Three tips to help vending machine operators create optimal inventory management

Writer： Zhongda vending machines Time：2022-11-01 17:37 Browse：℃

Vending machine operators’ inventory management is an important indicator to assess the level of core competitiveness of an operating company, and an efficient inventory management model has an important impact on improving the profitability of the operating company.

So how to improve inventory management?

The first formula: Optimising the Merchandise Structure

A relatively balanced merchandise structure is not only a basic guarantee for business operations, but also the basis for stock optimisation. Commodity structure is reasonable or not will directly affect the quality of the operator’s warehouse management.
If the structure of the merchandise items is too long or too deep, it will increase the proportion of slow-moving products and cause a backlog of inventory; if it is too small, it will not meet the actual operational needs and cause a decrease in service satisfaction and business losses. Therefore, optimisation of the merchandise structure is the first step to optimise inventory.

The three rules for optimising the merchandise structure are:

1.Determine the category width based on the number of aisles. As vending machines have a limited number of aisles, the category width (broad categories) should be refined according to the different types of equipment, not too long and not too short.

2.Once the width of the product category has been determined, the length of each product category (specific items below the category) can be determined progressively according to the two-eight principle.

The two indicators are ranked from highest to lowest by sales value and sales volume, selecting items that account for 80% of sales and 80% of sales volume respectively. The items that meet both sales volume and sales volume are then set as key items, while those that meet only one are secondary items.

3.Determine the depth of the category based on the price band design. Generally speaking, there are more indicators to choose from regarding category depth, such as specifications, price, brand, etc. For general operators, it is recommended to take a price range as the control of category depth. Through the determination of the price level, not only can the market competitiveness of the operating company be enhanced, but also the commodity structure can be more reasonably controlled and the optimisation of inventory can be achieved.`

Second formula: Optimising the Inventory Structure

Based on the optimisation of the merchandise structure, it is possible for any operator’s warehouse to store the entire range of operational merchandise due to the variable nature of the vending operation business. Therefore, when commodities are not stored properly, it is very easy to form two conditions of commodity shortage or inventory backlog, and even cause the generation of dull or dead inventory. Therefore, the same need for inventory classification management, the same need based on operational data and the rule of two or eight on the operation of the sales of goods, sales volume, gross profit for sorting, screening, grading, to determine the focus of the provision of goods items.

Key stock items are: items with high sales volume, fast turnaround time or some items with monthly sales volume below the minimum purchase quantity, with reference to the sales volume and gross profit percentage of the item. It is advisable to take key stock, to ensure that the actual inventory does not fall below the lower stock limit, and by the procurement department real-time attention, timely replenishment of the inventory approach. This will not only ensure timely supply to meet basic operational needs, but also reduce capital consumption. In addition, stocking should also take into account the impact of factors such as low and high season, price fluctuations and new product development.

Third formula: Optimising Logistics Operations
The various aspects of logistics operations are important nodes for stock optimisation, such as the purchase of goods, inbound and outbound storage, and in-stock management, all of which must be considered as key points for stock optimisation. In order to achieve multi-level and multi-link inventory management.

In addition to optimising the timing of purchases, purchasing cycles and order quantities, different purchase patterns should be adopted for different types of goods (e.g. characteristics of goods, settlement methods, warehouse management status, etc.).

Among them, regular goods generally take the cycle replenishment mode, seasonal goods are suitable to take the economic batch purchase mode. The cyclical replenishment mode refers to the purchase of goods in small quantities and in multiple batches based on the shop’s distribution cycle, days in transit, stock control status and safety stock ceiling.

As the sales curve and inventory curve of regular commodities tend to be the same, they are mostly purchased in the form of cyclical replenishment to improve capital utilisation and reduce inventory risk. Based on experience, the calculation formula can be referred to: the number of key stocking commodities purchased = average daily sales × requisition factor × (distribution cycle + maximum safety days) - the actual inventory on the date of purchase (including the inventory in the equipment)

In addition, the economic lot purchase model is a large volume, small batch purchase model that takes more into account the purchase and storage costs, as seasonal goods often require an advance sales curve in order to secure the supply of goods during the peak season and avoid a large inventory backlog of goods after the season. As a rule of thumb, the formula is: Quantity Purchased = SQRT (2 x demand for the commodity period x cost per purchase / storage cost per unit of commodity period), where SQRT represents the square root.