Every industry holds an inventory for meeting its production and market demands. A significant part of a company’s capital is spent on it; thus, it’s imperative to manage and monitor it efficiently and carefully. Inventory management faces several challenges, such as; stock getting outdated due to overstocking, stockouts, wrong trend prediction, and many more problems. The situation becomes worse when it comes to the fashion industry.
Fashion trends keep changing, and so does the need to update the inventory from time to time.. There are two ways of inventory management in fashion retail businesses: Traditional methods (physical handling) and Automation. In small retail businesses, inventories are considerably smaller; therefore, physical handling or traditional methods are efficient and sufficient. On the other hand, large retailers have multiple warehouses housing numerous products with a plethora of sizes and colors. Thus, inventories get more significant and messier. Automation is considered the best option for extensive fashion inventories as it’s unproductive and infeasible to handle manually.
To automate and streamline your fashion inventories, it is a best practice to use inventory management software. This software automates your inventory and increases productivity and ROI by eliminating situations like inventory shrinkage, stockouts, and overstocking. Let’s learn more about how inventory management software helps fashion retailers.
#1 Improves Inventory Accuracy
Inventory management software helps a lot to the fashion industry and retailers in maintaining inventory accuracy. It is a parameter that monitors the inventory records and checks if the official records match the actual inventory present at any moment. It helps in detecting any deviation or discrepancy in recorded data and the actual physical inventory. This deviation might result from improper data entry, theft, shoplifting, mismanagement of products, etc. One more primary cause of this inaccuracy is the vendor’s error that can occur due to theft during shipment or supplier’s fraud by sending fewer items than ordered, which further gets accepted without double-checking in the inventory.
Inventory management software automates the whole process of counting inventory and helps in maintaining accuracy. Similar to this is people counting software which does basically the same things but on people instead of inventory. One of the methods that this software uses to calculate inventory is cycle counting, a sampling technique that regularly counts the whole stock in parts. This helps maintain the records, avoiding discrepancies and mitigate activities that results in loss of the business.
#2 Improves Real-time Inventory Visibility
For fashion retail businesses to effectively handle inventory management, it is crucial to have the inventory as visible or transparent as possible. Because more transparent inventories are less time-consuming when it comes to locating goods. Moreover, visible inventories eliminate the possibility of inventory shrinkage due to theft, shoplifting, or any other cause.
Inventory management software can help track and locate inventory quickly, especially during peak seasons where demand is high; at such times, finding products of different colors, sizes, materials, etc. can be complicated. Using barcode or RFID inventory systems, you can quickly locate the products placed anywhere in the warehouse. Moreover, cloud-based inventory software gives you access to multi-channel inventory visibility from anywhere in the world. This helps you manage products across various inventories and sometimes fulfill inventory swapping needs based on the demand.
#3 Diminishes the possibility of stock-outs
Stockouts affect the fashion industry in two ways: First, it directly affects the production, and second, it deteriorates customer experience, leading to decreased sales. For example, say you’re preparing sweaters to meet the future demand in the winter season, but midway you’re out of wool. This will not only stop your production but will also affect your sales and business. Moreover, if a customer is not getting his demand fulfilled, it’ll affect the business reputation and may end up pushing customers away, looking for alternatives.
Employing inventory management software will help you eliminate the possibility of stockouts and therefore assist in keeping up with the rising demand. The software’s demand forecasting feature accurately predicts the future market by analyzing historical data, seasonal trends, and sales reports. Using the forecasted information, the businesses can order the inventory accurately enough to meet the demand. The software helps in maintaining optimum inventory levels by not only eliminating stockouts but also the possible situation like overstocking and deadstock.
#4 Reduces Inventory Carrying Costs and boosts profit
Inventory management software helps fashion retailers maintain inventory records accurately. Moreover, it also generates other useful reports like demand forecasts, seasonal trends reports, product performance reports, etc., that help businesses plan their inventory. Using demand forecasting, as mentioned before, companies can order enough stock to meet future demand, thereby eliminating the conditions of overstocking or stockouts. Especially when it comes to the fashion industry, it is vital to keep the inventory fresh, up-to-date, and enough to meet the demand.
The fashion trends of a particular year or season may not work for the next cycle, thus leading to excess, obsolete stock. Further, this leads to increased inventory costs due to tied-up cash in the form of outdated inventory plus increased storage costs. In such scenarios, inventory management software eliminates the risk of deadstock and helps maintain healthy cash flow, further reducing inventory carrying costs.
Thus inventory management software helps businesses earn more profit by loosening the tied-up cash in the form of obsolete inventory. Moreover, you can use the extra money you saved from buying excess stock to upgrade your system or invest in a new product. This will lead to increased sales and, therefore, more profit.
Inventory management, especially in the fashion industry, becomes tedious as the number of products increases with different colors, sizes, materials, etc. Therefore it is advisable to use inventory management software in such cases to automate as well as simplify the process of locating and accounting of inventory. Inventory management software brings accuracy and profits into the business. Every fashion retail business should have inventory management software according to their needs to maximize productivity and ROI.