The Art of Inventory
Managing inventory is as much an art as a science, and like any art, a number of tried-and-true techniques exist that publishers may want to consider to manage their investment in inventory more effectively.
1. Focus on the ABCs.
Perhaps the worst mistake one can make when managing inventory is to view everything from a one-size-fits-all perspective. All inventory is not alike, and a comprehensive inventory strategy should start with one of most basic tools of inventory management—the ABC Analysis. ABC Analysis is similar to a Pareto Analysis—sometimes described as the 80/20 rule, where 80 percent of an organization's sales come from 20 percent of its titles. Using a full year's sales as the starting point for your analysis, all of the titles in your publishing program should be segregated into three classes:
Class A Titles: This class should include those ISBNs that account for 80 percent of your organization's net sales and ideally should represent 20 percent or fewer of the titles in your publishing program.
Class B Titles: This class should include those ISBNs that account for 15 percent of your organization's net sales and should represent 30 percent or fewer of your titles.
Class C Titles: This class should include those ISBNs that account for the remaining 5 percent of your organization's net sales and ideally should represent 50 percent or fewer of your titles.
Your time and attention should be focused in proportion to the inventory class: Eighty percent of your time should be focused on making sure that you have sufficient inventory on or in the pipeline for the 20 percent of the titles that are your company's bread and butter.
This is not to suggest that you should ignore classes B and C, but—recognizing that all books have a life cycle—don't spend lots of time and resources on product that is likely to offer little or no return.