As the Accountant, Become a Business Leader

Out of stock inventory items should be avoided at all costs.  Customer satisfaction should be the top business priority of the company.   A customer who arrives for a purchase only to find the item out of stock will not be satisfied.  On the other hand, having too much quantity of an item in inventory is expensive, in many ways, to the company.  Being "out of" versus being "over stocked" represents a challenging conflict that, if resolved, will bring much value to the company.

This conflict represents a real opportunity for the small company’s accountant to gain recognition and acceptance from the company’s leaders and to become one of them.   The company’s accountant is well positioned and should be capable of taking on the challenge of developing the needed measurements and processes to avoid stock outs and keeping quantities on hand at an optimal number.

The key to success in this area, I believe, is good estimates of future sales.  Many accounting systems, such as QuickBooks, provide current sales rates, which is a good starting place for estimating future sales rates.  Then, with future sales rates, one who relishes in the details, in measuring and tracking data, and in reporting, such as a good accountant, should be able to shine by proactively consulting with the other company leaders so that all those processes that affect on hand inventory counts are understood and are managed for optimal inventory levels.  The active accountant can take ownership of this area and by doing so should enhance his/her position as one of the transformative leaders in the company.

The Internet can be a source of ideas and sound practices on maintaining optimal levels of inventory.  Four Internet designations with such ideas and practices are discussed below.

Guy Yehiav and Sammy Kolt at this blog “Pump Up the Profit” present ideas about minimizing inventory distortion (avoiding stock outs and over stocking).  Click here and here to go to these blogs on this subject.   Joe Schreibfeder publishes articles about inventory management on his website.  His articles examine how much safety stock is enough and how to factor past lost sales into future sales estimates.  Click here to gain access to these articles.