Top dispensaries use ABC analysis to plan their cannabis inventory buying effectively and efficiently. If you’re not familiar with ABC analysis, you can learn more here. If you are familiar with the concept, you know how important it is to have a plan in place to leverage your A grade inventory (which is stock that accounts for 80% of your total revenue).
To help increase your profits — and to avoid holding slow-moving inventory — keep reading to brush up on strategies that can help you leverage your A grade inventory to maximize your profit.
Build Better Relationships with Your A Grade Vendors
Before you can get your hands on your A grade inventory, you’ll need to work with your vendors first. In general, you want to have good vendor relationships, but this is especially important when dealing with the vendors from whom you buy your fastest-turning inventory. Having strong relationships with these “A-list” vendors can help improve communication, make the reordering process more efficient (especially when ordering through Confident Cannabis), and mitigate supply chain delays. Not to mention — if vendors like working with you, you’re more likely to gain access to better prices, faster turnarounds, and other perks. Check Confident Cannabis Wholesale to find your A-list vendors and order today!
To foster solid relationships with vendors, you should follow some best practices:
- Never pay late. This is one of the easiest ways to keep vendors happy and on your side. Now with Confident Cannabis, you can pre-fund your orders to give A-list vendors comfort and release the funds when you accept Metrc transfers.
- Stay organized. Be clear about what you want to order, put your order in writing, and give them adequate lead time for any orders. When you order through Confident Cannabis, vendors know exactly what you want, how to contact you and when to deliver it. Do them a favor and order online instead of calling or emailing them.
- Be respectful. They say business isn’t personal, but we all know that treating your colleagues with respect and kindness can go a long way. This means responding to calls and emails about a trade, paying on-time and in-full, and avoiding returns when possible.
Find Multiple Vendors for A Grade Inventory
Once you’ve identified what type of cannabis products sell best for you, don’t be afraid to shop around and consider multiple vendors. You might find that you can get your A inventory for a better price with another vendor or may get some major peace of mind by knowing you don’t have all of your eggs in one basket.
Working with multiple vendors is a great way to avoid stockouts of your best performing products if a supplier faces unexpected circumstances that don’t allow them to fill your order. You don’t want to have to scramble for a replacement at the last minute, so consider having multiple vendors that you can turn to when the need arises.
Keep Extra A Grade Inventory On Hand at All Times
To avoid stockouts that can send customers running to your competitors, always order enough inventory to have extra A grade inventory on hand when cannabis buying. This extra stash of products is called “safety stock” and acts as a surplus of inventory that can come to the rescue if you’re experiencing an issue with a supplier or if there is a change in market demands.
Know When Your Reorder Point Is
Again, you really don’t want to run out of your A grade stock. Inventory management can be challenging, but identifying a reorder point [par value, safety stock level?] for your most valuable inventory can make inventory planning easier. Confident Cannabis has free reordering features that help make this process fast and simple.
Having a firm grasp on what the lowest amount of inventory you can have before you need to reorder to maintain your ideal stock level, will help ensure you never run out of your A grade products.
To find your reorder point, you can use this simple formula:
Reorder point = (average daily unit sales x average lead time in days) + safety stock amount
Invest Even More in Your A Grade Inventory
Increasing your investment in your A grade inventory doesn’t just apply to cannabis purchasing. While you can invest by buying more of your best performing stock so that you have more of it available to sell, you can also invest in this inventory by increasing your efforts and budget in the marketing and sales department in an attempt to drive even more sales of your A grade products.
Increase A Grade Prices
While increasing prices on your A grade inventory is something you’ll need to consider carefully, you may find that increasing these prices — even minimally — can greatly increase your profit margin over time. If you think your customers would be willing to pay more for your A grade products, you can improve your bottom line by doing this. That being said, think carefully before doing so, as you don’t want to price your customers out of their go-to products.
Take Loss Prevention Up a Notch
Because your A grade inventory is extremely valuable, you need to make extra efforts to ensure that it stays safe and in a sellable condition. Because cannabis inventory can get lost, damaged, and stolen (like any inventory), you’ll want to have good security measures in place and conduct inventory counts regularly.
Striking the right cannabis buying balance can be tricky, which is why you should take some time to think about how you can get the most bang for your buck out of your A grade inventory. Whether that be keeping extra A grade stock on hand, changing your marketing strategy, or working with multiple vendors, try to be very strategic about making your A grade inventory really work for you.