The 3 important ways POS data can be used

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The modern day point-of-sale (POS) has evolved to become more than just a transaction processing tool. Technology has advanced since the original cash till, and today, the POS has business benefiting features that retailers can really use across processes. Let’s focus on one of the most important benefits of the POS which provides value in intelligence and decision making – data collection.

While most retailers over the last few years have started collecting data at the POS, it’s those who are actually processing this data in the right way and drawing insights to enhance their businesses are getting ahead in the retail arena. Below are 3 important aspects of POS data and how it can be used.

Inventory and stock optimization:
When the POS is used to record data about inventory, it enables retailers to stay on top of stock levels thus making it easier to track items — from ordering through the point of sale (and even returns). This further aids in better inventory forecasting, purchasing, and this is also useful in retail marketing decisions. Some of modern retail POS software provide some important features related to inventory such as conducting inventory counts, managing returns, automating re-order points, checking stock levels at stores, among others. Analyzing the inventory data collected at the POS can enable retailers to have the right product at the right time.

Enhancing customer experience:
The POS software can be used to collect customer information while registering customers, look-up already registered customers, capture their feedback, track the frequency of their visit to the store, and also monitor their ticket size, the kind and quantity of products they generally purchase. All this data can be processed to draw powerful insights to analyze shopper behavior and their buying patterns thus allowing retailers to personalize customer experience along with having the right inventory at the store. Further, the information can also be fed-back to the store-staff at the POS to enable cross/up selling. Also, having the inventory data will allow the store associates to proactively let shoppers know about the availability of certain products. These efforts can enhance the overall customer experience.

Improving staff performance:
The POS software can be used to collect data related to sales staff. Some of the valuable metrics in addition to total sales could be basket size in-terms of price and quantity, walk-ins converted to registered customers, customers issue resolutions, and so on. The data can then be processed to learn about employee performance and understand the areas where improvements are required in terms of training and also recognizing the achievements of the store employees. In addition to this, factoring in the staff to sales ratio is an essential parameter to decide about the staffing needs for the store.

Why do you need a franchise management software?

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To begin with, franchising is a retail business model that involves two parties – the franchiser and franchisee. The franchiser permits the franchisee to use its brand name and business model, based on certain terms, conditions and clauses involving revenue that are agreed upon. Franchising is a very popular business model especially in regions where foreign brands use franchisees to expand their presence in the market.

Since this business model involves 2 parties, complications and issues are bound to arise due to the involvement of separate entities collaborating over a business. Further, since the franchiser is the owner of the business and is allowing the usage of his brand and products, he would definitely want to have an overview and manage the franchisees. This could be tricky if not tackled the right way. Enter – franchise management software.

Let’s dive deeper into how can a franchise management software fit into the franchise model of a retail business.

A franchise management software can be perceived to be a platform that facilitates collaboration between franchisers and franchisees, as well as assists in increasing engagement between the two parties regarding various aspects of the business such as marketing, sales, branding, CRM, inventory management, reporting, operations, and so on. The software essentially establishes business rules and processes in mutual agreement between the two parties. Using these processes and business rules as a base, franchisers can look to grow their business further by hiring more franchisees. Moreover, the software with preset rules and processes allows the franchiser to monitor performance based on real-time analytics, and streamlining operations as well as exercise control over the franchisees, and also capture and store market data and trends for further analysis and bench-marking. The franchisees on the other hand can use the software to automate their business operations and also keep track of their business performance and provide necessary reports to the franchiser. Also, the franchise management software can help to connect multiple franchise sites through integrated communications.

Here are some aspects where a franchise management software can benefit your retail business:

Inventory and supply chain management: A good franchise management software generally enables access to inventory data to help you in forecasting the inventory levels. Purchase orders can then be placed to replenish stock. The software could help the business keep track of the supply chain process from order placement to stock replenishment, allowing to foresee and mitigate risks/issues that can arise in the process.

Customer management: Customer loyalty and retention is extremely important for every retail business and it is dependent on the quality of customer service in your franchisee outlets. A solid franchise management software aids customer relationship management by providing capabilities such as customer registration, loyalty programs, customer information look-up, inventory look-up, customer feedback, and so on that enable you to attract and retain customers in the long run.

Process management: A good franchise management software helps in the inspection of your franchise outlets following certain industry audit standards and checklists. By having capabilities of storing historical information of your outlets, you can use the information as a benchmark for performance tracking and inspection. Moreover, tracking sales data, employee data and performance, inventory data, and other important information, you can map out any discrepancies as well as keep a tight control on the processes and operations.

Setting up a solid and foolproof retail business inventory management process

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While strong sales are the backbone of any retail business, its inventory management process can signify the difference between success and failure for the business. Inventory management can be generally perceived to be a balancing act between demand and supply rather than just a business operation. While retail as a business has been evolving over the last few decades due to the influence of technology and innovations, the processes involved in the retail business are also a part of this evolution. The inventory management process has witnessed the need for a significant upgrade, especially due to the advent of new channels of shopping leading towards omni-channel. However laying the groundwork for a successful inventory management strategy and process that matures along with the business is extremely important for the success and sustenance of the business. Below are the basic steps for setting up a solid inventory management process.

  1. Set the key performance indicators (KPIs).

Setting, using and sticking to KPIs to manage inventory can be one of the best methods with regards to to measuring the impact of overall business operations. Every business and therefore their set of KPIs are different, but there are a few common ones that retailers must look at:

Gross Margin Return on Investment (GMROI): This analyzes the firm’s ability to turn inventory into cash above the cost of the inventory. It is an inventory profitability evaluation ratio, calculated by dividing the gross margin by the average inventory cost.

Gross Margin Return on Footage (GMROF): This is an important KPI that measures the inventory productivity that expresses the relationship between the business’ gross margin, and the area allotted to the inventory. This is critical, especially when stocking inventory at the store for selling.

Average Days to Sell Inventory (DSI): This is a measure of the time period taken by the retail company to convert inventory into sales, and this metric varies by industry. An important point to remember while using this measurement is that large-ticket items typically move slower than small-ticket items. The formula for calculating DSI is (Inventory/Cost of Sales) x 365, according to Investopedia.

Stock-Outs: This KPI represents the number of times a demand cannot be fulfilled due to the unavailability of the required inventory. This helps in obtaining a big-picture view of the effectiveness of the business in purchasing and production.

Rate of Return: This monitors and rates the percentage of orders that are returned and therefore need to be restocked. Tracking the reason for returns while monitoring this KPI is important to identify and address any trends in problems in the supply chain and thus mitigate risks of costly returns.

  1. Specify the W’s.

Efficient product organization aids a smooth inventory management process and can help in other processes such as picking, packing and shipping products accurately and quickly. At the basic level inventory organization begins with where and what – for achieving profitability, optimizing costs and offering superior customer experiences – that is the ‘why’.

Where: Evaluating the storage space available and creating zones, including number of doors/docks, recording their size and location, and non-inventory storage space; within these zones, determining sections, labelling each zone section clearly for employees to see and easily navigate.

What:  Accurately labelling each product to avoid confusion and time in finding what customers ordered.

  1. Choose the right software.

As the business grows, it is necessary to have an inventory management system that scales with it. Inventory management becomes more complicated with each new product the business sells and every new customer who buys it. Thus it is important to employ the right inventory management software (IMS) to help streamline multiple processes with a single program.

In order to find the right inventory management solution, it is crucial to define the pain points that need to be solved. These pain points may include overstocking/understocking, incorrect inventory levels or sales reporting, handling omni-channel inventory. Determining these needs will help in identifying the features each solution offers and how they will address the needs. Next is to evaluate the level of customization and compatibility with other systems, especially those that are currently being used or are going to be implemented within the business. Assessing the customer service capabilities (e.g., 24/7 service, dedicated representative) of the solution providers is a must as it can make a big difference when there is a need additional support.

  1. Check and monitor.

Frequent and organized check-ins will help streamline all aspects of inventory optimization together. Considering cycle counting programs in order to gauge the accuracy of inventory levels through routine audits can help in understanding the product sell-through rates, which can then be used to liquidate products that aren’t moving in order to optimize costs and storage space. It will also enable the retailer to introduce new products into the mix that share similar characteristics with the biggest sellers. Finally, keeping an eye on the product quality and any discrepancies in size, color or style can help increase customer satisfaction and lead to lower return rates.

Continued evaluation is key for enhancing the inventory management process. Having a well-run process in place — from inventory organization to implement the software to data capture and then review and analysis – can ably support the growing business by adding efficiencies to shipping processes, reducing fulfillment timeframes, lowering rate of returns and enhancing customer satisfaction while strengthening the bottom line.