Using your summertime lull to implement a successful spa or salon inventory management and replenishment process is a smart business strategy that will help you prepare for busier seasons ahead.
Even if you have a few employees and work out of one location, taking time to assess and plan is a worthwhile use of your resources. There’s no better time to do that than during slower months, when you have time to upgrade or set up new software that will help you run your business better.
Performing physical inventory counts monthly is ideal. An accurate count of your inventory can tell you what’s been moving, what hasn’t, where you’re spending your money and where you’re making money. If you conduct this assessment now, you still have time to weave some of those products into specials this summer to clear your shelves for fall and holiday stock.
Here’s are some things to think about as you assess your inventory:
- Look at the number of lines or brands you carry and the products you need to deliver all of the services on your menu. You can probably slim down the array of products you’re buying and avoid overstocking.
- Analyze what you’re selling regularly and in what sizes. Using that information, create an “approved” list of items you’ll carry from any given supplier. This practice can really keep your inventory costs under control.
- Identify maximum inventory quantities and minimums required to trigger a re-order. Keep in mind the amount of time it takes you to receive your order and order frequency. Knowing this can help you make seasonal adjustments to your orders.
- Create a budget for inventory procurement. The monetary value of inventory you have on hand should be equal to no less than 3 months and no more than 6 months of your monthly sales, valued at wholesale.
- Budget among your departments and look at your retail sales by category. For example, if 50% of your total retail sales come from skincare, then that’s where you should spend 50% of your budget, allowing for seasonal adjustments.
- Separate your inventory into categories that reflect the design of your service menu, and then into professional and retail segments. This will help you accurately track your expenses and estimate revenue and profit.
- Accuracy and speed are the keys to higher profits. The faster you can recognize you’re low on a product, order it, and restock it, the higher your revenue and the lower your costs will be. This is why inventory management systems are so important. Relying on old-school ordering methods of wandering the retail area with pad and pen in hand makes it easy to overlook an item, or to not understand how a particular product is trending.
- Keep timing in mind. Consider the time it takes for the order to be processed and for the shipment to arrive. The faster the timeframe between placing of the order and the placement of the product on the retail shelf, the lower your inventory costs and the less likely you will be to miss out on a product sale.
- Compare what you receive to the original order to ensure that the items you’ve received are the correct size, shape, and color. It’s important to create POs (purchase orders) or have a system that does this for you, so you can simplify the tracking process and ensure accuracy. It also helps to have one person receive the order. The more people involved in this process, the more likely you are to encounter errors.
- Establish detailed protocols for stocking and storing your inventory. Typically, newer products are placed at the rear of the shelf so that older products remain in front and are used first. This is particularly important with products that have a limited shelf life.
Effective inventory management doesn’t mean you have an overabundance of products – it means you have the right amount of products in the right place at the right time.
Learn more about how to improve your inventory processes during your lull in our Summer Makeover Guide.
About the AuthorMore Content by Kate Rankin