Retail Dogma

Inter-Branch Transfer (IBT) & Inventory Consolidation

Inter-branch transfer of goods is the transfer of inventory between different store locations that belong to the same retailer. This is usually carried out for single or few items to meet customers’ needs or in bulk for consolidation of inventory.

Reasons For Inter-Branch Transfer (IBT)

To Serve Customers

In many situations an item is not found at a certain store location but upon checking the inventory it is found at a different location. If the customer is not willing to go to the other location and buy the item from there, the store can arrange an inter-branch transfer to receive this item and sell it to the customer.

However; due to the cost associated with transferring the item, not all retailers are ready to grant this option to all customers.

For Consolidation

Another reason for inter-branch transfers is to consolidate stock between the stores.

At the end of the season, many items will start having broken sizes and cannot be displayed as a proper collection on the sales floor. However, these items still need to be cleared and sold.

In order to maintain a good display on the floor and at the same time maximize the sell through of the remaining stocks, retailers usually consolidate these broken assortments and marked down stocks to one location and display it and sell it from there.

How is Inter-Branch Transfer Done?

To transfer stock between store locations the following steps are followed:

  1. Identify the items that will be transferred
  2. Scan the items with a barcode scanner to record the transaction on the system
  3. Print the transaction documents and include it in the package
  4. Pack the goods and label the box with the relevant information (the receiving store, number of items,..etc)
  5. Dispatch the boxes to the DC to be then transferred to the other store or send directly to the other store
  6. The other store will scan the goods and confirm receiving them.

After the transaction is completed, the inventory that has been transferred will change its location on the system, so that it will now show on the books of the new store.

Considerations

It should be noted that a lot of the shrinkage that happens in retail is due to admin errors and excessive movement of inventory. That’s why IBT should done only when it makes business sense to perform such transaction.

As discussed before, it also costs money to relocate those stocks, which is another expense that can be avoided if there is no urgent need for the transfer. Usually stores will send their requests for transfers to the merchandiser and then he/she will decide if such movement is necessary.

Having the right allocations from the beginning, and setting up a robust replenishment system will minimize the need for inter-branch transfers and the costs associated with it.

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