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For most companies, Inventory represents 50% or more of their costs when manufacturing products. This means that it is paramount to manage raw materials, work-in-process, and Finished Goods.

It is important to avoid the ‘Stockouts’ for customer shipments or if you need to build something. Conversely, excess inventory consumes much-needed working capital. In addition, obsolescence, which is what excess inventory becomes once new products are introduced, ruins a company’s margins.

So, what is the answer? The first step is ensuring that you have a way to monitor the inventory levels of your raw materials. For smaller businesses, with few raw materials and transactions, this is easily accomplished using a spreadsheet and ensuring that transactions are recorded in a timely manner.

Here is a view showing a small portion of a perpetual inventory record using a spreadsheet.

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