Every year I like to go to the bookstore in January and look at the discounted calendars. Calendars are fun and helpful. Almost anyone can use a wall calendar even with today’s electronic devices. Almost anything and everything can be introduced in a calendar. You can see your favorite Dog Breed, Hobby or Art Work depicted in an eye pleasing format. In fact I am surprised at the variety of calendars. At 50% to even 80% off in January, you still have 11.5 good months to utilize the calendar. That is why, to my dismay I was absolutely shocked when I went to my favorite Book Store and found only a few calendars left. I mean a minuscule amount and all the subjects in my opinion were silly.
What… A Stock Out?
Although I was bummed out, I thought to myself, someone actually did a good job here. Ordering, maintaining and converting inventory into cash is challenging. The most important information distributors need to understand is their carrying costs. So many times this is misunderstood and you still need to compete to keep prices lower for your products. However, in order to remain competitive, you also need to understand that all decisions should be based with a complete picture of your products and all the costs associated with them.
These Inventory Carrying Costs Include:
- Inventory Value
- Warehouse Labor Expense – Salaries, Payroll Taxes, Benefits etc.
- Software and Hardware Costs if Using a WMS or Inventory Solution
- Warehousing Costs – Rent, Building Payments, Utilities, Safety Expenses, Equipment
- Business Insurance and TAXES
- The Cash You Tied Up in Purchasing the Inventory
- The Ongoing Finance Charges If You Finance the Inventory
Fortunately if there is a demand for your products, you negotiate a good deal, you have intelligent buyers who use good judgment along with specialized tools for keeping the correct amount of inventory and you understand the entire picture you should be fine.
Our company does not specialize in this but we have several good consulting firms with good track records that can help you, so let us know if you want a referral, 314-664-2200.
So the moral of the story is, the bookstore and its suppliers did pretty darn well and understood how to have just the “right amount inventory.” Shame on frugal me. I will be paying close to full price for my calendars from this point on or maybe, just maybe, I will get a good deal if I wait until the last week in December.