Inventory can refer to:
- The list of merchandise or material held in readiness (storage) for delivery or distribution, as well as the actual units themselves.
- It can also refer to the ongoing record of any units held in stock.
When approaching inventory as a business tool, you’ll see it’s a numbers puzzle: you need the context, the data and the experience to make sense of the pictures that come out from those numbers and columns, and accurate, timely inventory-keeping gives you the following advantages:
You know when you’re running low, or running high.
With a record you get historical data. You can compare and contrast the figures from year-to-date, or week-to-date, for example, so you can discern trends emerging or reappearing, and start thinking things out when the numbers seems to be showing you a different picture from what you reasonably expect this time around. You have an idea about what’s been going on, and how much has changed or not compared to a week, a month or a year ago.
- Why are you running low, and will this be likely to happen in other areas, or is it happening already? Why? What caused it? If you’re running low here, does this mean that the item in question is a hit with customers — and you can pre-order more — or were you not able to stock up properly the last time?
- What are the reasons for these changes? A delay in shipping? Switching to a new supplier?
The answers to the questions that come up help you do better next time. Any information you can use to make your business better, use it.
By tracking your inventory, you keep on top of the situation.
Knowledge is power. Accurate, timely information in the form of inventory tells you how much you have to work with at any given time.
- You don’t run out at a critical point. You have an advance warning system to tell you what needs attention when.
- You can batch orders and in the process save money on delivery costs, as well as have some reassurance that you’ll get what you need when you need it.
- Just-in-time production helps on shipping and storage costs — you skate on the edge of overstock, you pay for the storage and the shipping costs to get it in, but it’s not making money for you sitting idle. What if you have only what you need, only when you need it? (Building in acceptable leeway, of course.)