Whether your business is retail, service oriented or a combination of the two, buying new inventory or replacing sold merchandise, parts and supplies must be tightly controlled to minimize expenses. Control of Inventory and Supplies works in conjunction with sales, profit, cash flow and "open to buy", thereby supporting the continuity of profitable daily activity and growth for your business. Each area of business should have it's own "open to buy" within the context of merchandise or services allotted to that department.

The proper amount of inventory and supplies your company stocks is determined by past, current and projected sales or services. You must calculate, as closely as possible, the correct quantity required to continue uninterrupted business operations. Having too little causes delays in sales and services, resulting in customers or clients doing business with your competitor; and having too much might leave you with unusable inventory or supplies which would bring costs up and profits down.
Buying inventory and supplies generally follow these guidelines:

  1. appropriate for your operations;
  2. absolute necessity for the amount bought;
  3. fulfilling customer's or client's needs;
  4. cost effective for consumer pricing and company profit.

However, even the highest level of inventory and supply control, in any business, has a certain amount of monetary loss. Known as "Shrinkage", this loss, which is added to your operating cost, may occur due to a variety of unforeseen circumstances such as damage, aging, expired dating, replacements, repairing or re-doing previous work, defects, etc.

To help you "Control Inventory and Supplies", SCORE, A Resource Partner of the U.S. Small Business Administration, offers free, confidential one-on-one business counseling with experienced executives plus a day long monthly Workshop for a nominal fee. For the location, phone number and counseling hours of the office nearest you, call our main Dallas SCORE Office at (214) 987-9491.

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