The Art of Inventory
4. Think twice before manufacturing overseas.
While manufacturing in China and India certainly has its place for certain types of product—particularly children's books with complex formats—rising wage rates, currency issues and time in process are important considerations and should be given due weight in developing your inventory strategy. No less important is the basic supply chain maxim that suggests that the longer the supply chain, the higher your safety stock levels should be. Put another way, if you have to increase your print order by 10 percent to 25 percent to make sure you have sufficient safety-stock for Asian manufacturing, is offshore manufacturing really an effective strategy? No less important is the question of availability—producing the product onshore provides dramatically better options to meet unexpected demand—something that you would do well to remember as the Internet grows in importance as a major book-distribution channel.
5. Build kits on the fly.
Publishers selling to the elementary–high school, college and some elements of the professional markets are all too familiar with the growth in kits (aka "bundles"). Kits are the assembly of two or more products, each with unique ISBNs, into a shrink-wrapped or boxed offering sold under a separate ISBN. Unless you have a fairly sophisticated inventory system that includes a Bill of Materials module, or an inventory manager with the memory of the Amazing Kreskin, you are unlikely to have visibility to the kit components, and you may find yourself reprinting when you could just as easily be disassembling slow-moving kits and avoiding last-minute reprints.
6. Manage your returns backlog.
Think of unprocessed returns as another source of inventory. Track your returns backlog daily by the date of the oldest returns in the processing queue and/or estimating the days it will take to clear the backlog. Set aggressive targets for processing with the stated objective of processing, posting and returning the inventory back into stock in five days or less.