SELLING TO CUSTOMERS
For Something To Be Inventory
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You must have bought it: If you’re selling something on consignment, it still belongs to the manufacturer or supplier. That’s not your inventory – it’s theirs.
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It must be for sale: Things that you’ve bought to help run your business – such as stationery or work tools – aren’t inventory.
Why Have Inventory?
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You could just order what you need, exactly when you need it. And some businesses are able to operate on a just-in-time system like this. But for most businesses, it’s impossible to organise such a precise supply chain
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Having inventory on hand has a number of benefits. It lets you:
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Be responsive to customer demand
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Deal with seasonal or cyclical demand
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Have some independence from suppliers
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Take advantage of price discounts and bulk buying
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Delay the impact of price increases
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Reduce delivery costs
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Avoid work stoppages between manufacturing stages
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Manage products with long lead times
Guide to COC Inventory
