Managing a franchise’s inventory is virtually the same as managing any other company’s inventory—good inventory management skills are applicable across the board and it really does not make much of a difference if you are running your own company and selling your own product or operating a franchise and selling somebody else’s.
Whether you are running your own or somebody else’s business, good inventory management is a crucial aspect. It can mean the difference between success and failure, profit and loss, satisfied, and dissatisfied customers—unfortunately, lots of businesses, especially start-ups and SMBs, don’t employ good inventory management practices.
It really does pay to put effort into your inventory management. Whilst it may require some work, your effort will be far from wasted.
5 Tips for Better Franchise Inventory Management
It’s really not that difficult, especially when you use these tips and best practices alongside a robust inventory management solution. Here are 5 of our best tips!
1. Start off by prioritizing your inventory
By properly cataloging and categorizing your inventory into priority groups, it is much easier to visualize the products that are most important to you—e.g. because they are very popular or take a long time to manufacture when ordered—and keep tabs on how many you have left.
Sorting your inventory into prioritized groups means that you are less likely to unexpectedly run out of a specific product and be unable to immediately fulfill orders. When you’re franchising and have to order the product from your franchisor, prioritization of inventory is a brilliant way to make sure you order stock in time.
2. Regularly audit your inventory
Whilst audit is not exactly fun or interesting, it is the best way to keep track of your products and know what’s in, what’s not, what’s selling well, and what you need to order, amongst other things.
Some companies only do an audit every few months (or once or twice per year!)—we recommend carrying one out weekly.
3. Know your supplier(s) well
Supplier performance plays a huge role in inventory management. If your supplier is regularly unreliable and does not hold up their part of the bargain, are regularly late with deliveries, or regularly misses out items you have ordered, it may be time to have a discussion with them and consider finding a new one.
There’s nothing worse than effectively managing your inventory and then having a supplier let you down out of nowhere.
4. Keep on top of your sales and returns
This may seem like an obvious thing to say, but there is more to it than simply adding up how many sales you have made of X or Y product at the end of each day. Can you answer questions such as—
- Which of our products are seasonal?
- When does item X sell the best? Is there a certain day or time of year?
- Do we have enough to see us through a sudden spike in sales?
- Does item X always sell together with item Y?
Tracking sales and returns go beyond the number of them—it includes the broader picture and understanding this is crucial for effective inventory management.
5. Invest in an inventory management solution
Seriously—they make the job infinitely easier.
As your business grows, you will no longer be able to efficiently manage your inventory by using notebooks and spreadsheets. In fact, it is wise to adopt an inventory management system as early on as possible and learn how to use it. This way, you won’t have to play catch-up and migrate to an inventory management solution when you experience sudden growth.
Good inventory management solutions make all the points we have mentioned, and then some, so much easier.
Good Inventory Management Starts with You
If you are a franchisee, it is likely there’s already a system for management of inventory in place. If not, it is definitely something to look into and suggest to the people in charge of decision-making!
At the end of the day, you are in charge of your franchised business and its success, so there’s nothing wrong with taking the initiative and adopting a good system if one doesn’t exist or is inefficient.