I learned some lessons recently about good inventory management. And not in the conventional way.
You see, my wife and I have six sons and for a period of time four of them were teenagers. If you have teens, perhaps you can imagine what our pantry and our refrigerator looked like in our attempt to feed four teens as well as the other four people in our home. We tried to be fully stocked as best as we could. A recent peek into my Mom’s refrigerator, who lives by herself and was about to leave on a vacation, gave me some instant lessons on inventory.
Here’s what I learned from a peak into Mom’s refrigerator:
- Visibility into your inventory is critical! You need to be able to quickly see what you have and what you don’t have before you go shopping to buy more! If you have to “move the world” to see what you have and what you don’t, replenishing is a real chore AND you are likely to make mistakes. You will either duplicate what you already have and end up throwing it out later or you’ll have missed buying some important items and have to pay more to go buy it in a rush when you later realize you were out. Lack of visibility costs a lot!
- Size really does matter! The more individual items (SKU’s) that you have, the more difficult it is to determine your needs. As an example, wholesale distributors have very large inventories with many different sku’s, far too many to manage well without technology!
- Satisfying more customers can be a challenge! The more customers that you try to please by keeping stock just for them the more difficult it is to manage well. If each of your kids has a favorite juice and you resolve to stock for each one, your difficulty is multiplied! Strive for a good balance of satisfying individual customers’ needs and your ability to manage the additional SKU’s you might stock.
- Don’t let your inventory go bad because it smells! Okay, your business might not experience an actual odor of bad inventory like happens with spoiled meat or spilled milk left in your refrigerator. But any way that you look at it, inventory that becomes dead and is not selling really stinks for your business. This inventory moves from being an asset known as working-capital to being a liability or “non-working” capital and its drain on your cash flow can be a business killer! Having a good first in, first out (FIFO) procedure is as important in your business as it is in your fridge! By the way, my wife has become expert at making delicious meals with leftovers or those items that have been “on the shelf” a bit long and need to go now!
- Hungry customers could buy elsewhere! While my Mom’s refrigerator offered wonderful visibility, when she gets home from vacation, she won’t really have anything much to eat. If customers come to you and you don’t have what they need, you might lose the customer, so you want to anticipate that demand so that you are prepared to make the sale!
So these are five things I learned from my mom’s refrigerator. I advocate the use of technology and inventory reporting software to help you manage your business inventory so you won’t (pardon the pun) be left out in the cold. And if you’re trying to manage the stuff in your fridge or pantry, you might try one of these apps listed here. Either way, I’d like to hear how you’ve been helped!
Eric Jensen is account executive at Cutwater Solutions, an inventory management software solutions provider.