How a POS system improves supply chain visibility

What is supply chain inventory visibility?

Consumers expect to purchase products online, in-person and on-the-go – picking up in store, using same-day delivery services, and receiving shipments in the mail. This makes stock-keeping harder for small businesses; it is critical to ensure that your website and in-store POS have synced inventory information and fulfilling orders quickly and accurately, regardless of how customers place them. Keeping track of this information is known as inventory visibility. Mastering inventory management allows you to track product sales, trends, and reorder forecasting in a single view. You can even parse your data by product features, sizes, popularity and other variables that help you keep adequate inventory on-hand without tying up your cash flows.

How can an inventory management system provide end-to-end supply chain visibility?

Inventory management used to be a labor-intensive manual process that was prone to human error and inaccuracies. Now, small businesses can use modern inventory management systems that integrate with their POS solution – allowing you to view and update stock changes in real time, across all sales channels and locations. Here are a few key benefits of digitizing inventory management and ensuring synchronization with your sales data:

• Track inventory metrics: To develop an inventory management strategy, you need information. You can use your POS solution to track key metrics like inventory turnover ratio and inventory-to-sales ratio to understand how quickly you are selling products and how much of your cash flow is tied up in physical goods. You can also set up reports to track the performance of specific products and features to help with restocking decisions.
• Reorder profitable products and remove stagnant products: Use data from your POS solution to choose which products to reorder from suppliers and which to discontinue. Even if some products sell eventually, you should focus your efforts and resources on those that sell quickly and don’t stay on the shelf for too long – tying up cash flow and taking up valuable physical space in your store or warehouse.
• Forecast demand and order new inventory proactively: Inventory patterns can also indicate seasonality of products and other customer behaviors that you can use to forecast future demand. Armed with this information, you can restock profitable products in advance of busy seasons – for you, your suppliers and shipping providers – to save time and money for your business. Anticipating your inventory needs can help you avoid longer lead times from suppliers and longer delivery times from shippers during peak retail seasons and unexpected supply chain disruptions.
• Negotiate with suppliers using data: As you establish relationships with suppliers, it is important to negotiate favorable pricing and other business terms with them to boost cost savings and create additional value for you and your customers. You can start these conversations by presenting data from your POS solution and making reasonable requests for bulk discounts, custom packaging, reordering frequency and other terms that benefit your business and the supplier over time.

What should I look for in a point-of-sale system?

To ensure maximum visibility and transparency in inventory tracking, you should choose a POS solution that is cloud-based and can be accessed from anywhere – your payment terminals, desktop or laptop computers and mobile devices. You should also prioritize features like:

• Automatic data synchronization across all devices, sales channels and locations 
• Flexible data reporting and dashboards
• Tailored solutions for your industry (especially solutions specifically for restaurants)
• Customizable notifications and alerts for inventory levels and key metrics 
• Ability to generate purchase orders with pre-populated fields for repeat suppliers 
• Enhanced fraud prevention and data security features to protect your operations and customers

What is the best supply chain inventory strategy?

Armed with the right POS solution and inventory management data, you can develop the right supply chain strategy for your business. Key considerations include preferred suppliers, backup vendors, desired order lead times, shipping budget and inventory perishability, among many other factors. Here are two approaches to consider that leverage POS data insights:

1. Par stocking

Use your inventory management dashboards in your POS solution to set ordering and supply thresholds as part of a par stocking strategy. Choose a par level by calculating your weekly inventory needs and adding a safety stock buffer to account for any potential delays or disruptions, divided by the number of deliveries you receive during this period.

For example, a clothing store may sell 200 T-shirts per month and receive new products on a weekly delivery schedule. Using a par stocking strategy, you would add a buffer of 20 T-shirts to your monthly order to avoid potential supplier delays or shipping disruptions. This means that your business would receive 5 additional shirts per weekly order – creating a safe cushion of inventory without tying up too much of your cash flow in products.

2. Predictive analytics

Rather than setting a standard reorder threshold and automatic inventory buffers, you can analyze data from your POS solution to more precisely predict customer demand and send restocking orders only as needed. Further, you can also see which products your customers may be willing to purchase as substitutes if their desired item is sold out during a busy season – giving you more flexibility and reducing risk of lost sales.

Whether you are just starting out or are growing your multichannel retail empire, you need to be able to weather the storm of supply chain disruptions. Integrating your POS solution with your inventory management system and supply chain strategy will ensure smooth operations and satisfied customers for the long-term.