Are you master of your inventory?
This is so basic it might seem silly to ask but…. Are your hardware inventory numbers current?
If they’re not, you can’t expect to operate at peak efficiency.
We’re here to discuss how vital it is to get your inventory numbers up to date and trustworthy in your system. The inventory count in your store needs to be current. It’s the jumping off point to knowing exactly what you have in stock to sell.
“Inventory accuracy and keeping the correct inventory levels are the basic building blocks to inventory control,” said William E. Aubuchon, IV, president and CEO of The Aubuchon Company.
With online visibility today, customers shopping on your website need to see an accurate count too.
“And if you participate in BOPIS, or Buy Online Pickup In Store, accuracy is extremely important. Proper inventory levels can be a little trickier. You need to have what the customer wants when they want it, but it becomes a balancing act with the right inventory turns and keeping carrying costs under control,” said Aubuchon.
William E. Aubuchon, IV, is the president and CEO of The Aubuchon Company, based in Westminster, Massachusetts, an Orgill dealer with 107 stores in eight states, and described as the oldest and largest family-owned hardware store chain in America. The company also purchases from Emery Jensen Distribution.
Specifically, how should an owner best manage their inventory?
“The first thing that comes to mind is regular cycle counting and zero auditing, but it really begins with creating thoughtful purchase orders and accurately receiving products into your store. A good replenishment system can be very helpful, but it does take work to get it right,” said the CEO.
Diving into details, what sorts of procedures work best for an owner or manager to clean up carrying costs, and get numbers current and trustworthy in the system?
“Conduct a full wall-to-wall physical inventory and then begin a robust system of cycle counts and zero audits,” said Aubuchon.
Cycle counting is a method of checks and balances by which companies confirm that physical inventory counts match their inventory records. This method involves performing a regular count and recording the adjustment of specific products.
Zero auditing is the act of walking the store and checking outs. Aubuchon does this weekly in all stores to verify if an out, or a zero, is truly an out. It could be the item just needs to be filled from an overstock location.
“If we find an out, we check our inventory,” said Aubuchon. “If the system says we have inventory in the store, we investigate to verify the inventory is there.”
If they find the inventory isn’t there, they adjust the inventory so that their replenishment system works correctly.
The message here is to be timely about inventory control and keep your bins – and books – updated.
Clean out the ‘dead zone’
“Clean up problem inventory,” he said. “Discontinued merchandise and ‘dead merchandise’ will pile up over time if not taken care of.”
Physically counting items to confirm an accurate inventory is the key. Managing it is another. Making decisions on items that do not move is yet another control mechanism for an owner.
“Discount and sell this merchandise as much as possible. If it is junk and you can’t sell it at a discount, throw it out or donate.”
The key thing here, said Aubuchon, “is getting the inventory correct to help with auto-replenishment, or auto-ordering. A lot of stores in our industry still manually order versus auto-replenish, but even when manually ordering, it’s helpful to know what you have on hand.”
Think of current and accurate inventory knowledge as managerial power. That’s a power owners can use to make sound re-stock decisions.
Aubuchon offered some tips to those who are trying to better manage inventory.
“If you’re not cycle counting, or auditing your zeroes, start now,” he said.
“Graduate to a smart cycle counting system if possible. Evaluate your receiving practices. We find that most inventory discrepancies begin with receiving purchase orders.”
Successful hardware store owners manage their inventories daily and keep their books clean.
“It is extremely critical to manage your inventory today,’ said Aubuchon. “It becomes even more critical if you sell online and show customers on-hand quantities.”
Customers have more shopping options than ever, he said.
“Keep your inventory fresh. Be careful not to overstock but keep the quantities your market dictates.”
As a hardware owner you’ll have mastery over your books; and you’ll stay in control – and confident.