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Effective Inventory Management

by | Aug 4, 2006 | Guest Spotlights, PKF Texas - The Entrepreneur's Playbook®

Note: Running most Fridays in FromGregsHead.com, this is a continuing series of inventory control tips by Jon Schreibfeder. These run Saturday mornings during the BusinessMaker’s Radio Show on FM Newschannel 97.5. Audio files can be found on the Entrepreneur’s Playbook page of the PKF Texas website.

What is Effective Inventory Management?

“Effective inventory management allows a distributor to meet or exceed customers’ expectations of product availability by maintaining the amount of each item that will also maximize their company’s net profit.”

Effective inventory management is the result of outstanding inventory control and inventory management. What is the difference between “inventory control” and “inventory management?” Inventory control involves managing the inventory that is already in your warehouse, stockroom or store. That is, knowing what products are “out there,” how much you have of each item, and where it is.

Inventory management involves determining when to order products and how much to order, as well as identifying the most effective source of supply for each item in each stocking location. Inventory management includes all of the activities of forecasting and replenishment.

The most common question we are asked is “where do we start?” The answer is: You must begin with inventory control. Unless you know exactly what inventory is in your warehouse and that material is in usable condition, you can’t accurately determine when to reorder products.

Stay tuned for future segments on effective inventory management.

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