Romy Taormina

Psi Bands - Nausea Relief Chief/Co-Founder
Pacific Grove, CA
http://www.psibands.com

    Effective Inventory Management

    June 15, 2009

    If you are a product-based company, then you can relate to how difficult managing inventory can be.

     

    We just faced our first scenario where we didn’t have inventory to fulfill on our best-selling sku. It was NOT fun. You have to alert the buyers, you have to re-do POs to different timeframes, it’s just a time sucker and you don’t get paid if you can’t fulfill orders.

     

    We constantly ask ourselves the following:

     

    What is on the horizon?

    • Marketing – what press might we receive? What press has been confirmed? What paid advertising have we committed to? What kind of sales do we expect from all the above?
    • Sales – what new accounts might we land? What is the order history of our current retailers?
    • Seasonality – does inventory move quicker during certain times of the year? 

     

     

    What is the turnaround time to get more inventory?

    • If you manufacture oversees, what is happening internationally that could impact your turn time (i.e. weather, international holiday)?  
    • If you carry others’ goods, what is their turn time? Are they reliable?   
    • Are your ingredients/products available year round?

     

     

    What is the cash implication?

    • Does cash flow allow you to invest in more inventory? If not, are you willing to secure more financing? What does your gut tell you? If you are someone who normally does not risk, consider how investing in more inventory could grow your business (perhaps it is the right time to stretch, or maybe it’s not – you have to be comfortable with your decision). If you are a risk taker, is your decision to move forward based on facts combined with a gut instinct?
    • If you wait to order more product due to lack of cash flow, what needs to happen for you to have the necessary cash flow? What is the timeframe?
    • Can you save money by ordering in larger volumes?
    • What kind of money can be saved in shipping costs when you are not rushing to fulfill orders?

     

     

    What if we wait to order more inventory?

    • Can we wait without compromising our delivery terms?
    • What might be the missed opportunities if we run out of inventory?
    • How will existing or potential retailers respond if you don’t have inventory to fulfill?

     

     

    Even when you do plan, sometimes things don't go according to plan. It's a learned opportunity.

    What do you do to effectively manage inventory? What tips, strategies, and/or resources can you suggest? Please comment below. 

     

    I will leave you with this: If you build, it will come! The question is just how much to build!  Examine your unique situation and trust your gut!

     

    P.S. One of Psi Bands’ goals is to land another large retailer (5000+ stores).

     

    Read Romy's other blog entries >

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