LESSON 1:
Reduce shrinkage – shoplifting, product damage vendor
Retail inventory management- carrying the merchandise that
shoppers want, with neither too little or too much on hand, meet
demand w/o running out of stock.
Recognized when implementing retail inventory: PQIPIWH
1. Product location
2. Quantities of product type
3. Identify which stock sells well and which does not
4. Profit margin by item
5. Ideal amount of stock to have in storage
6. When to discontinue a product
7. How season affect sales
Importance of inventory management in retail -vital for retailers,
help them increase profit, likely to have enough inventory to capture
every possible sale, avoid overstock and minimizing expenses
Reasons why the practice of retail inventory management increases
efficiency: DMIPSREII
1. Decrease inventory cost -you can pinpoint inventory levels
more accurately, reduce storage and carrying cost
2. Minimize out of stock – use management inventory tools to
determine how much stock is “just right” to have on hand
3. Improves profit margin – lower inventory cost and enough
supply to fill every order
4. Prevents spoilage and obsolescence – helps retailers
address another costly inefficiency that happens when
products expire or become obsolete
5. Simplifies processes and facilitates growth – reduce friction
in business as sales grow, minimize complaints and reduce
staff stress
6.
mistake or fraud. Miscounting or misplacing it, stronger
retail inventory management could reduce it
7. Ease supply chain management – having a firm grip on
inventory and sales trend, replenishment of system that
works best for you
8. Improves customer satisfaction – they want fewer mistakes
or out-of-stock, increase customer loyalty
9. Improves forecasting – use of historical sales result to
project future sales
10 steps in retail inventory management CIDCCEBCDP
1. Create centralized record (product name, brand, price, retail
cost)
2. Identify stock location (stockroom, sections, shelf and rack)
3. Do regular stock counts (ensure it is accurate, avoid errors)
4. Combine sale and inventory data (shoes w/c goods are
turning over fast and w/c are lagging. When how much to
reorder, when to offer discounts)
5. Create purchasing process (prioritize purchase based on
item’s profitability, popularity, and lead time)
6. Establish method for markdowns (sales can fail to live up to
expectations, discounting, creating a strategy ahead of time)
7. Build a stock receiving process (verify incoming orders,
enter goods accurately into an inventory system)
8. Create system for return (handling customer returns)
9. Determine a dead stock (excess inventory ties up capital
and weighs on profitability)
10. Pick your inventory KPIs “Key Performance Indicators” (to
gauge the success of your process)
things to do when you encounter dead stock: To maintain an accurate inventory count over a period:

1. Record when it falls into this category and remove it. 1. Locatable when you need it
2. Designate a place to hold dead stock 2. Must be able to track the item from the time it was ordered
3. Ship promptly, pullbacks or received
4. Selling to outlets, donating, recycling or disposing 3. Inventory management must also keep a timely record for
these events
LESSON 2:
Four locator systems:
Inventory or physical location – dedicated physical inventory space
used by vendor to store their inventory. 1. Memory locator system – solely depend on human recall,
depends directly o people, foundations are: simplicity,
Importance of warehouse location – warehouse is the nucleus of
relative freedom from paperwork, maximum utilization of all
the business. Where all actions take place, shipping, receiving,
available space.
picking and pulling.
Conditions:
“a place to put things, and everything in its place.” (1) storage locations are limited in numbers
(2) storage locations are limited in size
-delays in shipping when there are zero items available on the rack, (3) variety of items stored in location are limited
may lose the business and ultimately their competitive position. (4) allows for easy visual identification and separation
Advantages of warehouse labelling (5) limited number of individuals work within the storage
areas
1. Increase overall efficiency (6) workers do not have duties that require them to be
2. Eliminates errors away from those locations
3. Speeds up workers productivity (7) not many stocks movements
4. Improves management of inventory
5. Efficient inventory and warehouse management Pros: simple to understand, little to no on-going paper-based or
6. Keeps an organization in compliance computer-based tracking required, full utilization of space

Stock locator system – is the way in w/c employees will know where
to go when they ordered to pick a specific product. It can be manual
or automated.
Automated stock locator system – make for a more fluid system
with far fewer errors
Cons: strongly rely on memory, significant and immediate decreases
in accuracy, once the item is lost to recall it is lost to the system.
2. Fixed location system – item has a home, two or more items
to be assigned to the same location, only those items to be
stored there.
Two reason this system requires large amount of space:
1. Honeycombing (storage space is available but not fully
utilized)
2. Planning around the largest quantity of an item that will
be in the facility at one time
Reasons in honeycombing why these spaces are not fully
utilized:
4. Random location system – nothing has home but you
know where everything is. Allows you to maximize
space for no item has a fixed home and may be placed
wherever there is space.
Pros: maximize the space in your designated warehouse,
control whereabouts of all items at any given time

1. Product shape – prevents cubic space or prevent placing

one item against another
2. Product put away – are not stacked in uniform manner
causing loss of vertical and horizontal space
3. Location system rules – location is empty but no other
items can be placed there
4. Poor housekeeping – trash, poorly places desks, force
empty space

Pros: immediate knowledge of where all items are located,

reduce time in training newly hired, simplifies and expedites
both receiving and stock replenishment, allows for
controlled routing of orders, allows for strong control in
facilitating.

Cons: contribute to honeycombing, products likely to be in a

facility within a defined period of time, somewhat inflexible

3. Zoning location system – centered around an item’s

characteristic, certain items can live in a particular area.

Pros: allows for the isolation of stock keeping unit to such

characteristics, allows for flexibility in planning.

Cons: zoning may contribute to honeycombing; zoning

requires updating of stock movement information