Archive for December, 2010

Managing your Products

Tuesday, December 21st, 2010

How well do you manage your Products?  Do you know the location, and quantities, and quality of the Products you sell?  Is this information up to-date?  Do you know at any moment, the dollars you have invested in your Product inventories?

If I change the word Products to Money and ask the same questions.  How do the answers for Money compare with the answers for Products?  Do you have the same confidence in the answers you get from your Business Control (ERP, MRP, etc) system for Products as the answers you get from your bank and investment portfolio?

Studies show that 52% of the businesses that sell Product, would answer the questions with “no way”, “I wish”, “it is not possible”, “my inventories are always wrong”, etc. etc.  For the Product businesses in the world, many have gotten used to not having good control of their Products, and spend large amounts of money to compensate for this lack of control.  Some of the costs are:

  • You have already purchased an ERP system or some type of Inventory Control System that give marginal results at best.
  • You have regular “physical” inventories to “check” the quantities.
  • You have expensive personnel (your management) doing “physical” checks for verify that you have enough parts to ship for an important customer.
  • You pay premium freight charges to ship your product that you had to expedite when you found out the inventory quantities were wrong.
  • You pay overtime to get product that was supposed to be on the shelf … and wasn’t … built and staged to ship.

This list could go on for a long time and you probably have a list with more cost that you experience because you simply didn’t know what Product you had available when it came time to ship.

Now inventory is not a new concept.  Businesses have been dealing with inventories for a long time.  So why do so many businesses struggle with poor information about the single largest expenditure and cost the business has?  Some believe that this is the “nature of the beast”.  Others believe that their employees don’t have an adequate “discipline” to manage accurate, timely inventories.  And still others think that their business is “different” and it is not possible to have accurate inventories with their type of Products.  Some companies have struggled for such a long time and spent large sums of money on inventory systems, that they just give up and resort to frequent physical counts. 

Before you give up, let me state: “about 48% of the businesses in the world do have accurate inventories”.  If you don’t, you can, and we will discuss some of the requirements for getting accurate inventories.  But first, why don’t you check on your inventory now and get an idea of just how accurate your systems are.  Here are some quick steps to evaluate your inventory accuracy:

  1. Select 10 part numbers that are a good cross section of the inventories that your business has.
  2. Check what your computer system shows you have available in inventory.
  3. Have someone familiar with your inventory go out and count the 10 parts.
  4. Score the results.


  1. Of the 10, how many of the counts were 100% correct?           _______
  2. How long did it take to count the 10 parts?                                    _______
  3. How many of the parts were in multiple locations?                    _______
  4. How many of the parts were in multiple containers?                 _______
  5. What were some of the reasons given for why your counts were not 100% correct?

If you had 100% correct counts, congratulation.  You are part of the 48% with accurate inventories.  If not, send me your results at and we will provide you some feedback.

In the next BLOG, I will start to address some of the reasons for inaccurate inventory as well as some of the solutions.  Happy counting!

Managing Your Business

Tuesday, December 21st, 2010

This is an introduction of a topic which will have many BLOGS in the future. 

Most businesses make their money by offering either a Product or a Service or both.  Key to managing the business is how well the Product or Service is controlled.  Product management starts with an accurate, timely inventory of the Product and its components.  Service management starts with an accurate timely tracking of people, activities, hours, etc.  Later BLOGS will start to discuss processes and methods for effective management of Products and Services.