Inventory: Knowing Exactly What You Have

Ask yourself one question: how many units of your best-selling item do you have right now,

exactly?

And if your answer is a number from your system, go to the shelf and count. The gap between the two

numbers is this book's subject.

The sentence this book rests on

Counting is not a software problem — it is a discipline problem.

And a system on top of a chaotic process reports the chaos faster; it does not fix it.

This is what surprises people: they buy an inventory system, **and discover two months later that its numbers

do not match the shelf — exactly as the notebook did. Because the number was not going wrong in the

notebook; it was going wrong at the door**: goods that came in unrecorded, others that left with no document,

a unit broken and thrown away.

**A system records what you tell it. And what you do not tell it does not exist for it — and it is sitting

on your shelf.**

Where the errors are actually created

Five doors, and all of them human:

• Receiving: a carton was counted and its contents were not (chapter three)
• Issuing: goods that left to a customer or a branch with no document (chapter four)
• Definition: the same item under two codes, or in two different units (chapter two)
• Damage: broken and thrown away with no entry (chapter five)
• Adjustment: someone "fixed" the number to match the shelf (chapter seven)

And the fifth is the most dangerous, because it hides the first four: every time a difference

appears, it is adjusted away — so the cause never surfaces, and it keeps bleeding.

Inventory is cash standing on a shelf

And this is what most of the discussion misses:

Every unit on your shelf is money you paid and have not recovered. So inventory is not "goods" — **it is

your cash in another form, and it costs you while it stands: space, insurance, deterioration, and above

all being unavailable to you**.

So excess inventory does not appear on your profit statement and does not look like a loss — **and it

quietly strangles your liquidity. We return to it in chapter eight, and it is the commonest error I have

seen and the least admitted**.

When you do not need an inventory system

I sell systems, and I will say when not to buy one:

1. Your items are few and you see all of them. A workshop or a small shop with dozens of items on shelves

in front of you ← a disciplined weekly count is enough, and it is more accurate than a system nobody

feeds.

2. Your goods come in and go out the same day. If you buy to order and do not store ← **you do not have

inventory to manage**, you have purchasing.

3. Your process has no discipline yet. ← and this is the most honest. If receiving happens with no

document today, it will happen with no document tomorrow — and you will pay for a system that shows you

wrong numbers more precisely.

4. Nobody owns the number. No single person accountable for inventory being right ← **a system will not

create them**.

And the third and fourth are not solved by money, and they are why most projects I have seen stall.

What this book is — and is not

It is about discipline and process: how to know what you have, and keep it known.

It is not about choosing a system — that is "Selecting and Implementing an ERP System", **which carries

the requirements, the vendors and the contract**, and I will point at it rather than repeat it.

Nor about point of sale — that is "The Point-of-Sale System for Restaurants and Shops", about the till

itself, and this is about what stands behind it.

Nor about invoicing your sales — that is "National E-Invoicing", **where a return moves inventory as well

as the financial side**, and we return to that in chapter four.

Nor about cleaning and migrating your item data — that is "Cleaning and Migrating Your Data".

And I will not name a single program. Programs change, **and the door your goods come in through does

not**.

Start with this test

Before anything else, do this today — it takes half an hour:

Pick ten items: your most expensive, and your fastest-moving. And count them by hand. Then

compare against your recorded number.

And record three things per item: the recorded number, the actual number, and the difference.

And that page is your baseline — we return to it in chapter eleven to see whether anything improved.

And do not correct the numbers now. A difference is information, **and correcting it before

understanding it erases the information** (chapter seven).

Action steps

1. Write the sentence and post it in the store: counting is not a software problem.
2. Count ten items by hand today and record the three figures.
3. Do not correct the differences before chapter seven.
4. Go honestly through "when you do not need a system", starting with the third.
5. Ask: is there a named person who owns the inventory number?
6. Estimate roughly: how much of your cash is standing on the shelves?
7. Identify which of the five doors you doubt most.
8. Do not buy a system before chapter six — counting comes first.