Inventory Management

GATE: Confirm assessment before designing the system.

Phase 2: System Design

Build the inventory tracking framework.

Product Catalog Template

## Product Catalog

| SKU | Product Name | Category | Unit Cost | Sell Price | Margin | Supplier | Lead Time |
|-----|-------------|----------|-----------|------------|--------|----------|-----------|
| [SKU-001] | [Name] | [Category] | $[X] | $[X] | [X]% | [Name] | [X] days |

Reorder Point Calculation

For each product, calculate the reorder point:

Formula: Reorder Point = (Average Daily Sales x Lead Time in Days) + Safety Stock

Safety Stock: Average Daily Sales x Safety Days (typically 7-14 days for solopreneurs)

## Reorder Points

| Product | Daily Sales | Lead Time | Safety Stock | Reorder Point | Reorder Qty |
|---------|------------|-----------|-------------|---------------|-------------|
| [Name] | 5 units | 14 days | 35 units | 105 units | 150 units |

ABC Classification

Categorize products by revenue contribution:

• A items (top 20% of products, ~80% of revenue): Tight control, frequent counting, optimized reorder points
• B items (next 30%, ~15% of revenue): Moderate control, monthly review
• C items (bottom 50%, ~5% of revenue): Loose control, quarterly review, consider discontinuing low performers

GATE: Present the system design for review.

Phase 3: Tracking Setup

Create the operational tracking templates.

Inventory Tracker Template

## Inventory Tracker

| SKU | Product | On Hand | On Order | Reorder Point | Status | Last Counted |
|-----|---------|---------|----------|---------------|--------|-------------|
| [SKU] | [Name] | [qty] | [qty] | [qty] | OK / LOW / REORDER | [date] |

Supplier Management

## Supplier Directory

| Supplier | Products | Lead Time | Min Order | Payment Terms | Contact | Reliability Score |
|----------|----------|-----------|-----------|--------------|---------|------------------|
| [Name] | [SKUs] | [days] | $[X] | [Net 30] | [email] | [1-5] |

Stock Alert System

Define alert thresholds:

• Green: Stock above reorder point — no action needed
• Yellow: Stock within 20% of reorder point — place order soon
• Red: Stock at or below reorder point — order immediately
• Critical: Stockout — activate backup plan

Phase 4: Prevention and Optimization

Deliver ongoing management frameworks.

Monthly Inventory Review Checklist

- [ ] Count A-items and reconcile with tracker
- [ ] Review products approaching reorder points
- [ ] Check supplier lead times (have any changed?)
- [ ] Review slow-moving C-items for discontinuation
- [ ] Update demand forecasts based on last 30 days
- [ ] Review cash tied up in inventory

Demand Forecasting (Simple)

Provide a basic forecasting approach:

• Use 3-month rolling average for stable products
• Apply seasonal multipliers for seasonal products
• Flag any product where actual sales deviate more than 30% from forecast

Stockout Prevention Checklist

• Maintain backup supplier contacts for A-items
• Keep safety stock at minimum 7 days for bestsellers
• Set calendar reminders for reorders based on lead times
• Create a "what to sell when out of stock" list (alternatives, bundles, pre-orders)

Anti-Patterns

• Not tracking at all — "I know what I have" stops working past 20 SKUs. Track everything.
• Over-ordering to feel safe — excess inventory is dead cash. Calculate reorder points, do not guess.
• Single supplier dependency — if your only supplier is delayed, you are out of business. Have backups for A-items.
• Ignoring slow movers — C-items that sit for 6+ months should be discounted, bundled, or discontinued.
• Manual counting without schedule — if you do not count regularly, your tracker becomes fiction.

Recovery

• User has no sales data: Start with best estimates and refine after 30 days of tracking. Any estimate beats no system.
• User is already experiencing stockouts: Prioritize the top 5 revenue products. Calculate reorder points for those first, handle the rest later.
• User has too many SKUs to track manually: Recommend inventory management software (Sortly, inFlow, or Shopify inventory for e-commerce).
• Supplier lead times are unpredictable: Increase safety stock to 21 days and track actual lead times to find the real average.
• User does dropshipping: Adjust the framework — focus on supplier reliability monitoring rather than physical stock tracking.