What to look for in a good retail stock ledger

A retail stock ledger reflects the inventory a store has on hand at any moment in time. A paper version from only a few years ago would have a sheet for each SKU the store carried. It would have columns for the date received, the supplier, a lot number, quantity received, quantity issued, date issued, and others necessary for a particular business. The difference between quantity received and quantity issued should match the quantity believed to be on hand in the back store room.

Quantity issued meant that quantity was moved to the display merchandise shelf and would be counted in addition to the stock ledger quantity. A retail stock ledger values all of your sales at retail price. It also deducts returns and markdowns, allowing you to calculate the gross income from goods sold. The retail stock ledger also calculates the cost of goods sold to give you a net figure for your sales.

Retail ERP systems begin with the same concept and expand the utility greatly both through built-in calculations and the ability to use the ledger in business intelligence applications.

What a retail stock ledger should provide

Where a paper ledger only used retail price to value stock, a retail ERP will show value at retail price as well as cost. Shrinkage can be set to automatically reduce stock based on known ratios. Cost for any SKU can be kept at the actual cost for each delivery or averaged over time, whilst inventory turn can be seen for any period of time and overall or by SKU or groups such as the same shirt in any size or color.

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Gross profit is available over any time period by SKU, group, and overall. Also gross profit by store should be easily viewable. Critical ratios and performance indicators should be viewable for top management, store manager, and department manager with individual reports for each.

Turn rate, annual sales / opening inventory should be immediately accessible, as well as sell thru, with units sold / opening units on hand plus purchases.

How a retail stock ledger will help your business

Retail stock is a critical factor. If you don’t have it on hand, you can’t sell it. This has led to overstocking many items which now must be sold at a markdown or even thrown away at a complete loss. Retail ERP systems can allow you to monitor stock as frequently as necessary so a small markdown can dispose of stock while it still has value. Retail ERP also helps control whether that overstock ever exists as you can achieve more control over incoming supply too and divert or reduce incoming purchases.

Retail is still a business where revenue must exceed cost and a retail ERP with an effective stock ledger module will provide many tools to help meet that goal.

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Tom Miller

About the author…

Tom completed implementations of Epicor, SAP, QAD, and Micro MRP. He works as a logistics and supply chain manager and he always looks for processes to improve. He lives near San Francisco Bay in California and can be found on the water in his kayak or on the road riding his motorcycle. Contact Tom at customerteam@erpfocus.com.

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Tom Miller

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