Taking Stock

Back when I owned an inventory-based business, one of my better customers had a clever barb in his repertoire. If we were out of anything he needed in his order, he would say "You know, this would be a great place to open a supply house."

But supply, we did for 20 years on my watch. We were in a smaller market, handling about 10,000 separate items, so we enjoyed few economies of scale. We competed with some large distributors and did very well largely due to our focus on inventory control.

At the time we used integrated management software that included an inventory control (IC) module. What made our system work so well was our commitment to keeping accurate inventory on a real-time basis, which necessitated "cycle counting."

Wikipedia.org defines a cycle count as "an inventory management procedure where a small subset of inventory is counted on any given day." In our case, this meant that, instead of taking a physical inventory once a year, we counted 2% (one-fiftieth) of our inventory each week up to the fiftieth week of the year. Using this method errors are caught more quickly, and extra counts can be performed on error-prone items.

With that introduction, let's talk about the steps you can take to get your inventory under control:

1. Evaluate your IC "infrastructure." Are you ready to automate IC? If you are using a management software package, is the IC module adequate for your needs?

Is your inventory layout conducive to administering a "real-time" IC? Can your staff take on the extra duties involved? While getting such a system going can require a lot of initial attention, IC systems save time, by allowing you to know what's in stock without having to go to the warehouse, by quickly detecting any possible theft, and by lowering rates of stockout (lost sales) and overstock.

2. Set a target for customer service level. Measures can include percent of orders filled completely, or percent of items delivered to items ordered. The primary constraint on reducing inventory is, of course, customer service level. What's an acceptable service level for you? 95%? 99.5%? IC software generally uses such a figure to determine how much "safety stock" you need to meet this objective.

3. Learn industry norms to aid perspective. While it should seldom affect your behavior, it is "nice to know" what the industry norms are for businesses of your size. You can probably get these from your trade association, or go to the "Annual Statement Studies" by the Risk Management Association, or "Industry Norms and Key Business Ratios" by Dun & Bradstreet.

What if the industry norms are 90 days of inventory on-hand, and you only keep 45 days worth? What if you keep 120 days worth? No action may be necessary, but this gives you a greater context and perspective as you fine-tune your system.

4. Use "best practices." Minimum overall inventory is not the end of the story. Ascertain whether a reduction is advisable. Even at a good overall level of stock you may still have many items out of balance, over or under. So our efforts should be about "best practices" that minimize quantities required, while raising the quality of your inventory.

5. Clean house! In my most recent turnaround consulting appointment, a plumbing wholesaler, we started by identifying all the items that our IC system identified as overstock. We went from thinking we needed more warehouse space to having about a third of existing space available.

Of course, much of it went straight to the trash heap, but some was recent enough to send back to the manufacturer. In between, we sold some at two garage sales we held, and donated the rest to a local housing agency.

6. Implement "Just-in-Time. " JIT includes a set of actions that work together to squeeze slack out of your processes. Do you enter received material as soon as it arrives? Can your key suppliers commit to shorter lead times?

7. Zero-base SKUs. Take a hard look at the realistic contribution of every item in inventory. You may need to keep some losers as "service items," but you will be amazed at how many of your items are break-even or worse.

8. Partner strategically. Can you narrow your number of suppliers by getting more items from the "majors?" You may currently split up orders to save a penny here and there, but the vendor left standing would probably meet or beat the other's prices for a greater share of your business. More from each vendor means more frequent replenishment, and more opportunities for JIT.

These are a few actions that should apply to continuous improvement programs at most inventory-based businesses. As they say, "your mileage may vary."

john b. vinturella, ph.d. has almost 40 years experience as a management and strategic consultant, entrepreneur, author, and college professor. For 20 of those years, Dr. Vinturella was owner/president of a distribution company that he founded. He is a principal in business opportunity sites john b. vinturella, ph.d. and john b. vinturella, ph.d., and maintains business and political blogs.

Oswego taxi to Midway ..
In The News:

Hackers and scammers keep looking for ways to break into your Facebook account. Kurt “CyberGuy" Knutsson has some tips to make sure your account is secure.
Kurt “CyberGuy" Knutsson shows you how to create group texts to reach multiple people at once — and also how to leave them if you get annoyed at the volume of interruptions.
Tax fraud is on the rise, and hackers are now using identity hijacking and artificial intelligence for tax returns in someone else's name to get a refund.
Toyota's Punyo soft robot mimics human behavior, using its chest, hips and arms — in addition to its hands — like a human to handle objects,
Hackers used third-party information to break into Roku accounts, according to the streaming company. Roku says it has secured affected accounts.
Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.
Kurt "CyberGuy" Knutsson explains the simple steps for setting a Wi-Fi hot spot on an Android. If you have internet on your phone, it's easy.
Dubai recently hosted the first jet suit race with a backdrop of skyscrapers, and one observer says it was straight out of a comic book.
Kim Komando introduces ways to keep you and your devices safe while traveling. The clever hacks mentioned can protect you from hackers and jackers.
TikTok CEO Shou Chew published a video Wednesday urging users to "protect your constitutional rights" against a bipartisan bill that would force China to divest from the app.
Tech guru Kurt "CyberGuy" Knutsson says you can never be too careful with tech passwords. He explains how to keep your information safe.
The Lighthouse in New Zealand rotates 360 degrees, constantly giving those inside different views around the clock. Built in the 1990s, it's up for sale.
High school students in Colorado are learning how to design their own AI model projects, including cameras for self-driving cars and apps that can teach other languages.
Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.
Vehicles collect sensitive personal information, which is used to set auto insurance rates. That's partly why auto insurance premiums are rising.
Honda's Uni-One is a hands-free electric mobility device that can reach speeds of 3.7 mph and support a user weighing up to 242 pounds.
Kim Komando puts three AI chatbots head-to-head to decide which is the best assistant for modern problems. Compare Google Gemini, ChatGPT, and Perplexity.
To safeguard personal information on iPhones, users can employ built-in security measures and iCloud Keychain for enhanced privacy. Kurt “CyberGuy" Knutsson shows you how.
Kurt “CyberGuy" Knutsson introduces you to the City Transformer’s CT-2 electric car, which can seamlessly transition from 8 feet wide on the road to a compact 3 feet for parking.
Hackers are always looking for new ways to trick targets into downloading malware. Now, they're after cryptocurrency folks via Calendly. Kurt “CyberGuy" Knutsson has the details.
Kurt “CyberGuy" Knutsson reveals how the Microlino Lite, a compact and eco-friendly vehicle, tackles city traffic congestion with its chic design and small dimensions.
A new funeral scam targets surviving family members of those who recently died. Scammers reach out to the survivors and pose as funeral home officials.
Merlin Labs' autonomous pilot could soon hit the commercial airways and may help alleviate a looming pilot shortage, according to CEO Matt George.
There's a simple way to check your subscriptions on an Android and cancel them. Tech guru Kurt "CyberGuy" Knutsson explains how it is done.
Hackers use pirated software to target macOS, Android and Windows devices in search of stealing cryptocurrency, according to Kurt "CyberGuy" Knutsson.

Do You Make These 7 Deadly Cash Flow Mistakes?

Managing cash flow is every small business owner's most important... Read More

Round Pegs In Round Holes: The Amazing Secret of Succeeding in Any Business Every Time!

Success is the desire of everyman on the face of... Read More

Who Makes the BEST Alliance

What types of companies do you want to align yourself... Read More

Breaking The Chains!

Everyday, customers and business owners are bombarded with billboards, logos,... Read More

Keep TRACK of your Business Relationships and Gain Profits

How do you know when an alliance needs to be... Read More

Why the Over Regulation on the Franchising Model?

Franchising is the fastest way to build small businesses, provide... Read More

Build Credibility, Value, and Trust on a Shoestring

Setting priorities in your business? Your first job is to... Read More

Your Babys Ugly..and Youve Got Bad Breath

I've got good news and bad news. The good news... Read More

5 GREAT WAYS to Gain New Contacts

What are the 5 best ways to gain new contacts?There... Read More

Tell Me The Reasons Why I Should Believe You?

Have you ever heard the phrase, 'PREPONDERANCE OF PROOF'?I recently... Read More

Does Your Small Business Marketing Suffer From The Bulldog Effect?

If you're an entrepreneur responsible for your own small business... Read More

How To Make Sure Your Customers Still Trust Your Small Business

The stock market is still on a wild roller coaster... Read More

Reverse Merger: Have They Taken the Reverse out of Reverse Merger?

Are the promoters and consultants destroying the market for Reverse... Read More

Power Tools for Business

How do we keep track of our business deals?If you... Read More

Franchising 101- What You Absolutely Need to Know

Franchising has made the world look really small. The well... Read More

11 Things Small Business Owners Can Learn From The Supreme Court

1. Have A Strong Constitution ? Justices deliver decisions by... Read More

How the Humble Ice Cube Made Business History

Gather round while I tell you the story of Kennebec... Read More

How to Start an Office Support Service

Office support services can range from basic data entry to... Read More

Real World Accounting for Small Business Owners

If you're like me, you love accounting. It's so fascinating... Read More

Top Ten Tips for Leveraging Conferences for Big SUCCESS!

As I am preparing for my attendance to the CoachVille's... Read More

The Failures Guide to Small Business Success

How many "get rich schemes" have you joined? Or have... Read More

Maintaining Your Carpet Extractor in Your Auto Detail Shop

Auto Detailing: Maintaining A Commercial Carpet ExtractorYou should drain your... Read More

How to Avoid the Most Common Reasons for Small Business Failure

The life cycle of the typical small business is short... Read More

7 Advantages to Incorporating

There's no question that hard work and a little luck... Read More

Understanding Franchise Releationships in a Franchised Business

Now that you have invested your time, energy and money... Read More

shuttle from Midway Morris ..