How to Manage Your Inventory

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You're starting a hamburger joint.

Your sexy self needs some inventory. "Let's buy some lettuce, 100 pickles, 100 tomatoes, 50 buns, and 50 patties, and 30000 napkins," you affectionately tell yourself.

You buy stuff.

So, you hook up with a vendor who sells you the pickles, tomatoes, buns, patties, and napkins. You sense promising results when talking to people, which gets you thinking: "OMG! OMG! I anticipate selling millions of our hamburgers, so we need to buy much more inventory! OMG!" But, then Master P. Biznezz comes around the corner, and slaps you. "Listen, son!" he teaches. "Stocking inventory is like buying milk for your home."

Say NO! to Excess

You don't buy 300 gallons of milk for the week because:

  • You'll end up with 298 gallons of wasted milk.
  • You'll increase costs to manage the milk.
  • You'll ridiculously deplete your your cash flow.

"Okay, I get it. Keep as little inventory as possible," you start to think. "The million dollar question then becomes: How?" Master P. Biznezz slaps you for being such a pretentious question-asker-person. So, in turn, he asks you:

  • "How much milk do you buy at the grocery, bizattichi?"

No Set Number

"Well, I don't have a set number," you say. "It's pretty random. Sometimes, I buy a gallon when I have another gallon in my fridge. Other times, I buy two to refill my last remaining gallons."

  • "That is," he tells you, "you purchase milk to replenish the milk supply you've used."

Think about that:

  1. You purchase inventory to replenish the inventory you've used.
  2. You purchase inventory to replenish the inventory you've used.
  3. You purchase inventory to replenish the inventory you've used.

Why?

  • You want milk when you need it!
  • You say NO! to spoiled excess milk!
  • You have more important things to spend the rest of your cash!

Buying milk for your fridge = buying inventory for your company. That is, you want to ensure:

  • You'll rid sucky inventory as much as possible.
  • You'll house the freshest inventory possible.
  • You'll optimize cash flow.
  • You'll supply demand where most necessary.

How? If you're running your ridiculously-deliciously-good hamburger joint named for your mama's mama, you:

  1. Purchase pickles to replenish the number of pickles bought.
  2. Purchase tomatoes to replenish the number of tomatoes bought.
  3. Purchase napkins to replenish the number of napkins customers used/stole.

That is, you buy inventory to replenish the inventory you've sold. The Fab Result: Freakishly fresh good inventory to sufficiently supply your real-world customer needs, with cash left over for your mama.

Milk your inventory. (<- witty.)

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Posted on October 29

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