If you are like the many small business owners still struggling to survive in today’s tough economy, then what you are looking forward to is an increase in demand. But the truth is that in case there is a sudden increase in demand, then you are bound to find yourself dealing with a different set of issues such as sparse inventory levels at your suppliers which in turn effects your ability to deliver the goods on time.Of course, this can be directly attributed to the economy as the suppliers cannot a strong inventory management. But this is solution if there is a sudden increase in demand. For instance, if you are anticipating an increase in demand in 2011, then it will help your business if you started working closely with your suppliers now.

You may wonder how to manage inventory then?

Some inventory management techniques are as follows:

Managing Inventory: Get a Backup

To begin with, ensure you have more than one supplier. However, don’t go overboard. Ideally, limit them to two, as it will be too cumbersome to manage supplier relationships. That said, having extra suppliers gives you room for bargaining.

Managing Inventory: Think ‘Partner’

With any important vendor, make sure that you become their favourite customer. Your goal is to encourage vendors to see you as a partner which will make them keep you on the top of their priority list. You could accomplish this by clearing bills on time, responding quickly to their queries and willing to be flexible while agreeing on terms. Refrain from picking up the phone and screaming. Instead, ask how you can work together to resolve the issue.

Communication is the key. This includes going out of your way to meet them face-to-face and build a relationship. The goodwill helps in suppliers going out of their way to fulfill commitments when the need arises.

Managing Inventory: Keep an Eye on Vendor Data

The more information you have about your suppliers’ inventory levels, the better you can plan. As part of the information-gathering process, ask your vendors to provide web access to product data. It’s unlikely that they will allow you to see cost information, but they might let you monitor how many items they have on hand.

Think about keeping in touch through phone calls and e-mail. Be sure to prioritize your suppliers and focus on a few, critical materials, rather than on an entire product line. This is especially important if your business experiences high turnover, because even a slight increase could put real pressure on the suppliers. A best practice is to break your inventory turnover down to individual products to see where potential supplier trouble spots are and address them.

Managing Inventory: Be Ready on Your End

If you are a business that offers services, then finding ways to ramp up personnel quickly can be a frequent issue. One solution to this problem is to use sub-contractors. This, however, could mean higher costs, at least in the short run. Instead, you might choose to have people on staff. If that’s the case, then it is better to develop a list of candidates to call on at a moment’s notice.

Budget for Different Scenarios

Now, back to the budget spreadsheets that need to be filled.

For optimal budget management, your best bet is to create a minimum of three budgets
  • One with an aggressive forecast for increase in sales
  • A second one that uses a more conservative assumption
  • A third one with worst-case scenarios

During times when you cannot predict the demand, it is important to consider the effect of increased costs on the cash flow, a critical issue when demand increases, since your need for working capital will also increase.

Budgeting season is the perfect time to scrutinize vendor relationships. Your suppliers will be mapping out their expectations from the coming year and you can help them by providing your outlook. It would be good if you can share your budget and the variety of scenarios you might face to see if they can handle different levels of demand. Many businesses fail as they couldn’t meet the demand. There is no reason for you to panic, if you plan ahead.

Entrepreneurial Learning

Management of inventory and inventory planning is essential to curb. Spend less; it will help you in your bad times. Knowing the importance of inventory management and budgeting will allow you to have a control over the unnecessary and helps you spend wisely. You gain flexibility through your budget.

Leave a Comment

Your email address will not be published.

You may also like

Growing a Business

Want Great Guidance ? Find yourself a Super Mentor


They are the gods of small businesses, those inspired individuals who have achieved the highest levels of success. They can be the shining beacons who light up the path of running your business with their vision, wisdom and wealth of resources and contacts. They are The Mentors.

If you are fired with the passion to take your business to great heights, the best thing to do is find yourself a super mentor. Here are some tips to help in your quest

Pinpoint your Need

Sit down and focus your thoughts on your business growth strategy. Which area of the business needs a lift. Is is staffing, is it the finances, is it the production, is it the your lack of customers or is it the business as a whole that needs a makeover. Once you’ve zoomed in on the sore spot, this is where you need…

Read More
Growing a Business

Dreaming Big? You can Move Mountains with these Business Productivty Tips


You may be full of admiration for some people who seem to manage themselves and their work so usefully and efficiently. They seem to fit in so much productive work into the same number of hours which everyone has.. Let’s look what makes them tick and take a few tips.

Learn to identify your most productive hours

Its true, most productive people know which time of the day they can be most creative and efficient. They identify and allot these hours for the best part of their work. This way they are able to give their 100% awareness to the job and business productivity.

Early to rise- A winning habit

Waking up early is a personal habit that has all the plusses on its side. You need not necessarily go to work that early. It’s a habit that gives you more time for personal care, like mediation, exercise, walking,…

Read More
Growing a Business

Leadership Qualities that can make you an Icon


You may have reached the leadership position through sheer dedication to performance and a do or die attitude . Now that you are at the top, your viewpoint needs to change. You have to now be a role model, one whom others will look up to and follow. Here are some tips that can shape your leadership and management skills

Be Competent: Employees will look up to a leader who has good industry knowledge and management skills. If you do not possess these skills you should surround yourself with knowledgeable people who can offer good counsel. Competence is a trait all employees will admire.

Be Trustworthy: No one will look up to a person they cannot trust. Your employees will want to rely on you and count on you. In difficult situations, leaders are expected to apprise their employees of the situations and find solutions on how to address…

Read More
Raising Money

Are You offering Your Services Using the Right Pricing Strategies?


In these times of fierce competition, business people , mostly those that offer services and belong to the service based industry, are finding it a challenge to implement the right pricing strategies. It is virtually a struggle to set the right business price that will retain and attract the customers, and not drive them away. Follow these tips, the crucial dos and don’t s and you may be in a much better position to offer your services at the best price.

Maintain your Business identity and Dignity

If you are offering a unique or special product or service, don’t underrate it just because you want to build a better relationship with the customer. This will just cheapen your offering as another run of the mill. If its something special you are offering the customer, then communicate this fact to the client and get the equation right with the most…

Read More
Raising Money

What is a Fair Wage? How Do you Assess Fair Wage?


How do you figure out a fair wage?

This is a very common question for startups and small businesses. They can’t seem to decide or understand how to set wages and manage reputations at a time. They are determined to pay well but they also have to think about encouraging their employees to stay with them for a long time. This is why there is a need to think strategically.

Listed below are a few expert tips to help you decide:

Don’t Focus Only on Money

Money should never be the main focus for you or for your employees. You should decide on the wages in such a way that your employees are tied to your business. When your business does well they should be able to taste that success and vice versa.

Also, think about additional perks such as exclusive benefits and time off. Many employees value this more than the overall…

Read More
Raising Money

Tips to Winning Hard Negotiations With Ease


While some negotiations are easy, others are quite hard to win. If you stumble you will lose.

Whether it is a potential client or an investor, negotiations can be very tough and frustrating. The problem is that the moment you let your frustration overwhelm you, you will lose the deal and you will give in to whatever is being offered to you. In order to avoid that, here are tips to overcome tough times and to win even the hard negotiations:


Know your opponent as well as possible. This is the rule no matter what you do. You should understand your opponent to the T. Who the person is, what his culture is, what he thinks, what he stands for, how is his network, etc. are the questions you should ask yourself and answer through research before meeting up for the negotiation. Understanding the opponent will give you a great advantage.


Read More