By Mr. Retail
During this time of tight supply, why is it that some retailers have more inventory than others, even with all things being equal, including cash on hand? Let’s explore a few ideas.
First, there’s the human side of the business equation. Face it, we are a small industry. As someone wisely told me over 30 years ago, you know your industry is small when golf ball sales are higher than ours. I never forgot that analogy. What that means to you is two-fold.
When business is severely stressed, such as supplies in backorder by 6 months, then like it or not, relationships matter. Business is transactional, yes, but relationships play a big part. Cultivating mutually beneficial business relationships built on honesty, integrity, and trust can go a long way for you.
Also, folks that spend time getting known (in a good way) in our industry are often rewarded with business benefits. I will leave out the specifics, but just say, being nice to a regional manager might come back five-fold when someday that person becomes company VP or even president.
Then there’s the transactional side of the equation. Large companies produce rolling orders for a whole year and then adjust them as needed. Smaller retailers such as ours can also do this in what are called “planned releases.” Most vendors will work with you to adjust the quantities up or down as needed.
Fast forward to the present where backorders are the new norm. Maybe consider doing ongoing backorders that you place consistently with important vendors. The reality is they aren’t going to ship your whole allotment at one time. But they do fill backorders in the order they were received. So, you place an order in January for a dozen of the XYZ head units, and it takes them four months to fulfill that. When you place your next order, you are now at the back of the line. So consider doing consistent orders once per month with your suppliers, knowing that it is going to take a while to be fulfilled.
I would also consider finding an easy way to track your backorders. I use a point-of-sale system that easily lets me see when I generated the PO and the associated quantities. If you don’t have that capability, resort to a piece of paper and a manila folder labeled for each brand.
Finally, there are going to be times when other stores get product before you. If Larry’s Car Audio is a direct dealer for XYZ and you buy it from a distributor, don’t be upset if Larry gets product more often that you. He has made the commitment to a vendor and is being rewarded for it. In the end, good planning makes it easier to get inventory. I won’t say it is easy, but it is worth the effort.
Source: https://www.ceoutlook.com/2022/02/01/5-lessons-in-inventory-during-the-pandemic/
