The first step to optimize a retailer’s inventory is to get accurate data on what and how much inventory it has. Data should be the basis for key decisions.
The company can get accurate inventory in ERP by ensuring the following entries are passed correctly:
- GRN/Purchase Invoice
- Stock Transfer
- Sales Invoice/DC
- Returns
- Defects
- Short quantity received from the supplier
- Differences in Item orders vs received.
The next step is to perform section-wise stock aging analysis. Identify stock lying unsold for more than 90 days for every section to liquidate them. Refer example
Even though 5% qty is aged > 120D here, Value wise it is 30 per cent. This leads to higher working capital and higher interest/ holding cost. These items need to be liquidated on priority.
Pro Tip
- 90-120 days+ stock needs to be acted upon quickly and prevented from going to dead stock. How to do this?
- Give barcode sequence to old stock for easy identification by salespersons in the store.
- Rotate stock between stores serving different customer segments.
- Prominently display old stock being sold at a discount.
- Incentivize salesperson to clear out old stock during specific months.
- A 2-3% deviation between actual and ERP stock is acceptable. Deviation beyond this indicates a lapse in the Process.
