How To Source And Manage Inventory For Your Grocery Business

The grocery business is a very competitive venture. The ability to source ideas and suppliers that can keep your products fresh might be just what you need to achieve your bottom line and stay ahead of the competition. But this also requires effective inventory management.

Let’s face it; you can’t appeal to customers with old or uninspired products. So how do you source fresh products? How do you select vendors for the goods your business brand needs? What strategies can you use to ensure adequate inventory management?

This post answers the above questions and gives you tips to help you source your grocery business and effectively manage your inventory. Let’s dive in.


Sourcing Inventory

What is sourcing?
Sourcing involves finding, vetting, and selecting the most suitable suppliers to provide you with the goods and services your grocery needs. The sourcing process helps your business achieve efficiency by establishing relationships with suppliers that ensure you get reliable and high-quality products at a price point that gives you the desired margin.


How to Source Products for Your Grocery Store

Sourcing is a complex process that should be done well, as it can be difficult and expensive to backtrack mistakes. While getting suppliers is essential, you must ensure that the product you are sourcing meets your customer demand.

If you already have retailing customer data
, you can use it to determine the basic needs of your customers. Then analyze data from departments like e-commerce and web analytics to understand the customer’s searches.

Or use other channels like your social media pages or the FAQ section on your website to ask your regular customers for feedback. Also, listen to your marketing team to gain insight into the customer’s buying patterns and item combinations.

They continually collect customer information that can be useful for your business. Another challenge in sourcing is not usually what product to source but the vendor who will provide the best quality products. Vendors can be categorized
 into :

Global sourcing allows businesses to source for vendors worldwide instead of restricting themselves to their locality.

Local vendor sourcing Involves working with a vendor in your local market to source products. Local vendors include:


  1. The Manufacturers

Working directly with manufacturers helps you eliminate the intermediaries. However, establishing a working relationship with them is not always easy because they prefer retailers who place more oversized orders. Besides, you’ll be in charge of sending out specifications and ironing details like warehouse import, which can be time-consuming.


  1. The Wholesalers

Sourcing your product from the wholesalers is easier because they’ll take care of the stress of importing and warehousing. You also don’t have to deal with shipping customs or even travel. All you have to do is place an order. 


Vending Sourcing Process

The best way to avoid any mistake in the vendor sourcing process is to streamline the process through:


  1. Organizational Need Assessment

The vendor search begins with analyzing each department’s needs by auditing the existing resources to define the specifications, current cost, and additional cost you’ll incur to purchase the required items.


  1. Market Research 

After determining the need, research and analyze your vendor’s market to get a clue on how it works, its risks and opportunities, how much competition there is, and the power of its key suppliers. Knowing the market positions you to better negotiate the best deal on your purchase. 


  1. Finding The Quality Vendors

Once you’ve evaluated your business and market needs, the next step is finding the right supplier to provide you with the quality goods you need. You can send potential suppliers a request for quotes or a proposal to announce projects and ask for bids to assess their ability to complete tasks. Some places to find the suppliers include expos, trade publications, market research, trade associations, online directories, etc 


  1. Testing for Quality and Setting Standards

After you’ve found your supplier, vet their product’s quality
 to verify that they’ll comply with your brand’s quality standard.


  1. Negotiating Contract and Payment Terms

Next, once you are satisfied with the shortlisted vendor’s history, begin negotiating contract and payment terms to get to mutually agreeable terms. 


  1. Planning and Forecasting for Inventory

Last, finalize the delivery of your products with annual and inventory forecasting. With time, you can use data to validate the relationship between you and your vendor and analyze their performance to decide whether to continue or end the contract.


Managing Inventory

After you’ve settled on a supplier, the next task is to manage the inventory effectively. This is where
grocery store

inventory management software

 comes in handy to automate your manual inventory handling, increasing your store’s efficiency.

The software tracks incoming and outgoing stocks, saving problems like product overstock and outages. Some Management Strategies you can use to ensure adequate Inventory Management include: 


  1. Control What Comes Through the Backdoor

Your inventory management’s success depends on how you manage what comes through your store’s warehouse backdoor. Instead of manually counting and checking items on delivery, use a direct store system that relies on digital checks and balances to ensure effective order fulfillment.

Scanning product barcodes upon receipt and sending the information to the inventory management system helps you double-check it against the original purchase order. You’ll therefore buy the right price and in the right qualities and close the purchase order-invoice gap.


  1. Check Your Shelves 

Monitoring your product’s shelf-life streamlines your inventory management and reduces food safety risks for customers and employees. Using digitized tools like a remote temperature monitoring system ensures that your inventory remains fresh, allowing you more time to work on making other areas efficient.

Electronic shelf labels update your product’s prices with just a click of the button from your staff, streamlining the original manual process. The labels can also price match in real-time, helping you keep track of your competitors to develop an effective plan to undercut them.


  1. Optimize the Warehouse Space

Designing and planning your warehouse
 to accommodate different groceries reduces the inefficiency in order fulfillment. Hence, to optimize the storage space, integrate inventory management software to address these inefficiencies by automating the picking, packaging, packing, and shipping processes.


  1. Maintain Your Product’s Freshness

The customer will always want fresh products, and since you can’t deliver them straight from the farm, you’ve to devise reliable storage ways to keep them fresh. Automating your store’s processes gives you real-time visibility of your inventory levels as stocks automatically update after a sale. You can therefore avoid over-stocking and stock-outs and deliver fresh items.


  1. Resolve Customer Complaints 

Unresolved customers’ complaints and their reoccurrence create mistrust among customers. But with inventory software, you can keep real-time track of the movement of the inventory, identify the failing points, and speed up the resolution process.


  1. Ensure You have a Dynamic Approach to both Fresh and Ambient Products

Fresh products need a just-in-time replenishment model, while ambient products can be more cost-driven and space aware. You must devise ways to ensure both products move quickly; otherwise, any change in demand can lead to lost sales.


Conclusion

Sourcing for vendors requires careful planning and implementation to get the quality products you need. If you overlook your inventory management, you’ll get it all wrong. Maintaining proper control over your inventory and being constantly aware of your
grocery store inventory list
is the key to running a successful grocery business. And with a POS software solution like Erply, managing and optimizing your suppliers and inventory becomes automated. So try Erply today, get a demo
, and see what benefits lie ahead.