Inventory Basics - Whiteboard Wednesday

Introduction

In today's Whiteboard Wednesday, we're diving into the essential aspects of inventory management. If you're in business, you're likely dealing with inventory from various suppliers and vendors, which you either redistribute or transform into new products. Understanding the basics of inventory is crucial to maintaining an efficient operation. Here's a breakdown of what you need to know.

Location of Inventory

One of the first decisions to make is regarding the location of your inventory. You can choose to keep it on-site, off-site, or even utilize dropshipping methods. Depending on the size of your business, a mix of these arrangements might suit your needs.

Stock Keeping Unit (SKU)

It’s vital to identify and label your inventory clearly. Using Stock Keeping Units (SKUs) helps you maintain a systematic approach. By diligently labeling and organizing your stock, you can easily track what you have and where it’s stored. While it may take additional time initially, this setup will save you from unnecessary search times in the future.

Units of Measure

Be specific about how you quantify your inventory. Are you using pounds, metric units, or ounces? Also, clarify whether you are counting by individual items, boxes, or larger units. Small discrepancies in counting can lead to significant errors down the line.

Inventory Management Plan

Establish a solid inventory management plan. Determine if you prefer a push system—where you aim to sell a specific quantity every quarter—or a pull system that meets the demand of individual orders. This approach generally requires more input and monitoring through your computer system.

Record Keeping

Initially, you can manage records using paper, as it is cost-effective. However, relying on physical files can become cumbersome, particularly as your business grows. Transitioning to a digital record-keeping system will streamline your operations by keeping all your files in one place. Utilizing cloud storage adds an extra layer of security against data loss.

Conclusion

These basic principles of inventory management may seem simple, yet their application is critical for business success. Ignoring these foundational practices could pave the way to inefficiencies and confusion in your operations.

Introduction

Inventory Management
Location
Stock Keeping Unit (SKU)
Units of Measure
Inventory Management Plan
Record Keeping
Cloud Storage

Introduction

Q: What is a Stock Keeping Unit (SKU)?
A: A SKU is a unique identifier for each distinct product and service that can be purchased. It helps in tracking inventory effectively.

Q: Should I keep inventory on-site or off-site?
A: The choice between on-site or off-site inventory depends on your business size and operational needs. You may also consider dropshipping for certain products.

Q: What units should I use for inventory measurement?
A: Choose units that best fit your products, such as pounds, ounces, or metric measurements. Be consistent in your counting metrics.

Q: How can I effectively manage my inventory?
A: Implement a clear inventory management plan, decide between push or pull systems, and utilize a digital record-keeping system for efficiency.

Q: Is it advisable to transition to digital record keeping?
A: Yes, moving from paper to a digital system is highly recommended for maintaining organization, especially as your business scales up. Cloud storage provides additional backup and security.