How do you run a profitable Inventory System?

Over the years we have witness retailers work diligently to figure out what to buy, when, how many, from who and for which store. It's quite a task for any buyer. Some businesses involve many staff to run various reports, analyze what was sold, where, by which store them see the current on hands and put the two figures together and come up with a calculated guess as to what to do next.

This of course is what companies do who have resources dedicated to this task. I dread to think what the others with limited time and staff do.

Years ago, we worked with a very knowledgeable buyer who had worked most of his professional life in a large and well known North American based department store. He had semi-retired and started to helped his wife run a six store retail chain. He wanted to apply the decades of experience he had gathered and work with Aralco to develop a very easy to use and yet sophisticated and extremely powerful "Inventory Replenishment System".

We worked through all his complex formulas and methodologies and eventually we came up with the first draft back in 1996. Since that date we have installed the system in a handful of places who frankly have told me "they cannot run their business without it"!

Of course it's not our mandate to "push" technology on to our clients and unfortunately whenever we did try, the retailers invariably told me different reasons why they wouldn't want to use such as tool, some would say "I don't want the computer to write cheques out to my suppliers" or "How do I know if the computer is accurate"?

Eventually we perfected this tool to a point where it actually let you see the exact reasons why it would suggest the order quantities so it ensured the user that it is working accurately. We also placed many "User Definable Controls" to "Tweak" the system to their individual needs. The system would prepare Purchase Order ONLY when the retailer with approve of its recommendations and give it the "go ahead".

In November 2009, we finally convinced a client of 11 year who has a complex, "Matrix" product line with up to 4 inventory dimensions to give the system a try. After a very short time, their full-time buyer managed to do purchase orders (automatically generated) and what used to take 35 hours per week ended up taking 2 hours. The management was astonished to see this new revelation. "The cost saving, speed and accuracy was simply amazing"!

In recent talks with some clients, it became apparent that through the use of some of these effective tools, Aralco can certainly provide much more than the "basic necessities" of a POS System. In this example, it can help you "Optimize" your inventory levels and increase your "bottom line".

A similar system is available for retail chains where the system would help with "Stock Balancing" across your stores to make sure each have got the right number of units on hand to meet their forecasted/ targeted sales.