Our friends at Green Bits break down the different options for dispensaries
Excellent inventory management is crucial for any cannabis dispensary. State regulations are strict, and marijuana products need to be sold on a lot by lot basis.
Bad inventory management can lead to expensive, complicated problems. If dispensary owners fail to manage their inventory adequately, these problems can go completely unnoticed until regulators audit the retail license.
If that happens, it may result in fines, license revocation, and even criminal proceedings. Dispensary owners have a clear incentive to take inventory seriously.
The good news is that efficient inventory management can improve profitability and streamline daily operations. This helps pave the way for growth while ensuring the dispensary is fully compliant every step of the way.
Retailers in various industries use different inventory strategies to account for receiving products. The unique nature of the cannabis industry makes inventory management an Important issue for anyone running (or planning to run) a cannabis dispensary. Seed to sale traceability adds an attentional level of inventory tracking in stores; more than any other industry.
Retail Inventory Management Strategies
At its core, the cannabis dispensary is a retail environment. Retail managers can choose from several fundamental categories of inventory management strategies. The three most common ones are:
- First-in, First-Out (FIFO). This strategy fulfills customer orders with the products that have been sitting on the shelf the longest. This helps ensure that perishable items get sold before their expiration date, which boosts profitability and protects against stockouts. This is the best practice for dispensaries. If you choose to employ another strategy, confirm with local regulators it fits with your local laws.
- Last-in, First-Out (LIFO). This strategy assumes the most recently acquired product is also the first one sold. It’s suitable for non-perishable items, which makes it a bad fit for cannabis dispensary businesses.
- Just-In-Time (JIT). This strategy favors large retailers that want to reduce the amount of company equity sitting in dead stock. It requires accurate forecasting to prevent stockouts but can reduce holding costs.
- ABC Analysis. This is more of an organizing principle than a full inventory management strategy. It categorizes products by the profits they yield, proportionate to their sales frequency. It can help dispensary owners identify their most profitable products as well as their poor-sellers.
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