The word
inventory does not have similar meaning in the USA and in the UK:
- In American English and in a business accounting context, the word inventory is generally used to explain the goods and materials that a business holds for the ultimate purpose of resale (or repair). In American English, the word stock is usually used to express the capital invested in a business, while in British English, the sentence stock shared is used in same perspective.
- In the rest of the English speaking world stock is more generally used, though the word inventory is recognised as synonym. In British English, the word inventory is more generally thought of as a list of compiled for some formal purpose, such as the particulars of an estate going to probate, or the contents of a house let furnished.
Stock, in both
British and American English, is the collective noun for one hundred shares as
shares were usually traded in stocks on Stock Exchanges. For this basis the
word stock is used by both American and British English in the term Stock
Exchange.
Inventory stands
for one of the most important assets that most businesses possess, since the
turnover of inventory represents one of the main sources of revenue generation
and subsequent earnings for company's shareholders/owners.
What is controlling inventory? Controlling inventory is the
ongoing procedure of identifying and managing the constant flow of items into
and out of an existing inventory. When you do not know accurately what
inventory you have accessible, where it is located, or where it is for sale,
it’s going to be complex to manage your inventory efficiently and can lead to
an ever-increasing number of problem areas.
Here are 9 effective tips to help you manage and supervise
your inventory more effectively and to help you avoid unnecessary monetary
loss.
9 Tips to Control Your Inventory
1. Make sure all your items are for
sale.
Items that are on hand but not
listed for sale cannot be sold. As a result, if you have boxes of items that
are not listed for sale, they are not to be called as inventory (they are
called storage).
2. Understand your lead time
Lead time is the quantity of time between order and arrival.
While the majority sellers would love to run their business using “just in time inventory”, doubtful lead
times can cause a seller to run out of inventory. Lead time varies by the supplier,
seasonality, and even by item.
3. Know how much inventory you need.
If you cannot know accurately how much inventory you require,
it’s a good plan to have some “buffer
stock” on hand to diminish shortfalls. Buffer stock is additional inventory
a seller maintains to make sure that they do not run out of an item.
4. Sell on multiple channels.
If your in-stock items are not on numerous markets, you are
missing opportunities for sales. Gain access to diverse customers from each of
the big three (Amazon, eBay, and your own website). The pre-built marketplaces
are a dependable source of customers, but keep in mind you may end up competing
with the marketplace itself for definite types of inventory.
5. Automate your inventory system.
Do not destroy your business by juggling spreadsheets in
order to manage selling across channels. Use a third-party inventory management
result or solution to share and track your inventory across channels and reduce
the need for maintaining separate spreadsheets.
6. Know your inventory costs.
The cost of inventory is extra than just the price you pay
for an item. Here are distinctive costs associated with maintaining an
inventory:
- 6-12% Opportunity: What you could have made if you place the money you have tied up in inventory in another place (i.e. By putting the money in the bank, mutual fund or other investment.)
- 6-12% Obsolete Inventory: Surplus inventory that does not sell before it goes out of fashion, or is no longer in require. For example: Beta/VHS/ Blue Ray /DVD
- 3-10% Taxes and Insurance: That is applies not only to the inventory, but also to employees.
- 2-5% Warehouse/Storage: The cost of your utilities ,warehouse and storage.
- 2-4% Handling: Your time and employee time used up handling inventory. This could comprise physically counting inventory, keeping inventory fresh and organized, tagging and labeling, etc.
- 2-4% Breakage and Theft: Inventory that is damaged ,broken,or stolen and thus unable to be sold.
- 1-4% Clerical: Purchasing, keeping records, and any other associated or connected work.
7. Measure your inventory turn.
Inventory turn is a way to compute of the number of times
inventory sold in a time period (such as a year). It is like to the cost of
goods sold divided by the average inventory. (Inventory Turnover = Cost of Goods Sold÷Average Inventory). Once
you have the metrics, you can build improvements and measure results.
8. Don’t hold onto the past.
If you inventory is obsolete or is just not selling, do not think
guilty about disposing of it. All merchants have made terrible purchasing
decisions at one time or another. Give yourself permission to forgive and
forget your mistakes and let it go. There are exist many channels and processes
of disposing of obsolete inventory.
9. Beware of the “long tail.”
Long tail cost means the cost of inventory storage and
distribution. When inventory storage and distribution costs are short, it
becomes feasible to sell relatively unpopular products with long sales cycles;
conversely, when storage and distribution costs are high, only the most accepted
products are sold quickly enough to make a profit.
Note that majority of eBay’s and Amazon’s fees are collected
after the sale, so long-tail items can seem good-looking as distribution cost
is very low. However, if long tail items creep from being a little portion of
your inventory to being a large portion, you will continually struggle to equal
“last month’s sales” vs. being in a
growth mode.
