In a highly regulated industry, your inventory management system is critical. Making sure that you are implementing a method that is best suited for your store is essential to ensuring that you are reaching your business’ full potential. A good management strategy for your inventory must consider both efficiency and accuracy. Especially in the cannabis market, it is crucial that your reports are accurate, and managing your inventory productively will equally help to maximize profit.
There are 3 main methods of inventory management, and each one is tailored to different industries:
1. First-in, First-out (FIFO)
- Products purchased first also get sold first
2. Last-in, First-out (LIFO)
- Products purchased last are sold first
3. Weighted Average Cost (WAC)
- Middle-ground method between FIFO and LIFO
- Total Cost of Current Inventory divided by Number of Units
In the cannabis industry, the First-in, First-out (FIFO) method serves best as it ensures that the products purchased first are also the products that sell first. Overall, the FIFO method works best in an industry where products are prone to being spoiled over time. Especially in the cannabis market, items are at risk of becoming damaged goods after a certain period of time. As a result, implementing a FIFO system will not only help to avoid any waste of your cannabis products due to spoilage or damages, but it will also maximize profit by making sure that each item will be sold for their current cost.
Benefits of FIFO for Your Dispensary
Given that in this industry, cannabis products are perishable, the FIFO inventory management system is a great way to maintain your goods from going to waste and losing revenue from spoiled items.
- Easy inventory management system
- Maximizes your revenue
- Helps prevent profit loss from damaged goods
- Ensures your most recent purchased products are sold first
- Makes sure that each product purchase is accounted for at their current cost
- Preserves the quality of each product
Overall, although there are various inventory management methods, it is important to make sure that the one you choose is best suited for your business. With TechPOS, maximize your revenue and minimize waste with our system that manages your inventory chronologically to follow a FIFO method. Our all-in-one solution tracks the specific lot number once you have received your products to ensure that each item will be sold in sequential order until the next batch, guaranteeing maximal freshness of your goods. By managing the order in which you purchased your cannabis products, you can ensure that those purchased first are also being sold first to assure the highest quality for your customers.