2022: New Year’s Resolutions

We hope everyone had a safe and enjoyable holiday season.  While you are considering New Year’s resolutions, why not add some which will lead your organization to achieve the goal of effective inventory management.  That is, “to meet or exceed customers’ expectations of product availability while maximizing net profits or minimizing your total inventory investment.  Our inventory resolutions include:

  • Make sure that all material movement is properly recorded. If you are not sure of what is in your warehouse, overstocking is necessary to ensure you have enough to meet your customers’ expectations.


  • Develop an approved stock list. When you stock a product, you are committing to have a reasonable quantity available for immediate delivery to customers.


  • Separate products that are sold or used on a regular basis from those with sporadic sales or usage. It is usually possible to accurately forecast future demand of products with recurring usage.  But you can’t accurately predict how much of an item with sporadic usage will be sold in a future week or month.  Products with sporadic usage should be stocked based on a multiple of the normal quantity sold or used in a single transaction.


  • Ensure anticipated lead times represent how long it will take to receive the next shipment from the vendor. In these times of chaos in supply chains, the anticipated lead time is often very different from a lead time derived from averaging the lead times associated with past shipments.  Discuss longer lead times with your vendors.  Do they expect them to continue, get better or get worse?


  • Maintain safety stock quantities to achieve your desired level of customer service. Safety stock is “insurance” inventory maintained to avoid stockouts due to unusual usage or delays in receiving a replenishment shipment.  Some products need more safety stock than others as it is more important that they are in stock and available for immediate delivery.  Don’t use a “paint roller” and apply the same safety stock rules to all items.  Use a “fine-tipped artist’s brush” and dab it where it is necessary.


  • Analyze possible unusual usage. It takes experience and market knowledge to determine whether a dramatic increase or decrease in usage represents exceptional activity or is the start of a new trend.  Great salespeople know that questioning customers about unusual purchases often represents a fantastic sales opportunity.


  • Determine turnover and profitability goals. Keep in mind that you can vary goals by location, vendor, product line or any other meaningful criteria.



  • Measure progress each month in achieving your predetermined goals. Remember that people tend to do what you inspect, not what you expect.  Don’t expect to achieve effective inventory management overnight.  Look for gradual improvement!


I’m always entertained by New Year’s Resolutions.  That time of the year that I try and convince myself that because it’s a new year I’m magically going to figure out how to get more sleep, stay off my phone, workout 6 times a week, spend more time getting through my reading list, clean out the garage, replace the shelving in our pantry… I’m actually getting a little tired just typing this.   I will get to those things tomorrow, or next week, or next January.

Don’t let your resolutions die a quiet death.  Tackling your entire inventory at one time may seem like a daunting task. Start with a small segment: one vendor line or the stock in one warehouse.  Just get started…..you won’t regret the effort.

If you have any questions or need any assistance, just let us know.

May the only excess inventory you experience this year be in good luck and blessings,

Matt Schreibfeder

EIM VP Analytics and Research