TWELVE QUESTIONS AND TWO TECHNIQUES TO TRACK YOUR INVENTORY.

Hey Founders,

Last week, I opened the door to the topic of inventory management, specifically exploring what it is and why tracking it is important. This week, thanks to another insightful conversation with Jaap Siekman from Transformix, we're diving deeper into how to track it.

According to the U.S. Census Bureau, retailers are currently sitting on about $1.39 in inventory for every dollar of sales they make. That’s a lot of tied-up cash—and making too big an investment runs the risk of dead stock and disappearing profit. Regardless of your industry, let's explore how you can refine your approach and boost your bottom line.

ASK THE RIGHT QUESTIONS

Managing inventory like a boss, requires asking the right questions that can pinpoint areas for improvement and guide your decisions. Here are some key questions for consideration:

1. How fast does my inventory turnover? This reveals efficiency and liquidity.

2. Are my inventory levels sufficient to meet demand? This avoids shortages or excess stock.

3. What are the costs of holding inventory? Analyzing storage, carrying, and obsolescence costs uncovers savings.

4. Are inventory records accurate? Aligning records with actual inventory minimizes errors.

5. How long does it take to replenish inventory? Knowing lead times optimizes ordering.

6. Am I using inventory tech effectively? Evaluating systems finds areas for automation. See ten different tech solutions below.

7. What's the risk of stockouts or overstocking? Balancing inventory levels avoids both.

8. How can I improve supplier relationships? Better communication and terms enhance efficiency.

9. How do I reduce shrinkage and losses? Security measures and staff training mitigate losses.

10. How can I improve forecasting accuracy? Better forecasting reduces risks and costs.

11. Where can I optimize inventory? Streamlining processes enhances efficiency.

12. How do I align inventory with business goals? Ensuring strategies support your long term objectives is crucial.

TWO TRACKING TECHNIQUES

When it comes to managing inventory effectively, businesses often turn to tried-and-tested methods to streamline their processes and optimize resources. Among the plethora of techniques available, two stand out as particularly popular and effective: ABC analysis and the Kanban system. Let’s dive into these two approaches and uncover how they can level up your inventory management practices.

ABC analysis categorizes inventory into A, B, and C based on importance. A includes high-value items, B includes moderately important, and C includes low-value items. It prioritizes resources and focuses on managing high-value items closely while applying simpler controls to low-value ones.

There are dozens of inventory management software available. Here are five options that complement the ABC system, each with strengths to suit different types of businesses.

• NetSuite

• Cin7 Orderhive

• Lightspeed

• Zoho Inventory

• QuickBooks Commerce

The Kanban system optimizes inventory and workflow efficiency using visual cues like cards or boards. It signals when to produce or replenish items, maintaining just-in-time inventory levels and reducing waste.

Kanban Inventory Card

.pdf

Download PDF • 64KB

Here are five Kanban inventory tech solutions for you to check out!

• Kanbanbox

• Zoho Inventory

• Inflow Inventory

• Fishbowl Inventory

• Odoo Inventory

THE BOTTOM LINE IS THIS

Effectively managing inventory levels, tracking turnover rates, and aligning strategies with business goals are fundamental aspects that founders should prioritize. By refining inventory management practices and asking the right questions, businesses can optimize processes, reduce costs, and enhance overall performance. It's not just about adopting the latest technology, but about understanding the principles and strategies that underpin effective inventory management. Explore these methods to streamline your inventory processes and drive success for your business.

Ready to confront your numbers and hammer out a plan? Text 'NAILED IT' to 306-713-8321 and we'll build out your next steps together.

Until next week, stay focused, fearless and financially fierce!

Taunya.

ABOUT TAUNYA WOODS RICHARDSON

Taunya is well-known for her straight-shooting, bottom-line-building approach to founder finance. As the Founder of Nail The Numbers, she brings 30+ years of experience in entrepreneurship, finance, and neuroeconomics to our mission of strengthening the minds and bottom lines of Founders across North America.