If you are planning on starting an effective inventory system for your business, you should follow basic inventory rules to ensure you are in control of your stockroom. Any business’ inventory has a set worth, which is considered a business asset. The rules for the inventory is to treat it as a valuable part of the business by updating it daily and catching mistakes before it hurts the business or disappoints customers.
Know Your Start
One of the first rules of managing an inventory system is that the business owner must identify the amount of individual products in the inventory. If you only have one product you are selling, simply count the amount you have in stock. If you are selling 10 different products, you need to count how many you have of each product available in your business. Having the initial number of products for your inventory helps you run an effective inventory system.
A business inventory should be updated frequently throughout the day to keep employees up to date about what is available. If you are using a technological inventory system, the inventory amounts will update each time a specific product is sold. For instance, if you have seven copies of one movie for sale and a customer purchases one, the technical system will subtract the copy from the initial count, leaving you with six copies in the inventory. Running a manual inventory system functions in the same manner, except you will need to note each item sold throughout the day. At the end of the day, subtract each item from the respective product sum to get an updated inventory count.
Keep your eye open for potential employee theft on the job. Some employees may not be loyal to your business and some employers may experience a dwindling inventory despite the lack of sales. Technological inventory systems that run on a computer may also give you trouble. Computer glitches may cause the system to delete saved inventory sum entries or be unable to save daily updates if a file is broken within the inventory software.
Communication is important, especially if more than one employee has access to the inventory. One major rule is that all workers must update one another if changes occur within the inventory. This can include broken products or items that have passed their expiration dates. Most issues should be reported to the business owner or manager responsible for the inventory.
- Business Know-How; Think of Inventory in Terms of Time; Ted Hurlbut; 2004
- Just Ask Mary; The Importance of Inventory Control; January 2010
- Masao Nakamura, Sadao Sakakibara and Roger Schroeder. "Adoption of Just-in-Time Manufacturing Methods at U.S.- and Japanese-Owned Plants: Some Empirical Evidence," pages 230-231. IEEE Transactions on Engineering Management, 1988.
- Electronic Code of Federal Regulations. "Regulation S-X, 17 CFR Part 210: Sec. 210.5-02 Balance sheets." Accessed Aug. 1, 2020.
Based in Toronto, Mary Jane has been writing for online magazines and databases since 2002. Her articles have appeared on the Simon & Schuster website and she received an editor's choice award in 2009. She holds a Master of Arts in psychology of language use from the University of Copenhagen in Denmark.