How To Manage Inventory Turn – Spoiled Milk Management -VIDEO
Another video by Mike Michalowicz, Author of The Toilet Paper Entrepreneur
Did you read the one book that is actually helping entrepreneurs in this economy? Check it out now!.
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Tags: How To Manage Inventory Turn, mike michalowicz, on a roll, spoiled milk management, The Spilled Milk Strategy, toilet paper entrepreneur, Video
March 18th, 2009
Mike great video, I like the idea of Spoiled milk management but I am a bit confused, maybe I missed a point.
But they asked if they should reinvest to get more inventory.
So are you saying they should reinvest? Mind explaining that?
March 18th, 2009
Tom – I think his thought was that you shouldn’t reinvest in inventory unless you have to. You don’t want to immediately through cash into new inventory if you already have a good amount. Why tie that cash up in something just sitting on the shelf? You should use it for more marketing, expanding the business in other areas, or just holding on to! The worst thing is getting a bunch of an item that sold well and then you don’t sell any of that for months. You just watch it sit there on the shelf and know that it is money you can’t get back.
Mike – great video and great topic. This is the same tactic I use for my eBay business. I only order new inventory when I’m getting extremely low (1 or 2) of a product left and then I still wait to bill up a certain dollar amount in the order. That way I don’t have to pay multiple shipping costs for smaller orders. For my products, I usually wind up reordering every month or so depending on the items!
Keep up the great videos!
@chrispund
March 19th, 2009
@Tom – You know, you are right. I got so into my own answer, I missed part of what Victoria asked. The answer is KINDA. They need to first determine their optimal inventory turn… which is spending the least amount of money to get inventory turning over every 2 weeks. This may not be possible if their suppliers won’t allow it… but if they can they should. And yes they should be using the money they make from the sales of inventory to buy new inventory.
@Chris – When moving small inventory quantities, the shorter you have it the better. The irony is when you move big quantities, it may be better to have longer hold periods – since you can negotiate bigger purchase discounts and handle demand surges.
- Mike
March 19th, 2009
Chris
thank you for explaining that to me.
So order only when supply gets low and I guess part of it is recording inventory and demand levels or looking back at previous trends from the business.
Mike, thanks for the explanation, I never owned my own business so I was just asking to better understand.
March 19th, 2009
Tom – it obviously depends mostly on the type of business that you are in and the specific needs and demand that you have. For me it works out that I can order when inventory is pretty low (1 or 2 of an item left) and not have any missed sales because of not having it in stock. Best of luck!