Inventory Management in EPOS

Inventory Management crate

Your basement hates you. If it could scream, its anguished howl would curdle blood, and drive away your customers.

It would scream at the disorganised boxes piled haphazardly on top of one another; it would scream at the grime and muck; it would scream at your failure to organise and scrub it like a beloved basement truly deserves.

But a basement cannot – and does not – scream. Instead, the basement hides things, and sometimes, takes them away from you forever. One reason you desperately need EPOS is to help handle this. Inventory management is a set of functions which helps you keep on top of all your stuff.


The basics: what should an EPOS do for inventory management?

There’s a lot of stuff here, and some features and functions from other parts of an EPOS system do also encroach on “inventory management”. That said, a good inventory management system should: 

A) Track how much and which parts of your inventory you’ve sold 

Warehouse Inventory 1

It sounds obvious. The 101 of inventory management software is that it should prevent you from running out of stock or prevent you from over-ordering stock. You always need stock to remain in business; but you don’t want to over-order if you don’t have the space or your stock has a sell-by-date.

Inventory management will alert you to low stock levels and suggest you reorder to par stock (your normal suggested stock level) at the touch of a button. In advanced systems, you can trial automatic ordering for some products to take you back to the normal levels.  You might also want to be able to add products on the front-end of an EPOS so that you can quickly add new products in a pinch.

In order to achieve this basic task, you may need any of the following in your POS: 

1. If you have an online store, it needs to integrate with your POS. It’s essential that your stock numbers are up-to-date across your online shop and your store. Check whether an integration is available, or consider using the same provider for both.

2. A clear translation between how products come into your store and how they leave. If you work with food or complex drinks, that will mean “building recipes” in which the set-up will invite you to enter the approximate volumes of different raw materials which go into each unit, in order to deduct those raw materials from your stock automatically as each meal or cocktail is sold.  Check out EPOS for pubs and bars

3. Adequate modifier and variant capability. Rather than tagging every variant of every item – (“XL Moss Bros T-shirt in yellow”,”XL Moss Bros T-Shirt in blue…”) it’s usually easier to add “modifiers” or “variants”.

4. A quick view of the state of your inventory. In any POS system, in any demo, there is likely to be an “inventory” tab for the controller (you). It should give you a fast and intuitive look at the state of your inventory at the minute.

5. You may need a barcode printer to correctly label your stock so it can be scanned quickly at the checkout, which is available on our website. 


B) Manage which stock is where 

Freight boxes ready for loading on a ship

As you get more locations, you’ll find that the complexity of your stock begins to increase exponentially. You may have a warehouse, a central kitchen, or multiple stores. A good POS system can:

1. Sub-categorise where items are within storage areas. Warehouse / store 1 / store 2 / basement / room 1 / shop floor / Shelf one / shelf two / shelf three… you need to know the exact location of what you’re looking for to find it when a customer is waiting. 

2. Enable staff members to look up the availability of the item in other stores. This is popular among bike shops where customers are often looking for a specific part and will appreciate being told where the part is available. 

3. Clearly denote where all stock is at any one time. It is possible to use POS systems to take deliveries, although the scheduling and sign-off of these are still more likely to be done manually. 

4. Show that stock is running low in individual locations. Prompting you to order a delivery from your warehouse or from an external supplier. 


C) Tell your front-of-house employees whether something is “in stock”


This is another obvious but important one. If a customer wants to know whether an item is available in the back of the shop, and the employee has to go looking round the back of the shop for it, that’s a waste of time – both for your employee and your customer.

Similarly, if you’ve run out of the fish on the menu, it’s better that all your staff realises at the moment they try to input the order, rather than halfway through cooking, when a kitchen staff member relays it to the front-of-house.

Both of these examples are a great argument for a cloud-based EPOS system. With older systems, “out of stock” in item A B or C might not show on the other terminals besides the one which sold the final item – at least until the end of the day when all the terminals are synced. Since all cloud-based tills are constantly connected to each other, they sync constantly – and all of them show the correct stock at all times. 

Individual items should also be easily searchable, by purchase order, SKU, or item name. 


D) Buy stock and control stock costs

Man with crate

Life is a series of people asking you for money, and stock is no different. 

Controlling stock cost includes:

1. Creating a purchase order and ordering more stock from suppliers. On some systems it’s possible to schedule delivery, and we’d expect more of this to automate over time. 

2. Automatically reordering stock back to a par stock level when a lower warning threshold is hit. 

3. Notifying you of stock cost increases in a central dashboard, which can prompt you to start searching for another supplier as they rip you off. 


E) Reduce stock shrinkage

Wine being spilt

Stock shrinkage is your nightmare. 

If you have 20 one litre bottles of vodka, and you sell 200 25 millilitre shots, mathematics tells us that you’ll have 15 litre bottles remaining. Experience tells us you’ll have less than that. POS systems generally run on maths, and will need correcting every so often with your “actual” stock numbers verified by a manual stock take. This is usually known as “theoretical versus actual” stock. 

Depending on your industry, stock shrinkage can be a big cost to your business and is worth keeping a close eye on, which a POS system will allow you to do because you will be measuring it. If you’re losing a lot more than you should be, you’ll be able to use the data that a good POS system provides to identify the source of the losses – and plug it, whether that’s routine error, shoplifting, or employees drinking the booze themselves. 

How much stock shrinkage you should consider acceptable varies a great deal from industry to industry. But the causes are:

  • Shoplifting or external theft
  • Vendor/supplier fraud
  • Embezzlement or employee theft
  • Employees drinking or eating your stock
  • Stock being broken 
  • Stock getting lost
  • Paperwork errors
  • Communication errors in complex supply chain (e.g. the stock never arrives) 
  • Spillage
  • Discounts and free drinks
  • Mis-sized portions
  • Paperwork errors

In retail EPOS, research suggests that the total stock shrinkage figure is around 2%. Virtually any missing stock can and should be accounted for – and the biggest portion of that is likely to be external theft. If you find that you have a large amount of stock going missing, it might be worth examining your security first.

When dealing with alcohol, such as in pub or bar EPOSa normal shrinkage rate is around 15% but some estimates go as high as a 30% industry average. If you have less than 10% shrinkage with your alcohol, you’re doing rather well; if you have more than 20%, look into it. More than 30%, you’re losing far too much of your business and you’ll need to take decisive action to identify what’s going on. Unfortunately, this can sometimes be a company culture issue with staff casually pouring themselves and friends free drinks. 

It should also be possible for staff to log “wasted” stock – if, for example, they smash a bottle of vodka, it should be possible to put it through the POS system and log where it’s disappeared. 


F) Easily import/export stock lists 

Picture of market

This sounds obvious, but is another great argument for cloud-based software. Nearly all of the newer systems can bulk import stock from an excel or sheets file given a few formatting requirements, and nearly all of them can export stock lists into purchase orders or excel files if you want to work on them. 

G) Make sure everything is in-date

apothecary with stuffed shelves

For many systems, it’s possible to “batch” time-sensitive stock so that you’re alert as they approach the use-by date; and you’re not making your customers quiche with rotten eggs. 


What next?

The next chapter is about staff permissions and multi-sites.
chapter 4: EPOS staff and multisite

Got Questions? 

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