The biggest obstacle to learning inventory is that it initially seems more complex than it actually is, which is a result of starting with an attempt to track everything at the same time. You perform a count, receive a shipment, can’t find a box, and receive a rush order and the entire inventory process seems like nothing more than a bunch of numbers. The best way to start is not with the big picture, but with the movement. Inventory is nothing more than what was received, shipped, remained, and what no longer exists as it should. Once you start thinking of it as a flow rather than a math problem, you can begin to grasp the fundamentals.
An excellent starting point is to select five common office items, and track them as if they were inventory for a week. It doesn’t matter if they are notebooks, bottles of water, or rolls of masking tape. Start with a count, and then document every time an item is added or removed. At the end of each day, reconcile the count you have with the actual count you observe. This simple exercise will teach you one of the most important inventory skills, which is to never let your documentation deviate too far from reality. Once you’ve repeated this exercise a few times, you will begin to see how easy it is to let discrepancies develop, even with something as simple as your own office supplies.
One of the biggest errors you can make is to focus on the number rather than the reason behind the number. For example, let’s say you have a count of twelve, but when you actually look at it, you can only find ten. The typical response of an inventory beginner is to simply write down the new number, and continue on. This is where the real work begins. The question you must ask yourself is why do I no longer have twelve? Was one used and not documented? Was it damaged? Were two items placed in the wrong bin? Resolving this issue requires you to slow down and assign a reason to every discrepancy. Inventory becomes incredibly easy when every adjustment has a reason behind it rather than just a number.
When the inventory process starts to seem like an abstract concept, bring it back to the three most basic questions. What sells fast? What sells slow? What can cause problems? Answering these questions will help you think more like an inventory manager, and less like someone trying to memorize new terminology. Take a 15 minute block of time and practice. Spend 5 minutes counting the current inventory levels of three of your SKUs. Spend 5 minutes thinking about the average demand for each of them during the day. Finally, spend 5 minutes thinking about what might cause a disruption to the inventory for each of them. (Late shipment, damage, unexpected usage, etc.) This will help you get into the mindset of understanding the flow of inventory. Over time, the flow is more important than the count.
You will find yourself struggling most when every item seems like it is created equal. Newsflash: it’s not. Some inventory is critical because it moves so fast. Some is critical because it takes so long to restock. Some is critical because if you run out, it will cause immediate problems. If you feel like you are in over your head, select a single item and spend a few days studying it. Observe how frequently it moves. Observe where the discrepancies come from. Observe how long it takes to restock. Once you can understand a single item intimately, you will be surprised at how much easier the rest of them become.
Don’t be afraid to get feedback even if you are practicing on your own. At the end of every tracking period, reconcile your projected outcomes with your actual outcomes. If you projected that a particular item would be in high demand all day, but you didn’t sell any of them, try to figure out why. If you projected that you would have plenty of a particular item in stock, but you stock out anyway, figure out why based on timing rather than just blaming the numbers. This is where the real learning takes place. It isn’t about getting everything perfect the first time. It is about teaching yourself to pay attention to the flow, document based on reality, and approach every discrepancy as calmly as possible.