Many of us have scaled back Thanksgiving plans this year, but it’s still a good time to consider the similarities between the grand undertaking of a big meal and the grand undertaking of running a business. With both, you need a process to track what you have and what you need. Otherwise you might wind up with bland gravy or extra shipping costs.
So imagine it’s a pre or post-pandemic Thanksgiving and the guests are about to arrive. The turkey’s out of the oven, the mashed potatoes are in a serving bowl, and as you’re warming the dinner rolls you reach in the fridge to get some butter. There’s only a quarter of a stick left. Is there time to run out to that store on the corner that charges double for everything? Are they even open?
As you do a last-minute search for your missing gravy boat and three different guests show up with green bean casserole you think to yourself, I probably could have planned this better.
In business, these are inventory issues, and they’re something I see a lot, particularly among manufacturers and importers. An inaccurate inventory will always cost you money. An overcount means salespeople might wind up selling something that isn’t available, but an undercount can make you purchase items you don’t need or leave products gathering dust on a shelf.
If I see an import company using air freight instead of ocean, I suspect inventory issues. Air is what you use when you need something in a hurry, and if your inventory is up to date, you shouldn’t be in a mad scramble to restock.
One way to find inventory errors is to do small weekly inventory counts to compare with their computerized inventory. The question is less how much the inventory is off than how often it’s off. Once the error is known, we can create a process to keep it from happening, or fix an existing process that no longer works as intended.
It’s actually easier to pull off one grand meal a year than to manage a business, which is closer to manufacturing an endless stream of Thanksgiving meals. It’s also less crucial that everything be done right; your friends and relatives are (hopefully) more forgiving than your customers. But success with business or dinner parties requires keeping on top of your supply chain.
This year Thanksgiving may be small, or distanced, or done via Zoom chat, but we can still be thankful that we have survived this extraordinary year. And we can all look forward to Thanksgiving in 2021, when everyone will be thankful for one thing: the vaccine that makes it possible.
If you’re looking for even more to be thankful for, we can help you find the broken processes and profit leaks that are keeping your business from reaching its full potential.
Carol Soman CPA
CHIEF EXECUTIVE OFFICER