Effective inventory management can be a challenge for both suppliers and retailers. Scan-based trading could be the solution to these headaches.
How to Increase Consignment Sales and Handle Them Efficiently
Inventory management can be tedious, especially when purchasing on consignment. Learn how to increase consignment sales and handle them efficiently.
Inventory control can be tedious in the Food and Beverage industry, especially if you have to keep track of invoices and purchases manually. Labor-intensive and outdated, it also requires extensive resources. And for retailers who purchase on consignment, it is especially time-consuming.
If you’re unable to keep track of inventory and reconcile your payments, you won’t be able to properly handle your consignment sales. Here’s everything you need to know to better manage your inventory, invoices and payments when you buy on consignment.
Overview of consignment sales
Consignment sales are a trade agreement between you, as a retailer, and a supplier. As a retailer participating in consignment sales, you will only pay for inventory when items are scanned at the register. This typically involves contract terms between the supplier and the retailer, where both parties discuss (if applicable):
- New cost of goods
- New payment terms
- Inventory buyback
- How on-shelf inventory will be counted
How to handle your consignment sales
Consignment inventory can be a cost-efficient way to ensure you have adequate stock in-store. By keeping track of on-shelf inventory, it also improves supply and demand for the retailer. So, what’s the best way to manage your consignment sales without the hassle of manually keeping track of invoices and purchases? This is where a software solution comes into play.
Scan-based trading system
A scan-based trading (SBT) system enables you to keep track of your in-store inventory until it has been scanned at the point of sale (POS). Thanks to SBT, the supplier and retailer remain aligned –shelf visibility allows retailers to more effectively manage shrink and eliminate holding costs. This ultimately improves margins.
There are many benefits to implementing scan-based trading. With SBT, you can sufficiently align supply and demand to operate more efficiently and maintain effective communication between you and your supplier.
Additional features include invoice creation and payment, all while keeping track of items in stock, as well as their costs. You can even keep track of your POS, which comes in handy as you plan for future inventory purchases.
Differences between SBT and pay on consignment
With SBT, the supplier retains complete control of inventory until it is scanned at your POS. Pay on consignment means that the ownership is transferred to the retailer as soon as it reaches your warehouse. While the supplier takes on all the risk and costs under the SBT model, the retailer takes on the entire risk of the consigned goods the moment ownership is transferred to you.
SBT requires an enhanced supply chain model where you are expected to forecast and plan for the kind of inventory your supplier provides you with. On the other hand, the pay-on consignment model relies primarily on the amount of space you have available to you.
Pay on consignment
Steps to increase consignment sales
Increasing consignment sales relies on a well-thought-through organization system for your inventory. A good scan-based trading system will have all the features to help you achieve the following three steps:
Centralize your inventory management
As a retail store manager, you want to maintain a single hub for all information related to handling consignment sales. This centralized hub should provide you with greater control over restocking, purchasing, and receiving additional inventory. It should simplify multichannel selling, ensuring you keep tabs on your money without compromising on service. A good scan-based trading system has the capabilities to give you autonomous control of your stock.
Manage the impact of inventory shrink
Part of your retail management is managing the impact of inventory shrink. An effective management method would be to verify all purchase orders, invoices, and any other paperwork between you and your supplier. In addition, you should review each day's transactions using data from your POS. Finally, consider counting the physical inventory in your store, bar or restaurant. With SBT, you can automatically keep track of all your purchasing paperwork and inventory.
Access insights to plan ahead
Stop ordering based on guesswork or available space. A POS system provides you with invaluable information that you can use for data forecasting, order planning reports, and automated inventory tracking. By studying the data from past inventory, you can plan for future orders. This data also helps you understand and predict the trends in consumption, thus helping you custom-make offers based on your patronage's preferences.
Improve your consignment sales with software
iControl offers software that helps you stay on top of your inventory, eliminating the threats of unexpected shrinkage. We are committed to a “trade now, pay later” partnership that aligns with the demand registered by your POS system. Get a demo from iControl today and uncork effortless, incredible inventory management!