PostDate:
SCORE recently ran an article (Ann Arbor News, June 14, 2015) discussing how inventory control is part of a sound management strategy. Without good controls companies can run into financial difficulty. Good inventory management is a difficult, but necessary, balancing act. While excessive inventory can tie up significant amounts of cash, a shortage of inventory will drive your customers to other vendors.
In addition to the cost of acquiring inventory, there are hidden expenses for its storage and handling including insurance, damage to product, and even obsolescence. Time (and money) spent both taking a physical inventory and just searching for needed products can add up quickly when the inventory is not well managed.
One other important inventory issue not discussed in the article is configuration. Most companies go through a number of revisions during the design phase of their product and startups are no exception. Many of these design cycle changes never see the light of day or only as a mock up or prototype. However, once product is released for sale, engineering changes continue to happen. This means different customers are actually buying different products. This can be true with software as well as hardware items.
It is important to know how to identify what revision product a customer has purchased. This becomes a critical issue if there are product complaints from your customers, technical questions, or even the worst case scenario of a safety recall.
A good rule of thumb is that whenever a change is made to the form, fit or function of the device, the change must be recognized and a new internal part number assigned to the item. Other types of changes such as drawing corrections or clarifications are usually managed by a change to the item’s revision level. Your marketing name can stay the same, but your product label and sales records must reflect the correct configuration. This will provide better customer service down the road and assist in controlling product liability issues.
