Inventory control

One of the biggest threats to any business is waste. Waste creates problems for the production process and it results in highers costs to both customer and producer. It takes more time and energy, and it tends to be hard on the environment. A related issue for many businesses is inventory control. Problems with inventory can be the death of a busienss. Imagine ordering a particular item and then not having it for the customer when they come to claim it. Ultimately you would start to loose customers in this situation. Also, if you were to order far too many of a particular item than you normally sell you would invariably end up loosing thousands of dollars. Having either too much or to little when it comes to inventory could completely destroy your business. The key for any business is to exercise some inventory control. Businesses need to learn how to order and maintain their inventories so that they are adequate to the business's needs but never too large. Inventories also need to change with changing demands. If a product becomes suddenly more popular than others your business needs to order more and know how many to order.

If you want to practice much better inventory control you should read the basics described bellow. Some of the basics that you need to think about are things like the cost of holding a particular stock. This usually is based on the interest rate associated with the stock. Another very important factor is the cost of placing an order for new materials. You don't want to place many costly orders over a period of time. With a careful inventory you will have a much better sense of what needs to be included in each order. This will keep you from over or under ordering and from simply ordering too often.

You should also calculate how much it will cost your business when stock is short. For a manufacturer this is obviously a huge deal because business basically stops. For other types of business it can be very harmful because customers will be heavily impacted by the lack of inventory.

Payclose attention to the items that sell the most. Keep careful records of the total number sold and the changes in buying habits according to things like season of the year or general economic expectations. Once you have generally figured out the number of items you will sell, figure out a reorder point. The reorder point is the point at which a new set of stock needs to be reordered. Figure out the reorder point based on the amount of time for delivery.

Never just assume that you need the same level of inventory every month. Carefully watch what is going on in your business and order accordingly. Think carefully about orders before you place them. Forgetting something could mean a loss of many thousands of dollars by the end of the year. It is a good idea to make an inventory checklist in order to keep all necessary items in mind when ordering.
Make sure that you have adequate safety stock between the time of an order and the time when the items arrive. If an item is particularly popular you will need to order more frequently and keep an eye on your stock. You should also be aware of any special orders that will deplete stock considerably. Following these basic guidelines you can keep close watch over your inventory. Your business will be more efficient and as a result gain a positive image among customers.