As a beauty professional, your job involves more than just providing great services - it means managing a whole business, including your inventory. Even if we talk about selling salon retail products or the daily product usage, keeping your salon inventory levels low is a great way to save money and avoid having cash tied up in products. But how do you avoid running out of essential products or dealing with excess inventory?
Unless there is a big discount for buying bulk, it's almost always better to keep the minimum amount of inventory on hand as possible. After all, wouldn't you rather have cash in your bank account than on your shelves?
Below, we will help you calculate how much inventory you should buy up front and when to re-order. Plus, we’ll show you some essential salon management tools that remind you when it’s time to reorder your stocks.
Keeping a minimal stock level can be a smart strategy for beauty professionals looking to manage their resources efficiently. Here are some key points to consider:
The reorder point is the inventory you should have left before placing a new order. This ensures you have enough stock on hand to meet customer demand while waiting for your supplier to deliver more. This step is essential if you want to improve how you manage your salon inventory.
By now, we know that stockouts can disrupt your services, while overstocking can tie up cash and clutter your space. The key to finding the right balance lies in calculating the optimal amount of inventory to keep on hand. Let’s dig deeper into the reorder point formula.
Reorder Point = (Average Daily Sales x Average Lead Time) + Safety Stock
Average Daily Sales: This is the average number of units sold per day. It reflects the demand for a particular product or item. For example, if you sell 10 units of a product on average each day, this value will be 10.
Average Lead Time: Lead time is the time (in days) it takes from placing an order with your supplier until the inventory is delivered to your salon. For instance, if your supplier usually delivers in 5 days, the lead time is 5 days.
Safety Stock: Safety stock is the buffer inventory you keep on hand to account for uncertainties, like unexpected spikes in demand or delays in supplier shipments.
❗️ Note: This formula must be applied independently to each product (e.g., if you sell shampoo, conditioner, and heat protection in your salon, you should apply the formula independently to each product).
Practical example of a reorder point for shampoo:
Average Daily Sales = 4 items
Lead Time = 5 days
Safety Stock = 28 items (one week of inventory)
4 items x 5 days = 20 items
Reorder Point = 20 items + 28 items = 48 items
This means that when your inventory level reaches 48 items, it’s time to reorder. The 20 items cover the expected sales during the 5-day lead time, and the 28 items of safety stock provide a buffer to account for uncertainties, such as increased demand or delays. With proper salon inventory management, you can prevent stockouts and keep your salon running smoothly without interruptions.
An important aspect is that salon inventory management covers both the things you use as a stylist (like shampoo) and the things you sell at the counter (like at-home hair masks). This also includes towels, retail product lines, and cosmetology products, but the list goes on and on.
It’s essential to note that both of them have to be considered before you reorder. Therefore, here’s the formula adapted to both products you sell and products you use.
Reorder Point = ((Average Daily Sales + Average Daily Usage) x Lead Time) + Safety Stock
Average Daily Usage: The quantity of products you use during service in your salon in a day.
Let’s assume the following values for a specific product (e.g., shampoo):
Using the reorder point formula:
6 items x 5 days = 30 items
Reorder Point = 30 items + 33 items = 63 items
This means that when your stock level reaches 63 shampoos, you should reorder.
The safety stock plays an important role in managing your salon inventory.
This formula calculates the difference between what you might need in a worst-case scenario (high demand and long lead time) and what you typically need under normal circumstances.
Safety Stock = (( Maximum Daily Sales + Maximul Daily Usage) x Maximum Lead Time) - ((Average Daily Sales + Average Daily Usage) x Average Lead Time
Maximum Daily Usage: The highest amount of product used or sold on any given day.
Maximum daily sales: The highest amount of product sold to clients on any given day.
Maximum Lead Time: The longest lead time it takes for the supplier to deliver the product.
Let’s keep going with our example. The following values are for shampoo, as in the previous formula:
Maximum Daily Sales: 6
Maximum Daily Usage: 3
Maximum Lead Time: 7 days
Average daily sales = 4
Average daily usage in services = 2
Average lead time = 5 days
Now we can put these values into the formula:
Safety Stock = ((6+3)x7) - ((4+2)x5)
Safety Stock = (9x7) - (6x5)
Safety Stock = 63-30
Safety Stock = 33
How to manage your salon inventory by applying this formula to all the products you’re using/selling? Here’s how it should look like:
Remember that each product has a different reorder point based on specific sales, in-salon usage, lead time/ supplier, and safety stock.
If you don’t know how to improve your salon inventory management, here’s another solution for you.
An inventory management software will easily help you avoid salon stockouts while maintaining minimal inventory, ensuring you have just what you need, when you need it.
Goldie is the app that’s got your back when it comes to managing your salon, whether you want to let clients book online, track your performance, take payments, or manage your salon stocks.
The app will automatically send you low stock notifications, informing you when it’s time to reorder a certain product. With this system, there are no more last-minute orders or desperate attempts to find the last bottle of something in your stockroom.
To start receiving low-stock alerts from the Goldie app, you simply have to download it from the App Store or Google Play, set up your profile, create your products and set your low stock alert for each product individually. Here’s how to do it based on the example above:
It might not seem easy to manage your salon inventory and calculate the reorder point for your products. But by following our step-by-step guide provided in this article, it becomes a worthy process that will positively impact your business.
To better manage your salon inventory, keep these best practices in mind:
We’d love to hear from you! How are you currently managing your salon’s products? Share your thoughts and let us know what works best for you!
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