Part 1 of a 2 part series

Warning Signs:

• Decreased inventory turnover.
• Increase in inventory days outstanding.
• Frequent inventory shortages.
• Sudden growth in inventory.
• Pilferage, theft or missing assets.

Steps to Improve: CONTROLLING COST & QUALITY

• Compare inventory turns to industry standard.
• Compare to inventory ratios.
• Inventory growth should not exceed sales growth.
• Compare inventory growth by category.
• Track inventory needs better.
• Negotiate purchase terms: delayed payment, consignment, storage.
• Get suppliers to store your inventory while setting pricing based on your annual needs.
• Reduce inventory handling and carrying costs.
• Sell off/liquidate excess inventory.
• Sell via samples and/or catalogs with minimum inventory.
• Sell via Internet: hold minimum inventory; collect cash before shipping.