Inventory Management. The forgotten principle.

A large number of start up and indeed established companies struggle to survive each year.

And one of the key reasons? Poor inventory management. New business owners frequently lack relevant business and management expertise in areas such as purchasing, selling, production and inventory management. Unless they recognize what they don't do well, and seek help, business owners may soon face disaster.

So, what is inventory management?

Firstly, lets define inventory. It is a list (electronic or hand written) for goods and materials, held available in stock by a business. Inventory is held in order to manage the manufacture and/or supply delay which may be longer than delivery delay.

And the management aspect? Put simply, you are fully aware of your stock levels, stock to sales requirements and have a complete understanding of what you will require to service your customers for a designated trading period (be it 1 month or 6 months ahead).

It is vital to your business that you recognise that the supply chain DOES NOT start within your warehouse, but prior to this.

By understanding these requirements, you can ensure that you are in a position to be pro-active as your business moves forward. You then remove the fire-fighting process often associated with inventory management.

What steps can I take to effect stock control processes?

Identify your business requirements

Your company could well be performing better than you think in the area of inventory management. If it is not, then a process review can help.

Construct an electronic database of your entire inventory.

The major benefits to this are that your stock becomes immediately visible, you must also ensure that this database includes all major business considerations such as cost, sales price, stock holding and lead times. Another huge benefit is that this database is totally portable and can be used in such sales channels as Actinic ecommerce software, Googlebase and eBays Turbo Lister program. An attractive proposition for all ecommerce traders.

Effective stock flow forecasting

A vital element of any business is ensuring you have the stock to hand to service your customers. An effective process will help you achieve this using weighting and sales analysis to overcome any seasonal shortfalls and to ensure you stock is to hand for your customers.

You must future proof your inventory

Ensuring the stock levels are there for sales is only half the battle in inventory management. You also need a rigid stock audit process that is compliant with external audit requirements (One of my processes was used successfully and passed 3 external audits by PricewaterhouseCoopers during my time with Screwfix Direct). In many cases, this will remove the need to close your business for the dreaded 'stock-take'.

Complete process mapping of all aspects of inventory management

From start to finish, you can then construct the appropriate process for your business. This will be built into a 'standard operational procedure' manual that will contain both graphical and textual content for complete and controlled inventory management.

Full stock portability

One of the major benefits from controlling your stock electronically, is that you can utilise your inventory in multiple sales channels.

With 20 years experience in logistics, I have seen many horro stories, and these are not restricted to small companies. This process will benefit all business ventures of all sizes. Take time out today and say to yourself....

"Am I controlling my inventory or is it controlling me?"