Four Simple Ways to Improve Your Retail Business’ Profitability With NetSuite’s Inventory Management System

Written by Ben Moore

March 1, 2022

It’s a little-known fact, but did you know that someone you know or yourself will be faced with the possibility of experiencing a birthday at least once a year? Crazy ey? I know! But these are the facts. And it’s with this relatively unknown tradition that the giving of presents to the birthday boy or girl is the norm. Before the inception of the internet, this was sure to be a strenuous task, even for the best. But now you can order a present right from the palm of your hand – having only to lift one finger. However, there is nothing more exasperating than placing an order for the perfect gift only to find that it’s out of stock!

From personal experience, once you’ve gone through such an inconvenience, we humans tend to look elsewhere for purchasing items. The Harvard Business Review found that retailers can lose up to nearly half of all intended purchases when customers encounter stock outages! For an average-sized retailer, this can translate to around a 4% loss in overall sales and rightly so!

If this is the case for a company, they are likely running an inefficient or (in some cases) utterly decentralised inventory management system – an example of extremely poor business practice. Keeping track of inventory management is much more than knowing you’ve got an item on the shelf. It includes tracking and organising goods from suppliers, any part of the manufacturing process and the eventual purchase and procurement by the customer of the goods.

Take a look below at four ways that automating the manual processes across inventory management can help companies thrive!

Traceability

Having the ability to view a product’s stage of its lifecycle is analytical gold from a decision-making standpoint for companies. Businesses can trace their products in both directions through serial tracing and lot numbers, which is critical in maintaining accuracy and reliability in business operations. Lot numbers allow users to track the number of items and the specific cost of a group of products by production date. By utilising a lot number record system, companies can efficiently identify an expiration date and enter any information relevant to that lot. Serial tracking gives each specific item a unique serial number to fulfil or receive an incoming or outgoing order. When analysed together, lot numbers and serial numbers allow companies to configure defined fulfilment strategies, ensuring the effective and profitable utilisation of inventory and reducing the amount of waste created.

NetSuite is an incredibly effective tool when concerned with the traceability of a company’s inventory. Not only does it offer a high-level approach to inventory management, but it also offers the ability to class inventory on a granular level. Operating on either level is achieved by outlining a merchandise hierarchy and using a bin management system. Putting matrix items to use enables companies to track items based on different features of a main product. Whether the difference is the size of the product or the colour, changes made to the parent item are automatically applied to all sub-items within the item matrix. This ability dramatically simplifies SKU management and saves time and resources in the process.

Cycle Counting

Establishing a series of checks and balances in an inventory management system to account for physical stock on the shelf is a good measurement of platform quality. This process is known as cycle counting. By simply implementing cycle counts as an ongoing periodic task, a business can lower overhead costs, reduce the amount of required safety stock and make the process of counting physical inventory less arduous. Another bonus: it’s also an effective anti-theft tactic – so, all in all, quite a valuable addition to your ERP!

A great feature of NetSuite’s inventory management is categorising inventory based on the volume of transactions or item value. Also, NetSuite allows regular periodic counts of on-hand item quantities and can auto-assign count tasks to staff on the floor to maintain inventory accuracy. Implementing recurring cycle counts for select SKUs instead of performing a total inventory cycle count allows the count to be integrated into the everyday hum and drum of warehouse operations, significantly minimising the impact of any disruption to normal operations.

If a company has inventory trackable over multiple locations, using bins in the warehouse can massively reduce the counting process and increase inventory levels’ accuracy. The floor staff will know which bins to count instead of attempting a guessing game that consists of them looking for items one by one!

Replenishment

Keeping customers satisfied with their purchasing experience and turning a company profit can be like attempting to walk a swaying tightrope. Considering the unpredictability of most verticals, ensuring there is enough inventory to fulfil orders whilst keeping excess stock to a minimum can lead to failures within even the most organised operation. With companies having to account for fluctuations in demand, seasonal pressures, supply chain logistics and the natural lifecycle of a product, attempting to gauge the perfect inventory level is an ill-fated task.

This is where the introduction of an ERP platform such as NetSuite can offer a helping hand to avoid overspending and underperformance. NetSuite’s inventory management platform provides a demand-based replenishment solution that utilises historical and seasonal based sales. The platform maintains healthy inventory levels and effectively manages item reorder points by considering average lead time and the amount of days’ supply to stock data. NetSuite can automatically generate tasks for the purchase manager to complete.

 

Multi-Location

A common problem businesses face when scaling in size is the issue of growing too quickly for the company’s infrastructure to keep up with increased profitability. An example of this is an increased bolstering in stock levels to keep up with demand but a centralised warehouse that can’t hold all the stock. This is where NetSuite ERP comes in as a natural fit. Once a company stocks, sells and fulfils items in multiple locations, it is critical to have high-level visibility over all locations of business operations. Doing so ensures optimal inventory usage and that all customers receive their products most efficiently and profitably.

When using NetSuite’s inventory management software effectively, pre-defined parameters can be set to maximise profitability and minimise resources committed to this area of company processes. These parameters can consist of multiple factors, including whole order inventory availability and location. Orders can be sent to the location that has all items available, eliminating numerous shipments for a single order and increased shipping charges. To put it simply, inventory management software can help maximise inventory sell-through and minimise out of stock!

NetSuite’s inventory management solution can be configured to display stores as individual locations, providing an accurate enterprise-wide view of inventory levels. A high level of visibility into business operations allows for the proactive monitoring of stock levels and sell-through. Additionally, businesses can oversee the transference of inventory between locations, dependent on the need for inventory, and minimise archaic inventory. Such access to companywide inventory levels enables the sales team to save the sale in stockout scenarios by transferring, holding or shipping a customer’s order directly to them. This feature allows the company to be transparent when communicating to the customer regarding their order, boosting customer satisfaction and may produce something even more valuable than an order – a loyal customer!

These four points on how NetSuite’s Inventory Management solution can help boost a company’s profitability are only the tip of the iceberg on how NetSuite can help companies grow and thrive!

Fancy finding out more about how NetSuite can help your business?

Get in touch with our team below because we’re passionate about empowering others to boost their company’s operations!

LEARN MORE ABOUT NETSUITE’S INVENTORY MANAGEMENT SYSTEM BY BOOKING A CHAT WITH ONE OF OUR TRUSTED EXPERTS!

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