| Part of the answer to the "buying problem" is inventory | | | | metrics can then be used to improve inventory |
| control. In fact, the biggest reason retail businesses fail | | | | turnover and return on investment. |
| is that they lack inventory control. However, when | | | | Once an MIS infrastructure is established, it makes |
| employed aggressively against competitors, effective | | | | sense for the retailer to integrate vendors into the |
| management of your inventory can be a lethal | | | | system. Vendors are subject to an incentive to keep |
| weapon. Imagine doubling your inventory turnover rate | | | | their inventory on store shelves, and systems are |
| (certainly not far-fetched with proper control): you | | | | available which provide vendors with sales and stock |
| could sell product at half the normal margin and still | | | | information directly from the point of sale system. |
| gross the same amount of dollars in a given time | | | | Providing your vendors with timely information and |
| period. Inventory control has been used to take down | | | | making them responsible for maintaining inventory your |
| many competing retailers. | | | | overall efficiency is improved as your own workload is |
| Like much of the new technology available to business | | | | diminished. The net impact on your business is |
| owners, Management Information Systems (MIS) is still | | | | increased turnover rates and fewer runs on inventory. |
| evolving, and along the way it becomes both more | | | | Anything that results in making the chain between |
| sophisticated and less expensive. MiS tools can be | | | | Vendors, Retailers and Customers more efficient also |
| implemented to gain a significant advantage over | | | | results in additional profit. FRID, an example of an |
| competitors. However, it is critical that you understand | | | | electronic recognition system, enables tracking of items |
| the uses and goals of an inventory management | | | | via a computer chip embedded in the product or |
| system before implementing. Possibly the best | | | | packaging, which is detected at various stages along |
| examples of inventory management come from big | | | | the distribution process. Product information obtained in |
| retailers. To put it simply: Kmart neglected inventory | | | | this way is uploaded instantly to the inventory control |
| control and failed, and Wal-Mart concentrated on | | | | system, which reduces the time spent in receiving and |
| becoming the leading edge of inventory control and is | | | | stocking and allows for a more efficient shipping |
| now one of the world's largest companies. | | | | process. It is imperative for retailers to be aware of |
| It is a common misconception among small retailers | | | | inventory performance and its effects on profitability. |
| that only industry giants like Wal-Mart can use MIS | | | | Inventory control is not, however, the answer to all |
| effectively. Sam Walton himself began as a small | | | | questions. Inventory controls systems can tell you how |
| retailer, but one of his most advantageous assets was | | | | the inventory in stock is performing. It doesn't tell you |
| his deep understanding of inventory control's | | | | hat new products you should carry. Buying is a great |
| importance. | | | | area of opportunity, especially for the small retailer |
| MIS is commonly regarded as a daunting system to | | | | who is close to customers and much more responsive |
| implement by those with limited experience in this | | | | to their demands than is the national chain. |
| highly-technical area, however it is critical to understand | | | | Of course, inventory control is not the ultimate solution |
| exactly what MIS can accomplish. Although internal | | | | to retailers' problems. For example, inventory control |
| hires are available, MIS is made greatly accessible to | | | | tells you what products are performing well, but it can't |
| the small retailer by consulting companies. The basic | | | | tell you what new products to stock. Inventory control |
| goal of a point-of-purchase inventory control system is | | | | is a great way for small retailers to act like one of the |
| to provide information on profitability, status, and rate of | | | | big guys, and gain an advantage over other small |
| sale for every item a retailer stocks, instantly. These | | | | competitors. |