Many businesses have too much of their limited resource, capital, tied up in their major asset, inventory. Worse, they may have their capital tied up in the wrong kind of inventory. Inventory may be old, worn out, shopworn, obsolete, the wrong sizes, colors, or there may be an imbalance in inventory between different product lines, all of which lowers the total appeal of the total operation. You
must have the right goods for your market. Like many other facets of managing your business or department, achieving the ideal inventory goal is not an exact science. That happy goal should always be kept in mind. It will be reflected and worked toward in your constant study of your market and the buying habits of your customers.
Inventory control is a process of careful and thoughtful inventory management. There are no hard and fast rules to abide by, but rather some extremely useful guidelines to help structure your thinking. It is important to stress that this is not just a job for the bookkeeper or accountants, but is one of the key management functions, and one that all too often is relegated to clerical status much to the detriment of the business.
The five steps of inventory control are designed to help you think systematically through the process, but the final decisions are the result of your good judgment, not the product of a mechanical set of formulas. The constant process of managing your inventories will pay the large benefits of increased sales and increased profits, worthwhile goals to work towards.
The Strategic Management Learning System (SMLS) is a proven business management training program developed by Dr. William R. Osgood and adopted by the U.S. Small Business Administration as their first complete learning system created by a single author. © Dr. William R. Osgood 2008
