9 Tips for Cannabis Inventory Management | Green Leaf Marketers

How Successful Dispensaries Manage Cannabis Inventory

Anytime you run a product-based business, proper inventory management is a must. This is especially true in the cannabis industry, where it's essential to maintain an accurate and up-to-date inventory of your products and maintain a frequent audit process to remain in compliance.

 

Therefore, if you want your dispensary to succeed, it is important that you take the time to learn the basics of cannabis inventory management and apply the best practices to prevent future headaches and maximize performance.


The Best Reasons for Managing Your Inventory

The reasons for proper dispensary inventory management are many. The best reason, from an entrepreneur's viewpoint, is to maximize your profits. Other compelling reasons to manage your inventory include controlling costs, preventing theft and loss, keeping accurate records for compliance purposes, tracking customer preferences, and ensuring customer satisfaction.

 

Excellent inventory management helps you stay on top of items you have in stock and their

movements. Then, you can optimize your operations. For example, you can

discount products that have slow inventory turns to move them out of inventory.

Or you can transfer faster moving items to the front so that pickers can access

them quickly.


The team at Green Leaf Marketers has been working with the cannabis industry long enough to learn how the most successful dispensaries operate when it comes to managing inventory. To help you, we’ve put together these 9 top cannabis inventory management tips to incorporate for lasting success in your dispensary.

 

1. Use FIFO (first in, first out)

For starters, use the FIFO approach for inventory management. This means that the products you purchased first should also be sold first to avoid any issues with expiration dates or quality control.

 

Each product is labeled and dated down to the specific batch. Ensuring that you enter products into the system and stock them ASAP while pushing older products (that aren’t expired) to the front reduces waste and missed opportunities to sell the product.

 

Businesses that utilize FIFO include grocery stores, cafes and restaurants, as well as dispensaries. In addition, FIFO is particularly important to perishable cannabis products like cannabis flowers or cannabis-infused edibles and beverages.


Other Approaches

These are a few alternative approaches to managing inventory and cost sometimes used in place of FIFO:

 

  • LIFO: This inventory approach is the opposite of FIFO, and the acronym stands for Last-in-First-Out. This method is not widely used. In fact, it is typically only used in the US, where it is governed by generally accepted accounting principles (GAAP). LIFO assumes that the most recent items in inventory are sold first, allowing businesses to report lower costs of goods sold (COGS) and higher gross profits.

 

  • WAC: This acronym stands for Weighted Average Cost. As the name suggests, it is based on an average cost for all items in inventory. It is one of the simpler approaches of all the inventory costing methods since it calculates the average value of all stock. This method works to smooth out any fluctuations in prices. However, it doesn't account for critical factors like expiration dates.

 

  • ABC: This approach is particularly useful for larger marijuana businesses. The ABC (or ABCXYZ) system groups inventory according to its importance and/or value, then establishes different rules for managing them. "A" items are typically the most valuable and are tracked closely; "C" items may not require such close tracking but should still be monitored for any changes in demand or supply. This system allows you to focus on your highest-priority products while still monitoring the other inventory items.


2. Monitor Perpetual Inventory

Perpetual inventory is the practice of monitoring stock levels on a daily basis. This allows you to track sales, add new product items, and adjust your inventory accordingly. By tracking all of this data, you can adjust the levels of stock to suit customer demand and reduce wastage.

 

The team at Green Leaf Marketers recommends that dispensaries use an automation system for perpetual inventory tracking and inventory movements in real time, so they don't have to manually enter every transaction each day. Automation systems also offer up-to-date information on products and their locations in the store, which can help with customer service and restocking shelves quickly.

 

You can use barcode scanners and mobile solutions to help manage your inventory. This can provide a cost-effective way of tracking stock movements and costs, as well as providing reports on sales performance.

 

You can find automation systems that are priced within the typical budget of a small or medium-sized cannabis business.


3. Cross-Train Staff to Be Versatile

Cross-training your staff is essential for dispensaries that want to remain up to date with product information and inventory management protocols. Educating your employees on the different types of products, their uses, and the laws surrounding them will go a long way in creating an efficient and organized dispensary.

 

Cross-training staff also allows you to save time and money. There will be no need for extra hiring or having multiple people doing the same job when others could be cross-trained on that task as well. It’s a great way to ensure everyone is up to date on the latest products and practices in inventory management.


4. Integrate Your Systems

Integrating your systems is key to running a successful cannabis business. By integrating inventory, customer relationship management (CRM), accounting, and other systems, you can ensure that all data is connected and accessible from one platform. This will help you keep track of all your inventory, secure customer data, and streamline payment processing.

 

Integrated systems also allow you to get more detailed insights into your inventory management process. You'll be able to monitor how much stock is coming in and going out, as well as what products are popular with customers. This kind of information can help you make more effective purchasing decisions and increase the efficiency of your inventory management system.

 

Here is an overview of some top inventory management solutions for marijuana dispensaries and marijuana e-commerce stores that you can integrate:

 

  • Distru: Distru's integrations help cannabis businesses streamline their operations from track & trace compliance to analytics to accounting. For instance, sales orders from Leaflink are populated in Distru automatically, thereby removing the need for cumbersome manual order entry


  • Flowhub: This platform provides dispensary software and point-of-sale systems that can help you manage your products, sales, customers, and more. Flowhub also does mobile auditing to help you track inventory in real-time to perform actions like approving inventory discrepancies, managing your supply chain and transferring between stores and rooms.


  • BioTrack: BioTrack provides cannabis businesses with inventory management solutions that are optimized for their specific industry needs. This seed-to-sale* software platform helps you track data in real-time, manage your supply chain and provide in-depth cannabis POS analytics and reporting.


*Seed-to-sale tracking is an important term if you own a marijuana dispensary. If you are unfamiliar with it, the Commonwealth of Massachusetts defines it as:

 

“A rigorous inventory control system that tracks the cultivation, processing, and sales of cannabis and cannabis-infused products to consumers and registered qualifying patients.”


5. Bake Compliance into Your Process

Compliance is an extremely critical part of cannabis inventory management. Of all the marijuana inventory tips on this list, this one is arguably the most important. With ever-changing regulations and laws, it’s essential to ensure your business operates within the boundaries of the law.

 

You need to ensure that every transaction is compliant with local, state, and federal laws. This means tracking all products from seed to sale and ensuring that they are handled correctly by employees.

 

The best way to do this is to bake compliance into your process from the start. This means ensuring you have a robust tracking system that can trace the origin of each product, as well as providing staff with the necessary knowledge and training to understand the compliance regulations.

 

Go back to the following basics to review the best practices when it comes to baking compliance into your processes:

 

  • Utilize FIFO: As noted before, (FIFO) inventory management is a system in which the oldest stock items are sold before newer items. There are potential legal ramifications in selling cannabis that's too old. Utilizing FIFO is important for ensuring that products don’t expire or become less potent before they are purchased.


  • Use Automation: Automation simplifies cannabis compliance in many ways. You can look up expiration dates and get alerts when it’s time to restock certain products with an automated system. That way, you don’t find yourself in a position where you have accidentally sold expired or low-potency products to customers. There are also built-in features in CMS Management software, automation platforms and machine learning for compliance in cannabis retail operations and cultivation. So, definitely let the latest tech help you with your cannabis compliance.


  • Thoroughly train and cross-train: Making sure you have stellar employees is another key to compliance. Thoroughly train each employee on the laws and regulations that govern cannabis businesses in your state or local jurisdiction. Cross-train employees to help ensure everyone is up to date with the latest products and practices in inventory management. Also, give follow-up refresher training at specified periods to reinforce Important aspects of earlier learning.


6. Keep Customers Happy

Happy customers are the key to any successful business, and inventory management is a major factor in that success. You need to provide customers with the products they want quickly and at a fair price.

 

It's also an excellent idea to go above and beyond and delight your customers. This way, they feel valued and appreciated. This strategy can set you apart from your competition and improve customer retention.

 

But...how to get the word out? Cannabis companies face enormous challenges when it comes to digital marketing. However, a good way to reach customers at home is through expert direct mail design and distribution. No spam filters are involved with direct mail marketing, and it can be a great way to reach potential customers who are not familiar with your brand.

 

You can also offer customer loyalty programs to maintain engagement. Furthermore, you should provide customers with timely information about new products and promotions.


7. Analyze the Data

It’s important to analyze data to make informed decisions about inventory management. You should be monitoring sales trends, pricing strategies, and popular products in order to optimize your inventory levels. In a nutshell, it helps you understand where your customers are coming from, what products are popular, and how to optimize pricing strategies.

 

Data analysis is also essential to understanding your cannabis inventory management process. You need to analyze data on sales, customer behaviors, and stock levels in order to make informed decisions about purchasing, stocking, and pricing products. This will help you make more effective decisions about managing your inventory and ensuring customer satisfaction.

 

Where do you get these data analytics? The automation solution you choose should be a huge resource for this, as many of them offer advanced analytics. Data can also be gleaned from your cannabis POS system (point of sale) and other tools.

 

However, large cannabis enterprises, and those looking to scale, may want to purchase a comprehensive data solution like Happy Cabbage, Greendata.ai, Headset or BDS Analytics. These tools usually contain competitive consumer and market analytics that typically go beyond your business’s scope.

 

Additionally, a CRM system can be a great asset in collecting, managing and analyzing your data. You should also consider leveraging technology such as AI/ML to help you make sense of all the information you're gathering.

 

Lastly, using analytics tools such as Business Intelligence (BI) can help you make sense of the data. You can also use predictive analytics to forecast future demand so that you always have enough products in stock and don’t waste money on overstocking.


8. Create an Audit Process

In order to ensure compliance and accuracy in your cannabis inventory management process, you should create an audit process. This can help you identify discrepancies between physical inventory and POS records. It’s also important to track things like shrinkage and expired products. Auditing allows you to continually monitor and improve your processes, ensuring that everything is running smoothly.

 

Audits should, at a minimum, take place once a week. This helps you stay on top of your inventory management system, catch mistakes and make improvements quickly.

 

The audit process should be standardized into a written process that is approved by the respective stakeholders. This step can help ensure that everyone is on the same page and that there are no discrepancies in the data.

 

An external audit by a third party can also be beneficial, as it provides an impartial look at the system. This can help identify any areas that need improvement, and this outside perspective can be invaluable in developing your cannabis inventory management process.


9. Use KPIs (Key Performance Indicators)

KPIs are a great way to measure the performance of your cannabis inventory management system. Setting benchmarks for your KPIs, such as average order size or customer return rate, can help you identify areas where you need to improve. They also provide an objective way to evaluate how effective your processes are in meeting customer needs.

 

Looking at your KPIs on a regular basis can help you monitor your performance and make adjustments accordingly. Furthermore, having clear goals in mind will enable you to measure your success.

 

Too often, KPI metrics just linger on the computer for management to work on or review in meetings. However, only doing that can kill a great deal of their potential. Instead, post colorful print-outs of your metrics in work areas where visitors and workers can see them. They are extremely interesting, and, more importantly, will motivate your staff to work towards improving the KPIs and keeping customers coming back.

 

By following these tips, you will be able to implement a successful cannabis inventory management system and keep your customers happy. As the industry continues to grow, it’s important to stay ahead of your competition by having the best processes and systems in place. With the right strategies, you can optimize your inventory management system and ensure that your business is running smoothly.


Take Your Cannabis Business Marketing to the Next Level

At Green Leaf Marketers, we believe in elevating the cannabis industry with solid marketing fundamentals and unique cutting-edge tactics. We work with cannabis and CBD businesses across the country in all sectors of the industry, including dispensaries, growers, finance, and more.

 

We focus on offering both B2C and B2B direct mail campaigns, cannabis labels and packaging, printing and signage, promotional products and more.

 

Our Compliance team stays up to date on the latest in advertising and product restrictions to maximize our techniques and provide expert guidance and services without the risk.

If you are a new or established cannabis dispensary and want to take your marketing strategies to the next level, contact the Green Leaf Marketers team using the form below.

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