Getting inventory right can make or break a business. Too much inventory increases costs and ties up cash. Not enough inventory and your product or service cannot be delivered. So here’s how to get the right balance.

1) Predict less
Spend less time trying to predict exactly where and when inventory will be needed.

2) Don’t ‘Push’ Inventory
Don’t ‘push’ inventory into your operation by ordering it against a demand forecast.  Variations in forecasts inevitably occur, causing inventory to get out of control.

3) ‘Pull’ Inventory
Setup a ‘pull’ system where inventory is ‘pulled’ out of the store and replenished based on a re-order point. This can be accomplished simply by using re-order cards. The re-order cards can also hold inspection details for ensuring the correct quality of inventory is held.

4) Work with Suppliers
Work with suppliers to reduce the time it takes to replenish inventory. Under a ‘pull’ system, shorter replenishment times mean lower inventory levels without increasing the risk of running out of stock.

By controlling inventory in this way, you’ll have the lowest inventory possible with the least risk of running out of stock. Cash is then released from ‘stock-on-hand’, and the operations become easier to manage.