Managing Inventory Turnover to 10x Your Business
How would your business be different if you sold 10x the number of items you sell today? What would you need to change to deal with that volume?
Think about this. Imagine your new business. The fun. The problems.
What did you imagine when you thought about selling 10x the amount of product? More space? Bigger store? More employees?
How about none of that.
The issue is: There is only so much great real-estate for sales. And, only so many great people to hire and manage. You have to locate it. Rent it. Hire for it. Manage it.
Can you tune your current business? Does technology apply?
Inventory turnover is 'how many times you sell a bottle of Gatorade and how many you needed to keep stocked' to sell that many.
Selling in the physical world, your real estate is precious. Pick the best location. Move the most product. Be efficient.
Inventory turnover is only relevant based on where you sell (location) and the product sold. And inventory turnover is all about efficiency, and making more profit.
Take all of what I say based on what you paid for it.
Triton is a method. I am refering to what is called Triton Core 7 Full Method and not what they call other methods. They have a set of recomendations about how to duplicate thier method. Thisndoesnt mean that its the only way to get the desired results but its one way they have found to get them.
The main requirements that most people seem to struggle with is turnover and refugium size. Here is my approach.
I did not skimp on the refugium. From all the research I did and reading about the method the refugium appeard to me to be the priority. I have a 220g display and have a dedicated 29g tank for just the refugium. I attempted to fit a 40g in that spot but fell a few inches short.
For turnover I am not at 10x just with my return pump. Evennwith a minimalist design on the return pipes I am not able to get 10x out of it. However as
stated, you can get extra flow by using a pump in the refugium. I stumbled on this due to adding a pump to the refugium right under the dosing tubes to create a super high flow area for the dosing of the elements. I cannot be understated what the importance of extremely high flow for where you dose the triton liquids.
I have also thought about running two return pumps instead of just one. I am going to hold off on that until the tank tells me I need it.
I have not been running my tank that long but I have also not done a single water change since thenday I put the water in the tank and I have no plans on doing that unless some situation arises that makes me do one. I test regularly and my ICP results tell me what additional trace elements I need on top of the core 7.
My fish are healthy, my corals are doing good, mostly all LPS with a few trial SPS in there right now. Some would say to early but my water chemistry is stable and I plan to keep it that way.
The neat part about any method is that it is just
method. You can approach it differently and may get the same results or maybe not. However, its a great starting point and if you either run a lower return rate or a 9.5% refugium you may only have to make some small changes to get similar results. I would say that the furthur you deviate from the core set of requirements the less likely you may be in achieving the same or similar results.
What I have not seen is a table of success linked to deviation of the requirements. Is it linear, exponential or logarithmic? Time will tell and feedback from the community will be key to getting that data since I dont think Triton could possibly test every permutation.
How close can you get in your system?
How do you get 10x inventory turnover?
Let's say you have a clothing retailer in an expensive foot traffic area. On average, your turnover is '4'. That means in a 30-day window; you turn your inventory once a week.
Mathematically: Turnover = Sales (4 units) / Inventory (1 unit).
But wait. If you are selling clothes, do you just have one 'Small Pullover?' No. You have three of each size.
Now: Turnover = 4 units / 3 units or 1.33 - not 4.
So, your number is 1.33. Your competitor across the aisle has an inventory turnover number of 3. How are they doing it? Sell more units? Lower quantity on-hand?
To increase turnover, you need more selection available in the same square footage. More specifically, you need to look at your turnover rate and your sales per square foot.
Turnover represents efficiency. Efficiency = more profit. The higher the number, the more efficiently you run your operation in given square footage and advertising budget. RFID is a 10x multiplier in the way you can and will run your business.
With RFID, when an item is removed from its sale location, the item is automatically replenished.
Sales per Square Foot = Sales / Square Feet.
With RFID, you can stock one of each item. Increase the total types of items to increase overall sales and increase selection without increasing store space. Additional items can be stored nearby and replenished on-demand. The same piece of real estate can sell 5x the amount it sold before because you don't need to stock three units of every item, size, and color to ensure customers find the product they want.
Additionally, sales won't be lost when inventory is miss shelved, or not placed on the display floor, or sitting in incoming shipping boxes, unreceived.
Meanwhile, during a sale, the proper color and size are stuck in the fitting room floor, but the customer doesn't buy because they could not find it.
Take a look at our RFID Cookbook for ideas on how you can increase your sales. Getting to 10x will require a significant change in how you run your business.
But, for $299 a month, you can add RFID to your daily operation. If this makes you 5% more efficient (taking a daily inventory in minutes vs. a quarterly inventory in days) and your yearly sales are $1,000,000, you'll save (or make) $50,000 on a $1,200 yearly investment. And, customers will recognize you as the place that has in-stock goods and better selection.
Footnotes on using Inventory Turnover to tune your business
There are several other cool ways to calculate inventory turnover. For instance, COGS / Average Inventory. Using COGS allows you to measure multiple items, but it's hard to laser-focus on a single item.
Let's say your store sells $1,000,000 a month. Your average inventory is $500,000. Then your # is 2. But, it's difficult to tune a single item and get great at it. However, applying RFID will allow you to reduce inventory by about 30% and still hit the same COGS for pennies.
I have a 60x45x30, and opted for a eheim output of 1050lph. I always regard 10x as the minimum to go for. Surprising how much, media, muck, hardcore and plants slow it down. However as has already been pointed out, you can adjust the flow, and also play around with your outlets, if it proves too much. Hope this helps.
