Effective inventory management is crucial for any business. Too much stock ties up capital; too little means lost sales. Here's how to find the right balance.

The True Cost of Poor Inventory

• Overstocking: Capital tied up, storage costs, expiry risk
• Understocking: Lost sales, unhappy customers, rush orders
• No tracking: Theft, wastage, inaccurate financials

Key Inventory Metrics

Stock Turnover Rate

How many times you sell through inventory annually. Higher is usually better.

Days of Inventory

How long current stock will last at current sales rate.

Reorder Point

Stock level at which you should place a new order.

Best Practices

1. Use ABC Analysis – Focus on high-value items (A), moderate attention to B, minimal to C
2. Set Reorder Points – Never run out of bestsellers
3. Regular Stock Counts – Weekly for high-value, monthly for others
4. First-In-First-Out (FIFO) – Especially for perishables
5. Track Slow Movers – Plan promotions or discontinue

Common Mistakes

• ❌ Ordering based on gut feeling
• ❌ Not tracking expiry dates
• ❌ Ignoring seasonal patterns
• ❌ No system for stock counts
• ❌ Multiple spreadsheets instead of one system

Using Technology

Modern inventory management software like Tawala helps you:

• Track stock levels in real-time
• Get low-stock alerts automatically
• See which products sell fastest
• Manage multiple locations
• Connect inventory to sales and purchasing

Getting Started

1. Do a complete stock count
2. Categorize products (ABC analysis)
3. Set reorder points for top sellers
4. Implement a tracking system
5. Review and adjust monthly