By Tim Salaver, MBA, PMP, CSSMBB President, APICS Golden Gate Chapter

President, Cornerstone Systems Solutions

Why is Inventory Important?Write 3 reasonsPoll the reasonsPrioritize the

reasonsDiscuss the reasons

Good Customer ExperienceDetermines customer satisfaction levelsCreates loyaltyDefines the customer relationshipDrives revenue growthRequires Best Practice Inventory

ManagementIs Traditional and Online

Bad Customer ExperienceDrives away customersPeople remember vividlyCaused by poor training Result of poor inventory management

practicesHas greater publicity

“Satisfied Customers Tell Three Friends,Angry Customers Tell 3,000”

What is a Small and Medium Business?What is your perception?How large is an SMB?What is the Annual Revenue or Asset Base?How Many Employees?Small Business Administration Definition (source:

sba.gov)1. is organized for profit; 2. has a place of business in the United States; 3. makes a significant contribution to the U.S. 

economy by paying taxes or using American products, materials or labor; and,

4. does not exceed the numerical size standard for its industry

Industry Group Size Standard

Manufacturing 500 employees

Wholesale Trade 100 employees

Agriculture $750,000

Retail Trade $6.5 million

General & Heavy Construction (except Dredging) $31 million

Dredging $18.5 million

Special Trade Contractors $13 million

Travel Agencies $3.5 million (commissions & other income)

Business and Personal ServicesExcept:

$6.5 million

Architectural, Engineering, Surveying, and Mapping Services

$4.5 million

Dry Cleaning and Carpet Cleaning Services $4.5 million

SBA Size Standards (sample)Table of Small Business Size Standards Matched to

North American Industry Classification System Codes (source: serv_sstd_tablepdf.pdf)

492110 Couriers and Express Delivery Services 1,500 EE423210 Furniture Merchant Wholesalers 100 EE541512 Computer Systems Design Services $25.0M622110 General Medical and Surgical Hospitals $34.5M522110 Commercial Banking $175 million in Assets111333 Strawberry Farming $0.75M111336 Fruit & Tree Nut Combination Farming $0.75M

Think P.A.R.T.S.ProcessesAccuracyResourcesToolsStrategy

Inventory ProcessesCapstone to Inventory ManagementEvery company has an inventory processFor Better or WorseNeed to address customer’s demands

appropriatelyServices inventory processes are not so easily

defined as in Manufacturing

Inve

nto

ry Man

ag

em

en

t

Pro

cure

-to-P

ay (a

ka R

eq

-to-C

heck

)

Strategy

Processes

Accuracy

Resources

Tools

Inventory Management

Quote-to-Cash (AKA Order-to-Cash)

ProcessAccurac

yResourc

es ToolsStrateg

y

Inventory

Quote-to-Cash

Pro

cure

-to-P

ay

Quote-to-Cash

Customer Satisfaction is #1

The dreaded responses“We don’t carry that item”“We have it in a different color”“We can order it for you. It should be here in 2

weeks.”“I don’t know”“I thought we had it on the floor”“Let me check the warehouse, the system seems to

be down”“It shows we have 2, but I know we have more

than that in the warehouse”“We ran out earlier in the day, sorry about that”“I’m sorry for the wait, a big party just came in.”

Service versus ManufacturingSkillsKnowledgeInformationMenusContentBlogsEntertainmentQUALITYPRESENTATION

PartsSub-assembliesRaw MaterialsIn-progressFinished GoodsItemsOptionsQUALITYPRESENTATION

Inventory AccuracyNot an OptionExpectedCompany ValuationHow often do you count

and value inventory?Is key to meeting

customer service levels

Inventory ResourcesTrainedSkilledEquippedManagedInformedCapableMotivatedCapacity

Inventory ToolsHand Held TechnologyInformation SystemsPoint 0f SaleWarehouse Management SystemOnline TicketingOnline Ordering Configurator systems

Inventory StrategyWhy Last?Because SPART isn’t a good acronym to

remember To create a workable and executable inventory

strategy requires knowing what processes, accuracy, resources, and tools are available

Focused“Kitchen Nightmares” with Chef Gordon Ramsey“Tabatha’s Salon Takeover” with Tabatha Coffey

Aligns to Corporate Objectives and Strategy

What HappensWhen PARTS Work When PARTS Don’t

WorkHigher Customer

SatisfactionGreater ProfitabilityDecreased WasteLower ShrinkageLess Item ObsolescenceEfficienciesEffective Product

ManagementGreater value to the

customer

Lower Customer Satisfaction

Lower ProfitsIncreased WasteHigher ShrinkageMore Item ObsolescenceInefficienciesPoor Product ManagementHigher costs to the

customerLoss of Business

What is Inventory Really?

Create a Watch Retail Company

Questions, Comments….What else do you wanna know??

Tim Salaver, MBA, PMP, CSSMBBtim@go-css.com

702-286-7464

Additional Resources Arnold, CFPIM, CIRM, J. R. Tony, Stephen N. Chapman, CFPIM, and Lloyd

M. Clive, P.E., CFPIM. Introduction to Materials Management. 6th ed. Upper Saddle River: Prentice Hall, 2007.

Brooks, Roger B., and Larry W. Wilson. Inventory Record Accuracy: Unleashing the Power of Cycle Counting. New York: John Wiley & Sons, 1995.

Mercado, Ed C., CPIM, C.P.M. Hands-on Inventory Management. Boca Raton: Auerbach Publications, 2007.

Novak, Stephen, CPIM, CIRM, CQMgr. The Small Manufacturer's Toolkit: a Guide to Selecting the Techniques and Systems to Help You Win. Boca Raton: Auerbach Publications, 2006.

Piasecki, David J. Inventory Accuracy: People, Processes, & Technology. Kenosha: OPS, 2003.

Wild, Tony. Best Practice in Inventory Management. 2nd ed. New York: John Wiley & Sons, 1997.

Fundamentals of Inventory Control, version 2.4. Chicago: APICS The Association for Operations Management, 2002.

Fundamentals of Operations Management, version 2.1. Chicago: APICS The Association for Operations Management, 2002.

Fundamentals of Materials Handling and Warehousing. Operations Management Education and Research Institute of Canada (OMERIC), 1999.