How Do You Achieve the Ideal Inventory Control?
The essence of an inventory control program is planning your stock levels more stringently by using weeks-of-supply inventory maxims.
Maintain the Balance
Retailing is a delicate balance between merchandise and cash. Independent retailers usually must take one of two risks: commit themselves to large quantities of inventory and possibly end up with an excess, or commit to less and later find goods unavailable. Given the current economic situation, its probably better to go with the second risk.
If you hold inventory in proportion to your projected sales for the weeks of supply, you will have a greater share of fresh merchandise. In addition, timing the inflow of merchandise as closely as possible to the start of the selling season will, in most cases, be more profitable than taking goods far in advance, even if vendors grant dating or other price concessions. The other costs of carrying inventory will almost always wipe out whatever savings you realize by taking goods early.
Inventory control requires disciplined effort. It takes work to maintain a steady flow of fresh merchandise while keeping stock quantities proportionate to your ideal turnover rate. But if you do shape up your inventory turnover rate, it will improve your income statement, balance sheet and your bottom line. And thats a program worth doing!