Point of Sale: You Need a Hot Inventory Process

This post is not truly actionable for most retailers, but I’m making it anyway. Taking regular inventory is an important part of maintaining accurate counts, which is crucial for all kinds of reasons, but many of you are doing it in the worst possible way because there’s no good process solutions in your toolset. I’m not providing that solution to you today, but my hope is that in describing a solution, I’ll equip you to ask more of your current point of sale vendor. If you’re a POS developer, particularly in the game trade, I’d like to hand you what should be an easy-to-implement killer feature.

How it’s usually done

For most small retailers the solution involves clipboards and handwritten notes about how many of each item was found. Inventory Day is an all-hands-on-deck affair, with the whole store being turned upside down by everyone on staff, who then turn in their notes to a manager or owner, who frets over entering the quantities into the system late into the night.

This is expensive, because the store is usually closed for this event. Retailers can’t have quantities changing while they’re being counted, so the doors are locked. I’ve seen retailers set aside a day or more every year for this nightmare, frequently starting on New Year’s Day. Nothing starts a new year off right like a day of disappointed customer door-tugs and a payroll percentage of infinity percent!

How we did it

Let’s do a simulated inventory of concessions. SURELY you want to inventory these more than once a year, right? We’ll do this in my development environment, since I kind of sold my store and don’t have access to production anymore. I still have a non-exclusive right to the POS software I developed.

Employee selects Inventory from the menu.
Employee selects Concessions from the list of categories.
Employee counts our simulated and very small inventory of concessions.
Disaster! Another employee just sold a soda!

This is where an inaccuracy would creep into a manual inventory process, but our point of sale system checks to see what items from the category being inventoried have been transacted against during that inventory count. There’s no trivial way to know whether the count took place before or after the customer took their item from the shelf, so the software asks the inventorying employee to check that item again.

The employee grumbles to themselves and re-counts the Mountain Dew, finding that there’s 19 this time. If another transaction impacts the category while they’re re-counting, the cycle repeats until there are no possible transaction timing issues.
And we’re done. The reports screen indicates that all ended up being well with the Mountain Dew count, with the only discrepancy being an overage of one Sprite. Usually this happens because it was counted incorrectly the previous time, but in this case I intentionally introduced the error.

Get it together and break it down

Doing this sort of inventory well requires software smart enough to work while the store is open, but also an inventory that can be broken down into small enough chunks that one employee can inventory an entire chunk in a reasonable amount of time. If your store carries 30,000 board games and they’re all in a giant “Board Games” category, you’re going to have a really bad time. Furthermore, a too-large inventory chunk can cause an infinite loop if an employee can’t possibly re-count ambiguous items faster than customers can come mess with them again.

My store kept board games in one category, but we were not primarily a board game store so it was manageable. You may want to break games into genres, or do this by manufacturer. It seems like a bad idea to me, but you could even do it by starting letter. That would work okay for Magic singles but poorly for a large video game collection. Then you have all the old problems of categorization: Are Citadel paints included in Hobby Supplies with the other paints, or in Miniature Games with the Warhammer miniatures they’re intended for? There’s no one right answer and a bunch of wrong ones, but if this is the thing keeping you from being able to do Hot Inventory, you’ll find that finding your solution makes the rest of your store run better, anyway, so do the work.

Reap the benefits

If you’re closing your store to do inventory, the primary benefit of Hot Inventory is easy to see: What kind of sales volume would you expect to have on the days you’re counting inventory if you were open instead? Not to mention staffing normally instead of calling everyone in.

Being able to inventory while the store is running moves the taking of inventory to an apocalyptic event to something your employees can do on a slow day. This means that not only can you stop hurting sales with the closed-for-inventory day(s), but you can do inventory much more frequently. On slower-moving categories like Board Games we did inventory quarterly. We inventoried Concessions every other week. If a new employee messes up the process on a set of Magic cards or Sega Genesis games, you can inventory them ahead of schedule instead of living with unreliable numbers until Inventory Day.

You have not because you ask not

If you’re using QuickBooks or some other POS, you’ve already got to shoehorn your business into the capabilities of your one-size software solution, so I can’t help you. If you’re using something industry-specific, then you are probably capable of finding the ear of your POS developer. Ask for Hot Inventory. Tell them I sent you.

In an industry where retailers making a middle-class income are considered wild success stories, the money saved by addressing the pain of Inventory Day can make a big difference in owner income, and that’s the most important thing.

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