Automatic Replenishment: Tips & How to Do It from Your POS

  • By Matthew Davis
  • Jul 1, 2024
  • Day-to-Day Operations

Running out of stock of a popular item on your busiest day of the year… It’s a retailer’s nightmare.

Unfortunately, it happens more often than you think. Retailers feel the pain of stockouts, just like customers. But often, the solution is overcompensation. They buy more inventory, which ties up valuable resources and can lead to dead stock.

Automatic replenishment systems offer a solution. Automated replenishment uses technology to constantly monitor inventory levels and automatically triggers a reorder when stock dips below a predetermined point.

For retailers, an automated replenishment system solves stockout issues, improves inventory accuracy, and lowers inventory holding costs.

In other words, automatic replenish is a retail tool you can’t live without. The good news is that replenishment software is easy to use and it’s available in FTx POS.

What Is Automatic Replenishment?

Imagine a world where stock magically reappears on shelves just as it starts to dwindle. While that might sound like fantasy, it’s the reality for retailers who leverage automatic replenishment systems.

These systems use machine learning and algorithms to streamline inventory management. They take the guesswork out of reordering and ensuring shelves stay stocked without overflowing. Essentially, when your inventory hits a certain level, the system automatically replenishes inventory.

The workflow is simple: A purchase order is created. You approve it. And it’s sent to a vendor to process.

How Automated Replenishment Works

At the heart of automatic replenishment lies a concept called the reorder point. This is a predetermined stock level that triggers an automatic order for more product.

Here’s how it breaks down:

1. Data Collection: The system gathers data on various factors including historical sales figures, lead times from suppliers, and current stock levels.

2. Minimum Stock Threshold: A minimum amount of stock (safety stock) is established to ensure there’s enough product on hand to meet customer demand during the lead time (the time it takes to receive a new order).

3. Reorder Point Calculation: Considering the minimum stock level and lead time, the system calculates the reorder point. This is the point at which inventory dips low enough that a new order needs to be placed to avoid stockouts.

4. Automatic Reordering: When inventory falls below the reorder point, the system automatically generates a purchase order for the supplier.

The beauty of this system lies in its automation. By constantly monitoring inventory and dynamically adjusting reorder points based on real-time data, retailers can achieve a level of stock control that was previously impossible with manual methods.

Essential Tips for Implementing Automated Replenishment

Ready to ditch the stockout blues and embrace the magic of automated replenishment? Here are some key tips to ensure a smooth and successful implementation:

1. Understand Your Inventory Needs

Before diving in, take a deep dive into your inventory data. Analyze historical sales trends, identify seasonal fluctuations in demand, and categorize your products based on their sales velocity (how quickly they sell).

This understanding will be crucial for setting appropriate reorder points and optimizing inventory levels.

For example, if you run a hardware store, you might notice that hammers are a steady seller throughout the year (consistent demand). However, lawnmower sales surge in spring and summer (seasonal demand). You might set a lower reorder point for hammers, knowing they sell consistently, while lawnmowers require a higher reorder point and potentially earlier order placement to account for seasonal spike.

2. Set Accurate Reorder Points

As discussed earlier, reorder points are the cornerstone of automated replenishment. Dedicate time to meticulously calculating reorder points for each item, factoring in lead times, safety stock levels, and historical sales patterns.

Fortunately, the best small business POS systems can automate reorder point setting, saving you time. Here’s how it works in FTx POS:

3. Choose a Reliable Point-of-Sale System

Your POS system serves as the central nervous system for your inventory management. Ensure your chosen POS seamlessly integrates with your automated replenishment system and even better if this a customizable POS feature included in your plan.

This ensures real-time inventory data exchange, allowing for accurate stock level tracking and automatic order generation.

4. Regularly Review and Audit

Don’t be lulled into a false sense of security by automation. Schedule regular reviews of your automated replenishment system to monitor its performance. Conduct periodic audits to verify physical stock counts against system data.

Regular cycle counts will help identify any discrepancies. Your goal should be to compare physical stock counts to your data to ensure everything matches up.

5. Train Your Staff

Your employees remain vital to the success of your inventory management strategy. Train your staff on the new system, including how to interpret data and respond to any system alerts. Effective communication and collaboration between your team and the automated system will maximize its effectiveness.

How to Set Up Automated Replenishment in Your POS System

While the specific steps may vary depending on your chosen POS system, here’s a general guideline:

I. Choosing the Right POS System

The first step is to ensure your POS system offers built-in functionality for automated replenishment. Look for a system that seamlessly integrates with your chosen replenishment method. For example, in FTx POS, you’ll find a variety of options for Order Methods for triggering automatic reordering.

II. Data Prep and Configuration

Inventory Data Input

Gather and meticulously input your inventory data into the POS system. This includes current stock levels, historical sales figures, and lead times from suppliers. Accurate data is essential for the system to calculate optimal reorder points. Note: A quality POS will include robust inventory management software.

Set Reorder Points

Set reorder points for each item within the POS system. These points dictate when the system automatically triggers a new order. Additionally, establish minimum inventory levels to ensure you have enough stock on hand to meet customer demand during lead times.

In FTx POS, you have three standard options for automatic replenishment:

  • Replenishment: Order what you sold during a specific period (e.g., past week).
  • Days in Inventory: Order based on how many days’ worth of sales you want to have on hand. Great for established items.
  • Hybrid: Combines both methods, a useful strategy for new ones you aren’t sure how fast will sell.

Supplier Integration (Optional)

Some advanced POS systems allow integration with your suppliers. This enables the system to automatically generate and transmit purchase orders to suppliers when reorder points are reached.

III. Monitoring and Maintaining Your System

Don’t just set it and forget it! Monitor your automatic replenishment system’s performance regularly. Analyze data, identify any discrepancies and adjust reorder points or inventory levels as needed.

Automated Replenishment – Your Stockout Slayer

Gone are the days of scrambling to fill empty shelves or holding excessive inventory that eats away at profits. Automatic replenishment systems are a game-changer for retailers, offering a data-driven approach to inventory management.

By leveraging automation, you can achieve:

  • Reduced Stockouts
  • Improved Inventory Accuracy
  • Lower Inventory Costs
  • Enhanced Efficiency
  • Make Data-Driven Decisions

Ready to embrace the magic of automatic replenishment? Just remember these key steps:

  • Understand your inventory data and categorize products based on sales velocity.
  • Set accurate reorder points using a system like FTx POS.
  • Choose a reliable POS system with built-in automated replenishment functionality.
  • Regularly review and audit your system for optimal performance.
  • Train your staff on the new system to ensure effective collaboration.

Embrace automation and watch your stock levels, and your profits, soar!

Get Started. Automated replenishment is one of many valuable tools for retailers in FTx POS. Request a demo today to see how it works.

FAQs

Automatic replenishment can benefit a wide range of retail businesses, especially those that:

  • Deal with a high volume of inventory: Managing numerous stock levels can be overwhelming manually. Automation simplifies the process.
  • Experience fluctuating demand: Automatic systems can adjust reorder points based on seasonal trends or unexpected sales spikes.
  • Value efficiency and accuracy: Automation reduces human error and streamlines inventory management tasks.

However, if your store carries a very limited number of products with consistent sales patterns, a manual system might suffice.

Costs can vary depending on the features and complexity of the system you choose. Some POS systems include basic automated replenishment functionality as part of their package, while others may require additional fees. This feature is included in FTx POS in Enterprise plans.

While automation offers numerous benefits, there are a few potential drawbacks to consider:

  • System Errors: If inaccurate data is entered into the system, it can lead to miscalculated reorder points and stock issues.
  • Unexpected Events: Sudden changes in demand or supplier disruptions can throw off automated calculations. Regular monitoring is crucial.
  • Limited Customization: Some basic systems might offer limited customization options for reorder points or inventory levels.

Yes, many advanced systems can integrate with other aspects of your business, such as accounting software or supplier portals. This allows for a more holistic view of your inventory and streamlines workflows.

Beyond the core benefits mentioned in the article, here are some additional advantages:

  • Improved supplier relationships: Consistent, automated orders can strengthen your relationship with suppliers.
  • Reduced warehouse space needs: By optimizing inventory levels, you might require less warehouse space.
  • Enhanced customer satisfaction: Having the right products in stock leads to happier customers.

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Business Experts & Contributors

A New Solution Coming To FasTrax

Danielle is a content writer at FTx POS. She specializes in writing about all-in-one, cutting-edge POS and business solutions that can help companies stand out. In addition to her passions for reading and writing, she also enjoys crafts and watching documentaries.

Danielle Dixon

Content Writer
A New Solution Coming To FasTrax

Matthew Davis is a content marketing specialist for FTx POS. With experience in marketing, brick-and-mortar retail, and ecommerce, Matthew enjoys writing about strategies and technology retailers can use to grow. Previously, he managed retail operations for a sports/entertainment facility and worked in marketing consulting.

Matthew Davis

SEO Specialist/Content Writer

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