Posts Tagged ‘inventory management for SME’

It’s easy when accountants like myself preach JIT. JIT means just-in-time where you only buy raw materials as needed. You don’t accumulate stocks.

You see, the problems with many startup entrepreneurs start when they get involved in an industry which is related to inventory.

Services don’t need inventory, but for a big business, inventory is a must, if not what to sell la?

A business grows and revenue grows, so does your cost buying the inventory to convert into products to sell.

Everyone is happy and you are happy.

Until you realise the net profits suddenly diminishes and you are faced with a cashflow problem.

You ask your partner or your staff, why do you ask for so much?

Without proper recording, an enterprise might die.

When a business operates in a country where the supply chain is not effective, you cannot do JIT.

You have to keep stocks as the suppliers can’t provide stocks on time and sometimes they don’t have stocks.

You have to resort to inventory buildup or train your supplier.

As the business grows, so does the inventory and cash tied up to it.

Growing is painful, being an entrepreneur, you need to ask yourself, how much is enough?


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