I was speaking with a subscriber about the information needed from his POS system and he was unsure if he could come up with it. Everything we need is in there; it’s just a matter of getting it out. I told him to speak with his POS rep.
Whether you use our open to buy system or not, there is information that is vital to keeping your inventory on target and your cash flow positive that you must be able to access on a regular basis. All of the figures I will speak of are in retail dollars since you need to build a retail dollar inventory to support your retail dollar sales. “But we do everything at cost” you might be thinking. Well, cost is for your accountant, not for your merchandising.
So, the first item you need to know is your beginning inventory in each of your merchandise departments (in retail dollars). Beginning inventory figures are important since when planning your buying into the future, your starting point must be your inventory from the 1st of the month. Without that, you don’t really know where you stand without a lot of manual calculations and why would you do that when you have a POS to compute all of that and the other things I’ll speak of?
You also need your monthly sales by department in retail dollars, but that should not be a problem for even the oldest POS.
Next, you need to keep track of your orders as they are placed. The tracking should include the order number, the supplier, the merchandise department, the delivery month and the amount in retail dollars. If your order form does not have a space for retail dollars (selling price) at the end of each line item, it should be added. When you buy, you should determine the selling price BEFORE you know the cost, based on the item’s intrinsic value and what you feel your customers will pay for it. Then ask the cost. If the cost supports the margin you’re looking for at the selling price you established, it’s probably a good buy. If you have to raise the selling price to accommodate the cost, you’re probably buying a markdown.
If you’re not keeping track of your orders in your POS, you need to do so in some other way. Of course, myotbplan.com has the option for you to keep track of your orders and your receipts as well as any other inventory changes if your POS is not up to the job.
So, these are the “big 3” of the items you need to get from your POS if you want to plan your future buying: beginning inventory in retail dollars for each department, monthly sales in retail dollars for each department, and on order by department by delivery date.
When you have these numbers at your disposal you can develop turnover for each department and a future buying plan. It’s a lot of work, but you can do it if you want to devote your time and energy to putting together a plan. Or you can subscribe to myotbplan.com and be sure that all the computations are done properly and that you have a plan that is usable, accessible and revisable. Considering all you have to do, that should be an easy decision.