Business Process Analysis - Inventory

Many businesses do not carry inventory so this page isn't for everyone.  For instance FM Net Design, is in the business of providing website design or custom office automation software.  There's nothing to sell other than services.  Other businesses such as retail are all inventory while manufacturing service businesses usually require some inventory.  That inventory may be in service trucks or a small warehouse area.  For businesses that have to carry inventory, it's as important as having sales orders.

Inventory is an investment requiring an outlay of funds to own it.  If you are required to have inventory, it should be an investment in the future of your business.  It is the fodder for manufacturing to turn into finished goods.  It is the parts a service business needs to repair customer equipment.  Maintaining inventory levels at just the right level, not to much and not to little is important.  Making sure the right inventory is maintained is important.  Having inventory available that no one wants doesn't help the bottom line.  In case the point hasn't been made yet, inventory is important.

Failing to maintain inventory properly has been the downfall of many businesses, large and small.  To much inventory at the point of an economic downturn is damaging.  Having the wrong inventory, "stuff" that no one wants is a wasted investment.  Inadequate inventory that causes delivery schedules to slip for a failure to deliver is a disaster.

So you have inventory, what questions do you need to ask about it?  How do you track your inventory, do you know what you have and where to find it?  Is there some sort of location system in place to know where to find what you own?  An inventory location system may consist of what's in Joe's truck and what's in Bob's truck.  It may consist of a traditional ZARB system where your warehouse is defined by Zone, Aisle, Row, Bin.  Do you know how many pieces of an item you have and where it's located?

When inventory is used, do you have a system in place to show it was issued or sold?  Where it was used?  How many pieces or Units of Measure (pieces, pounds, gallons) were issued?  The same applies to new inventory, do you know when it comes in?

Some way to track inventory incoming, outgoing, and location is vital to the successful operation of any business large or small.