Boost profitability with better inventory management
Effective inventory management can help you to decrease costs and increase the profitability of your gas station or convenience store.
In this post, we speak to Elena Lau and Alexia Field, who both held a number of operational leadership roles within fuel and convenience retailing before joining Kalibrate. We’ll get their advice on how to decrease costs without impacting operations.
When most fuel and convenience retailers think about their costs, they focus on what they pay for fuel and how much they pay their product vendors. They don’t often think about their inventory “on hand” costs.
Take a look at your stock. Do you have boxes of product that’ve been sat there for months? If you do, you need to review your ordering processes.
Saving a few cents by buying in bulk can be attractive — but is it the best move?
Buying bulk to get a discount can have detrimental effects. The surplus stock needs to be stored, which often results in extra costs. If excess items are perishable, they’ll need to be sold quickly or could end up being written off as a loss. Not only that but buying excess stock takes up real money — money that could be used to invest in other aspects of the store that could really pay off down the road.
Investing in inventory management tools is a great idea to make sure you’re buying what you need and not spending the extra money to save a few cents. You need a system that can work out how much you need to order to have enough product in stock at any one time.
The industry standard is to have 21 days’ worth of inventory on hand. For fast-moving items with short shelf lives, you might only want three days’ worth in stock. This means you might need to speak to your suppliers and ask them to increase their delivery frequencies so you can buy just what you need each time.
As an independent consultant, Alexia has helped numerous gas station owners over the years to identify that their cash and inventory loss is caused by employees taking things from the shelves and the cash register.
Unfortunately, this isn’t uncommon in gas stations and convenience stores. Hiring the right staff, increasing employee engagement, and focusing on your company culture can really help to reduce this.
If you suspect you’re losing money to employee theft, analyzing the cashier register audit can help to identify problems, and employing a local consultant or speaking to the US Small Business Administration can help you to substantiate your concerns and manage the outcome.
Elena Lau and Alexia Field bring you actionable insight and advice on
- How to implement a successful employee hiring process
- How to compete with larger fuel retailers
- Decreasing labor costs without cutting staff
- Tips to increase your sales
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