MIT Researcher: Think of Inventory as Cholesterol

Inventory is like cholesterol, according to Barry Lapide, an MIT Research Affiliate and UMASS Lecturer in his excellent article, “Change Your Inventory Mindset.” Too much cholesterol clogs veins and arteries, but too little is also harmful because of the valuable function it performs.

Money blood pressure, Fishbowl Blog“Both have two components to them: good and bad,” Lapide says. “So like cholesterol, you want to keep your total inventories as low as possible, but you don’t want the good component to get too low.”

The problem is that many supply chain managers and other key figures in companies have trouble understanding the true value of their inventory. Lapide notes that some want to obtain as much inventory as possible, without considering the costs, in order to meet customer demand. Others want to cut so much inventory that they wind up hurting sales because they have too few products on hand.

This is a familiar problem that creeps into many companies. What can be done to solve it? Company managers must change their way of thinking about inventory management. They must learn to tell the difference between good and bad inventory management strategies.

Lapide summarizes this point well in his article, saying, “Bad inventories are those deployed just in case, as well as those deployed using gut instincts rather than sound analysis. In contrast, good inventories are positioned with very specific purposes and are based on economic principles.”

You can find several ways businesses can implement good inventory management principles in Lapide’s article, near the end.

Companies that want to move past the costly mistakes that come from trusting in gut decisions for their inventory management should try using inventory software solutions.

Fishbowl is an excellent inventory control software provider. Its software integrates with QuickBooks and it offers an extensive and ever-growing number of services for an affordable price. Check it out by hitting this link: Fishbowl.


About Robert Lockard

Robert Lockard is a copywriter with Fishbowl. He writes for several blogs about inventory management, manufacturing, QuickBooks and small business. Fishbowl Inventory is the #1-requested inventory management software for QuickBooks users. Robert enjoys running, reading, writing, spending time with his wife and children, and watching movies. His favorite movies include Mr. Smith Goes to Washington, Fiddler on the Roof, Back to the Future and Lawrence of Arabia.
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