To walk you through the process of setting up an inventory system, both in the physical world and in our software, this guide will use a small (fictional) retail business called “Sweet Little Devils Cookies and Candies”. Here’s a recent aerial photo of the business:
(Undated aerial photo)
Sweet Little Devils makes and sells cookies, candies, coffee drinks, and other café items. Some items are made from scratch, while others are bought and sold. They also ship direct to customers who order products from their website, www.sweetlittledevils.com. Unbeknownst to them, their actions are being used in this guide to show the entire world how to set up an effective inventory system.
Let’s follow along.
The Elements of a Pretty Good Inventory System
We like our Clearly Inventory software. We think it’s easy to use, and we know that it will help you become more productive. But no matter how good we think it is, it will fail to help you if you don’t do some very basic things.
The purpose of this section of the Inventory Basics Guide is to walk you through the absolute basic attributes of a pretty good inventory management system and to instruct you in detail about how to implement our recommendations.
We say “pretty good” because there are no perfect ways to create the elements of an inventory management system, but there are lots of bad ways. You may be able to improve on our recommendations or your enterprise may have to do things differently, but if you follow our recommendations, you’ll wind up with a pretty good system.
The Critical Elements of a Pretty Good Inventory System
- Well-organized location names
- Location labels that are easy to read and unambiguous
- Unique, short, and unmistakable item numbers
- Units of measure
- A good starting count
- Software that tracks all inventory activity
- Good policies
- Most important: people who know and follow good policies
Before we get into each of the above elements in more detail, let’s take a moment to explain why these elements are so important.