want.īut the reality of inventory management isn’t so great. The important issue is that any organization should be consistent in the formula that it uses.Imagine you’re running a retail store that always has the right products at the right time. Inventory Turnover = Net Sales Average Inventory at Selling Price Inventory turnover is also known as inventory turns, merchandise turnover, stockturn, stock turns, turns, and stock turnover. The equation for inventory turnover equals the cost of goods sold divided by the average inventory. It is calculated to see if a business has an excessive inventory in comparison to its sales level. In accounting, the inventory turnover is a measure of the number of times inventory is sold or used in a time period such as a year.
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