Shop management: Useful techniques + methods


Shop management is the step in the supply chain where inventory and stock levels are tracked in and out of your warehouse. The goal of shop management systems is to know where your inventory is at any given time and how much you have available to properly manage inventory levels. Some companies may choose to scan inventory with a barcode scanner to increase the efficiency and accuracy of picking routes.


Check out some useful techniques and methods for effective shop management

Choosing the right shop management techniques for your retail shop is no easy task. The faster your business grows, the more difficult it is to manage basic inventory from the start, which is again so crucial.


1. Backorder: Backorder refers to a company's decision to accept orders and receive payment for products that are not in stock. It's a dream for most businesses, but it can also be a logistical nightmare... if you're not prepared.

If only one item is in stock, just create a new purchase order for that item and notify the customer when the remaining item arrives. When there are dozens or even hundreds of different sales per day, the problems start to pile up.

However, allowing for stockouts means increased sales, so it's an act of dexterity that many companies are willing to undertake.


2. Just in Time (JIT): Just in Time (JIT) inventory management reduces the amount of inventory that a firm has on hand. It is considered a risky technique because you buy the shares only days before they are needed for distribution or sale.

JIT helps organizations save on inventory maintenance costs by keeping inventory levels low and eliminates situations where inventory is depleted—essentially frozen capital sitting on the shelves for months and months.

But it also requires companies to be very agile and able to handle a much shorter production cycle.


3. Consignment: Consignment requires the wholesaler to place the inventory in the retailer's hands but retain ownership of it until the product is sold when the retailer purchases the used inventory. Mail-order sales typically involve a high degree of uncertainty in demand from the retailer's perspective and a high degree of trust from the wholesaler's perspective.


4. Drop Shipping Cross-docking: This trade management technique eliminates inventory management costs. When you have a shipping contract in place, you can transfer customer orders and shipping details directly to the manufacturer or wholesaler, who will then ship the goods.

Similar to dropshipping, cross-docking is a practice where arriving semi-trailers or railcars unload materials directly onto departing trucks, trailers, or railcars.

Essentially, it means moving goods from one means of transport directly to another with little or no inventory. Transit areas may be required where incoming items are sorted and stored until the outgoing shipment is completed. In addition, you will need a large fleet and network of transport vehicles to make the cross-dock work.


5. Cycle Counting: Cycle counting consists of counting a small amount of inventory on a given day without having to do a full manual inventory. This is a type of sampling that allows you to see how closely your inventory records match what you actually have in stock.

This method is an integral part of many companies' inventory management practices because it ultimately helps ensure that customers can get what they want when they want it while keeping inventory holding costs as low as possible.

Final thoughts


Whatever your particular approach to inventory counting, here are some best practices to follow for your retail shop:


Count one category at a time – Ideally, you want to be able to cycle through your entire inventory regularly. It is best to focus on one category at a time so that you can count efficiently during working hours and not be hampered by operational downtime.


Select count categories based on seasonality: The purpose of the inventory is to be able to correct inventory variances as they occur. It's best to count products when they're at their peak to ensure you can address any issues immediately.

Change your cycle counting schedule: It's a sad reality that sometimes stock reductions are caused by employee theft, so try changing your schedule to discourage employees from "gaming the system."