Inventory management is a vital part of any cannabis business.
Efficient inventory management systems protect your business from becoming non-compliant, avoid significant fines, and keep money flowing in your business.
Why Are Efficient Inventory Management Systems So Important?
As requirements become more cumbersome, your inventory management system must work for your business — inventory management should be a top concern for dispensaries.
Not only can having an efficient inventory management system reduce costs, automate processes, and prevent deficiencies, but a streamlined inventory is also the key to increasing your cannabusinesses revenue.
4 Tips For Maintaining An Efficient Inventory Management System
You understand the importance of an efficient inventory management system, but what is involved in creating and maintaining that inventory system? Keep reading to learn best practices for creating a cannabis inventory system that works.
#1: FIFO — First In, First Out
In any business that handles and sells perishable goods, first-in, first-out inventory is one of the most useful inventory management methods. By using this process you avoid selling stale or expired products and keep your business compliant with your state’s regulatory authorities.
#2: Have A Cannabis-Specific Point of Sale System
Every Cannabis dispensary should have a quality point of sale (POS) system tailored to your business’s needs. Not all POS systems are created equally, and most generic POS systems lack the functions your dispensary needs to make cannabis sales more efficient and more profitable.
How can a cannabis-specific point of sale system help your dispensary?
- Staying legally compliant — by having an industry-specific system, you can easily track compliance issues, track all of your receipts, and ensure that you’re passing state inspections.
- Delivering a stellar customer service experience — ensure transactions happen without error. The embedded functions that come with a cannabis-specific POS system are designed to streamline every aspect of the purchase process and track past purchases for order continuity.
- Better sales reporting — Improve insight into which products are performing well and those that are underperforming.
- Traceability — a cannabis-specific point of sale system makes batch tracing easy in the event of a recall.
#3: Audit Your Inventory Regularly
Checking your inventory regularly is a great way to get an idea of which products are moving and which products are sitting on your shelves for far too long.
In an ideal world, you would do this daily, but that can be hard to manage when you’re busy maintaining other aspects of your business.
This also might be a great place to add that we recommend having an employee strictly for audit purposes. This person should be responsible for maintaining inventory and your inventory space. By having one person in charge of inventory, you’re reducing the risk of fraud or theft due to too many hands in the cookie jar.
#4: Streamline Your Cannabis Inventory Management By Monitoring KPIs
Key performance indicators (KPIs) can help your cannabusinesses measure whether you are progressing towards your business goals. Monitoring your inventory KPIs closely can help you:
- Make more informed purchasing decisions
- Streamline your cash flow
- Enhance profitability
What are some KPIs that help create an efficient inventory management system? Here are a few examples:
- Gross margin by product — learn the amount of money the business keeps for the sale of each product. Understanding the profitability of each product is key to increasing your bottom line.
- Inventory shrinkage — measure inventory that cannot be accounted for due to loss, theft, or inaccurate recording.
- Other inventory levels — although this may seem like a given, this KPI is the key to an efficient inventory management system. Not only do you need to know how much stock you have on hand, but you need to know how long products have been sitting and which products sell quickly.
- Inventory turnover rate — how many times have you sold and replaced certain products during a specific period? Do you know how fast your inventory is selling? Keeping track of this KPI can help you learn more about your customers and which products are in high demand.
- Days to sell inventory — this KPI can help measure the age of your inventory and how many days it takes for your products on hand to sell? If it’s a large number, there are inefficiencies in your inventory movement. If the number is low, make sure popular products aren’t at risk of going out of stock.
Simplify Your Processes With An Inventory Management Software
Manually maintaining your inventory can be a lengthy process, and if done incorrectly, it can lead to inventory mishaps, compliance issues, and fines.
For this reason, we suggest simplifying your inventory processes by using inventory management software. Automate processes, ensure that products are being booked correctly, moved adequately, and accounted for so that your business not only stays in compliance but continues to grow.
We mentioned earlier that an efficient inventory management system involves detailed traceability. This is a crucial step to producing high-quality products.
Effective inventory management software can not only help you comply with state regulations, but earn public trust. A quality invententory management software can help avoid selling products that have been contaminated by being able to trace your products from seed to sale with RFID tags.
Do you need help setting up an efficient inventory management system? Are you looking for ways to grow your business? We can help. Contact us today to set up a consultation.