Most people believe that inventory reports provide two insights; the first when to order more stock and second how well items are selling. I learned, early in my career, that inventory reveals more than what is in your stockroom, warehouse, the refrigerator, freezer or on the retail floor. Working in a restaurant and department store taught me that.
Here are three insights I learned about my business from analyzing inventory. Most people ignore the problems inventory reveal. Don't delay, address these issues immediately or they will eat away your profit. Inventory speaks, do you see what it is telling you.
As you read this article, ask yourself, "Does this sound familiar?"
Is it time for training?
Have you noticed an increase in finished goods waste? Or experienced an increase in missing raw materials? If so, it is an indication that your employee engagement level is low or it is time for training.
Higher raw material and finished goods waste is expected when on-boarding new employees but waste should return to normal quickly. However, if new employees aren't a part of the equation, this is a clear indication that technical training is needed. Or more important attitudinal training is needed. Whichever it is, be sure to address it immediately. If it is allowed to fester, it will be a costly problem to fix.
Give me cash or give me your food/clothes/gear, etc.
Have you noticed your stock is decreasing but your sales are not increasing? Your inventory will tell you if money or product are walking out the back door. Or you have product walking out the front.
Look closely at your inventory. What is missing, in what quantity, in relationship to what else? Paying attention to these variables, they will tell you if money or products are being taken and by whom. You rely on employees to help train new employees to do the job right. Keep an eye out, because they also train each other how to take advantage.
Are you having trouble reconciling your inventory to your sales? Missing small and moderately priced items indicates customers are walking out the front door. Discrepancies with secured and expensive items indicate an internal issue. However, the costliest shrinkage problem is a high inventory of a moderately priced item combined with a low inventory of an expensive item, as this represents several different issues.
Need help analyzing your inventory? Contact Madelon Wallace; she will help you transform your company into an even more thriving business in any economy.
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