Most companies carry too much inventory. “You can’t sell from an empty wagon,” is usually the reasoning. Being over-stocked means the company will likely not run out of anything. But what about the inventory that has celebrated a few birthdays in the warehouse? Has anyone stopped to calculate the true cost of worrying about “running out?”
The costs of maintaining excessive inventory usually far outweigh the true cost of not being able to quickly deliver a particular item to a customer once in a very long while. A balance must be struck between inventory levels and turnover as discussed during this one-day workshop. Good inventory managers know what stock moves at what rate. They carefully plan re-order levels to ensure that the chances of running out are minimized while the turnover rate is maximized.