The Importance of Inventory
If you are in the retail or the online e-commerce business, the first priority is making sure you have the quality products your customers are looking for, when they want them. Points to cover when planning your supply strategy, either for finished goods or materials you will convert into items for sale, include:
Where to order
How much to order
Which goods to order and which ones to avoid
When to reorder
How much to have in inventory at a given time
What to do if the merchandise you receive is unsatisfactory
How well versed you become at buying and merchandising will factor heavily into your level of retail success. Larger, more established companies will hire buyers, experienced in the area of sales, to stock the shelves and track the sale of goods. When starting a retail business this will be your job, along with anticipating upcoming trends and knowing what to buy and what to avoid.
Just in Time Inventory Management
One of the ways companies have been able to marry customer service with cash flow is by shortening the time between making a product and selling it. All of the upfront expense required to create a product usurps resources that cannot be replenished until a sale has been made and payment collected. A cabinetmaker must purchase materials: wood, paint, stains, hardware etc. It takes time to make pieces. A huge inventory sitting in a warehouse waiting for a customer means valuable cash is tied up.
A savvy business owner who can offer a catalog—printed or online—of choices in a furniture line can wait until orders come in before beginning the manufacturing process. This can be a bit of a dicey balancing act. You don't want to lose customers by forcing them to wait too long to get your product. On the other hand, by reducing as much as possible the time between investing in manufacturing and receiving an order, you will come out ahead of the game.