Planning on bulking up your wholesale inventory with some hot new items? Preparation is key and today we cover how to have successful inventory planning. Read more below…
Picture your boutique inventory, how it is displayed, and catching the eye of your customers. Now, replace the image of your inventory with one-, five-, ten-, and twenty-dollar bills. You must see your inventory as cash flow and revenue as a business owner. Your goal is to turn the actual product into dollar signs. Inventory planning can help you reach this goal.
Inventory planning involves knowing which products to order, how long it takes to get them, and how to avoid overstocking and understocking. These factors must align with your boutique’s production and sales plans. This may sound like a lot of work to sell some clothing. You are right. But it is essential for success.
Steps of Inventory Planning
Each retail business is different in theme, branding, products, size, and location, to name a few. One component that is the same among all retailers is the steps of inventory planning. Steps include ordering products, receiving products at your boutique, inspecting products, and then sorting and storing the products.
Other steps include inventory audits, making sales, placing reorders with the wholesaler, and updating inventory data.
What Are the Benefits of Inventory Planning?
If being organized and efficient were the only benefits, that would be worth it. However, inventory planning offers even more for boutique owners, including the following:
- Helps you manage cash flow
- Improves inventory sell-through which increases profits
- Limits misuse of inventory by employees
- Improves order accuracy
- Saves time and money
- Meets the needs of customers
You may not know where to begin when creating an inventory plan. Fortunately, there are many inventory planning tips and strategies, like the ones below.
Build a Good Relationship with Wholesale Supplier
You have likely already found that working with a wholesale supplier is the best way to get big discounts on bulk items, allowing you to see higher profit margins. Working with a wholesaler is more than just ordering products on their website. You must build quality relationships with your contacts.
Communication is key in all good relationships. Stay in contact with your wholesaler, let them know how their products are selling or not, and seek advice on moving more products. Think of your supplier as a partner with inside information from the manufacturer that can be passed down to you.
Be a great partner by paying your bills on time, avoiding last-minute orders, knowing your numbers, and being kind.
Start collecting data on sales, returns, profits, losses, and everything else that can help you formulate an overview of what is working and not working. The more data you have, the better you can plan inventory for your clothing boutique. Data can also help you:
- Optimize storage space
- Calculate lead time
- Analyze trends
- Re-order at the right time
- Demand forecasting
ABC analysis divides inventory into three categories based on how they affect overall costs and is a helpful inventory planning tool. Category A includes products that sell and add to your profits the most. These are your most valuable items selling in your boutique.
Category B is items that contribute less to overall products but are not the least valuable items in the boutique. Category C consists of products that, by themselves, don’t offer much in terms of profits. But as a group, the small sales add up to increase revenue.
Consistency in ordering, receiving, storing, and reordering products will make your life easier. Changing any of these areas from month to month will be confusing and frustrating and puts you at a higher risk for many mistakes, which can be costly.
Use Inventory Planning Technology
Trying to keep track of orders, sales, returns, reorders, shipping information, etc., using pen and paper will quickly become overwhelming and unmanageable. Investing in technology supporting your inventory needs will save you time, money, and effort. Consult with your wholesale supplier about their technology and use inventory planning software compatible with the wholesaler’s technology when possible.
Create a Plan for Dead Inventory
Dead and slow inventory are the products that aren’t selling or are slow to sell. Without a plan to handle this type of inventory can cost you money in the long run. Develop a list of solutions to move the dead or slow inventory. Solutions may include sales, discounts, or bundle pricing. Whatever you choose to solve the problem, collect data on its efficacy so you can make improvements if necessary.
You have likely already learned that everything can change quickly in the boutique clothing business. What is trendy today may not be trendy a month from now. Things out of your control can negatively affect your boutique. For example, technology can freeze, crash, and present other challenges when you need it to work the most. Customers may complain, return items, and accidentally damage your inventory. All of these can add up to losses unless you see them as opportunities for improvement.
Every incident gives you a chance to figure out why it happened and how to prevent it in the future. Or at least figure out how to protect your business and profits. Continuous improvement benefits numerous components of your boutique clothing business, including:
- Customer service
- Employee satisfaction
- Company culture
- Brand and reputation
- Customer satisfaction
It is important to note that continuous improvement should be implemented according to your plan. Winging it is not a viable option. You can’t copy another boutique’s ongoing improvement plan either. Your business differs from theirs, and all plans must be customized to meet your and your customers’ needs.
Don’t forget to include your wholesale retailer in your inventory and continuous improvement plans. They want you to succeed, and there are actions they can take to help you reach your goals. When you succeed, they succeed. You are likely to remain a customer, which is their top priority.
Wrapping Up Inventory Planning
If you don’t already have an inventory plan for your clothing boutique, start creating one today using the tips and strategies offered above.