Inventory Management Tips for Retail Businesses

Good Inventory Management = More Profit

Inventory is the largest asset for most Indian retailers. Manage it well and it generates excellent returns. Manage it poorly and it becomes a cash trap filled with slow-moving goods. These 10 practical tips — backed by ERP capabilities — help retail businesses master inventory management.

10 Expert Inventory Management Tips

Tip 1: ABC Classification

Classify your inventory into three categories: A (high-value, fast-moving items), B (medium-value, moderate-moving), C (low-value, slow-moving). Focus procurement and shelf space on A items. ERP makes this classification automatic from your sales data.

Tip 2: Set Reorder Points for Every Item

Don't wait until stock hits zero. Set a reorder point for each item — the quantity at which you must reorder to avoid running out. ERP generates automatic alerts when stock hits this level.

Tip 3: Conduct Regular Cycle Counts

Instead of one annual stocktake (which takes days), do rolling cycle counts — checking 20% of your inventory each week. ERP tracks count results and shows discrepancies immediately.

Tip 4: Separate Physical Stock from Virtual Stock

Damaged goods, returned goods, and display items should be tracked separately from sellable stock. ERP allows you to categorise these — so your available stock figure is always accurate.

Tip 5: Track Supplier Lead Times

Know how long each supplier takes to deliver. If a supplier takes 7 days, your reorder point must account for 7 days of expected sales — not just current stock level.

Tip 6: Identify and Liquidate Dead Stock

Review stock aging reports monthly. Anything sitting for 90+ days needs an exit strategy: discount, bundle, or return to supplier. Dead stock ties up cash and shelf space that high-profit items could use.

Tip 7: Use Barcode Scanning for Accuracy

Manual data entry during billing and stock receipt introduces errors. Barcode scanning eliminates this — every item scanned is correctly recorded, reducing stock discrepancies dramatically.

Tip 8: Monitor Stock Turnover Ratio

Stock turnover = Sales / Average Inventory. Higher turnover means more efficient inventory. ERP calculates turnover per category and product — showing which items are dragging your efficiency down.

Tip 9: Build Safety Stock for Fast Movers

Your best-selling items should always have buffer stock. If your top product sells 50/day and supplier takes 5 days, you need at least 250 units safety stock. ERP calculates this automatically.

Tip 10: Centralise Multi-Branch Stock Visibility

If you have multiple shops, track total inventory across all locations centrally. When one branch runs short, check if another has surplus before ordering from supplier — reducing total inventory investment.

MILAAN ERP Makes All 10 Tips Easy to Implement

• Auto ABC classification from sales data
• Configurable reorder alerts per item
• Mobile cycle count with barcode scanning
• Stock aging and turnover reports
• Safety stock level tracking
• Multi-branch consolidated inventory view