Your Solution Expert
How To Lower Inventory Costs For Your Pet Supplies Business
It seems like cutting costs is a universal message in businesses today. The looming economic downturns since the pandemic still have an impact. Therefore, it stands to reason that the retail industry is equally looking for opportunities to cut costs.
The pet industry might not be privy to the recession effects. Still, if you can improve your bottom line positively, you might as well seize the opportunity as a business owner. So, here are some tips on ways you can lower your inventory costs.
Optimize Your Supply Chain
Using technology to automate and optimize your supply chain
can reduce your inventory costs significantly and in different ways. An excellent inventory management system automates manual processes that otherwise lead to errors that incur additional charges.
For example, instead of recording your inventory manually where human error is prevalent, you can use mobile stock-taking devices through an app that records data directly to your inventory management system.
Besides reducing errors, the software solution also improves efficiency since it takes less time to audit or record your inventory. Secondly, an inventory management system continuously collects and records operational data that you can use to make intelligent decisions.
For example, your inventory management system keeps a record of your sales. With proper analysis and customization, the information collected from your sales data will identify the products customer prefers for their pets.
Therefore, instead of developing your order fulfillment strategy around all pet products, you can strategically focus on those with high demand. An automated inventory management system also can notify your suppliers when you need stock.
You only get to fill your pet store with the necessary supplies. As such, you no longer spend money on overstock or understock, meaning the money you spend on your inventory remains optimal.
Rethink Supplier Relationships
Supplier relationships are essential, especially if you've had the chance to build trust over the years. But what happens when your most trusted suppliers start to delay their delivery? It means you will, at some point, have to deal with a lack of stock and lose sales revenue in the process.
Don't forget how your supplier relationship affects your safety stock as well. Safety stock is important
because it is your contingency plan against unseen forecast demand. But if a supplier continually delays delivery, you probably sell what is in your safety stock.
If you deplete your safety stock during peak demand, you have no inventory left to sell and are losing on sales. Therefore, take some time and examine your supplier relationships vis a vis your demand. Do all your suppliers meet your request on time?
Have they, at one point or another, failed to provide the products promised? What effect did it have on your bottom line? If you notice that one or two suppliers are failing to meet your customer demand per your agreement, it is time to cut them loose.
Reduce Overall Inventory Costs
Your inventory incurs different types of costs that you must keep in mind when planning your sales
. This includes:
Pet supplies purchase price, usually from the manufacturer or your supplier
The cost of product quality control or wastage
Insurance costs since you must insure your inventory
Logistics costs, that is, packaging, storing, and delivery costs
Labor costs
You can find ways to reduce each of these costs. For instance, negotiate for better prices with your suppliers and manufacturers. Consider other cheaper alternatives. You might also find an insurance company with more affordable premiums for your pet store. But as you negotiate on prices, don't compromise your product quality.
For your product quality control and wastage, consider implementing strategies to preserve your supplies' quality during transportation and storage in your warehouse. For example, ensure your suppliers only provide products that are freshly manufactured.
This is especially critical if you sell pet food. Also, adopt safe transportation solutions to ensure your products are not damaged during delivery. This means investing in high-quality packaging solutions or using logistics companies that guarantee product safety.
Regarding labor costs, consider automating relevant processes. For instance, using robotics in warehouses significantly reduces the need for manual labor. This might cost you during implementation, but you will spend less on storing and moving your inventory in the long run.
Don't Be A Hoarder
Hoarding leads to obsolete inventory that dips into your inventory costs since inventory that stays on your shelves longer than intended loses value. An excellent example would be purchasing pet accessories customized for a specific holiday season.
If you overestimate the demand for such products, you will have some stock left once the holiday is over. In that case, the products become obsolete and lose their value. Since you need these products to meet customer demand, the solution is to use the advantages of a POS system
to manage your inventory and order fulfillment.
A POS system will use historical data to identify the amount of inventory you need for such products. Therefore, the chances of having obsolete inventory become slim. If you do happen to have some obsolete inventory, you can also save on inventory costs using the following innovative solutions:
Liaise with your suppliers and auction those products. Your social media platforms are also great avenues to auction these products to pet lovers that hold some sentimental value to pet products.
You can also ask your suppliers whether they are open to a return policy for products that are no longer moving from your shelves. Manufacturers can recycle the products or product packages and offer you some compensation for the inventory purchase cost.
Donate the inventory to pet shelters or kids and families who cannot afford pet accessories or products. Charitable acts are incredibly excellent at marketing your brand to customers, which, in turn, might inspire an increase in sales.
Consider selling your obsolete inventory as part of a bundle with fast-moving products at a reduced cost. For example, if your grooming supplies are selling fast but your pet clothes are becoming obsolete, sell the clothes as an offer for grooming purchases or as a bundle at a reduced cost.
Monitor Your SKUs
Stock Keeping Units are significant because
they help you manage your entire inventory. SKUs will ensure your inventory management system is updated on the number of stocks you need for different pet products based on demand.
You can also use your SKUs to solve issues like stock shrinkage
and reconcile the amount of safety stock you need. On the flip side, your SKUs might be putting a dent in your inventory costs by withholding stock you would otherwise sell.
For instance, if you sell different pet foods, each type could have multiple SKUs. One pet food type might have SKUs based on the quantity, nutritional value, or manufacturer. This product description is essential because it helps customers make informed purchase decisions.
However, it can confuse your inventory management system based on demand. As a result, your system might not flag a specific item for reordering, not because it is not in need, but because the system thinks it has no demand because of its SKUs.
A robust inventory management software that can monitor various types of data and SKUs simultaneously and compare and identify the different ways a product is chosen for purchase is your solution to cutting down inventory costs.
Join Erply Today
One of the advantages of using our Erply POS software solution is that your inventory and suppliers will continuously be optimized. Therefore, you can rest easy knowing that your inventory costs are always lower when using Erply. Try our demo or consult us to
understand how we can help you manage your inventory costs efficiently.