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Managing inventory (don’t do this)

If you are a business owner or if you manage any aspect of a business, one of your tasks is to manage your inventory.  This process can be overwhelming when you consider all of the items you need to have on hand in order to be operational.  Some systems, small investments, and common sense will help.

Systems:  You need to have a system for inventory management.  First, list the items that you need to have on hand to run your business.  Ask a simple question:  do I need to have this item to run my business?  Then set a schedule, daily or weekly, to do an inventory count.  Determine your rate of use of each item, and then set up your purchasing/servicing plan.  For example, if you are a massage therapy clinic, you will be using oils, creams, and linens every day.  Set up your plan.  Check your inventory daily, and make your purchases weekly.   IMPORTANT:  KEEP EXTRA INVENTORY ON HAND!  This leads to the second point.

Small investment:  KEEP EXTRA INVENTORY ON HAND!  Don’t run your supply to the very end, and then make an emergency trip to your supplier, or make a frantic call -hoping/demanding that your supplier fix your problem.  What if:

  • your supplier isn’t receiving their shipment of product until tomorrow?
  • your supplier is closed that day for an unforseen reason?
  • your supplier decided to change product lines, and no longer carries what you need?
  • your supplier normally delivers to you, and delivers the wrong product?

Mistakes can happen.  And when you give yourself no margin for error, the mistakes (yours or someone else’s) add unneeded stress to your entire office, and they cost you revenue.

Let me give you a specific example that is related to our medical customers:  lab coats.  We clean and press lab coats for medical and dental practices.  Our service is weekly, with next-day turnaround.  The best practice is to wear a clean lab coat every day.  So, if a doctor works 5 days/week, how many lab coats will he need?  Answer:  a minimum of 10 -even with weekly, next day service.  Here’s why:

  • 5 are needed for the prior work week.
  • 2 more are needed for the pick-up day and turnaround (example:  pick-up on Monday, delivery on Tuesday).
  • 3 more are needed for the unexpected or unusual schedules (example:  we are closed due to a snowstorm, but the medical practice is open.  Or the doctor spills coffee on a lab coat and uses another one.)

The last point is common sense.  Don’t try to be an inventory hero, running your inventory down to the last item in the name of cash flow.  The risk is too great.  And don’t ignore your inventory, planning that your supplier will bail you out if needed.  Again, the risk is too great.  For most consumable items/services, you probably don’t need 6 months of inventory on hand.  But be smart about this.

A little planning will eliminate your inventory emergencies.  Your suppliers want to see you succeed; that’s how we stay in business, too!

 

Categories News | Tags: | Posted on January 24, 2018

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