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05 — Inventory Management

Why Accurate
Inventory Matters

Inventory affects sales, operations, finance, cash flow, profitability, governance, and business continuity. AAC diagnoses, classifies, and governs your stock — then embeds it into the VDDL system so control holds.

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Inside This Service
1

Why accurate inventory matters — across financial control, customers, operations, and governance.

2

Diagnose, classify, and design — from preliminary diagnostic to warehouse zoning.

3

Govern, enable, and measure — roles, technology, KPIs, and controlled counts.

Inventory affects sales, operations, finance, cash flow, profitability, governance, and business continuity.

The Foundation

A Clear Inventory Tells the Company

Eight facts every business needs to know about its own stock — at all times, not just at year-end count.

What it owns, how much, where located, item cost, availability status, movement, reorder timing, and who is responsible.
What it owns
How much
Where located
Item cost
Available / reserved / damaged / expired
Moving / non-moving
When to reorder
Who is responsible
Financial Control
Protect cash flow
Correct financial statements
Real cost and profit
Customers & Continuity
Protect sales and relationships
Support business continuity
Improve demand planning
Operational Efficiency
Reduce theft, loss, and misuse
Identify slow / obsolete stock
Improve purchasing
Governance & Growth
Strengthen family-business governance
Support scalability
Support compliance & external confidence
Reliable Data
+
Protected Cash
+
Better Decisions
+
Continuity
=
Controlled Growth
The Diagnostic Path

Diagnose, Classify & Design

Four stages, from a preliminary read of the numbers to a fully zoned warehouse layout.

Evidence leads to root cause, root cause defines the right control level, and the right control level produces a controlled warehouse flow.
1

Preliminary Diagnostic

Collect

Item master · Valuation, movement & aging reports · Purchasing, receiving, sales, returns · Count & financial records

Test

Physical vs system quantity · Item codes · Locations · Approvals · Family withdrawals · Ledger reconciliation · Separation of duties

Classify issue as Strategic, Operational, or Both.

2

In-Depth Diagnostic

Assess

Item-master quality · Demand variability · Suppliers · Lead time · Safety stock · Cash (inventory investment)

Review Processes

Receiving · Storage · Picking · Returns · Adjustments

3

Classify Inventory

ABC by Annual Usage Value

A High value, top ~70–80% of value · B Medium value, next ~15–25% · C Low value, bottom ~5–10%

By Movement & Risk

Fast-moving · Slow-moving · Non-moving · Obsolete · Critical

Combine value, movement, and criticality.

4

Design the Warehouse

Define Zones

Receiving · Inspection · Quarantine · Accepted stock · Fast-moving · High-value · Temperature-controlled · Returns · Damaged/Expired · Picking/Packing · Dispatch

Standard Location Code

Warehouse–Aisle–Rack–Shelf–Bin

Evidence
Root Cause
Right Control Level
Controlled Warehouse Flow
Making It Stick

Govern, Enable & Measure

Clear roles, the right technology, relevant KPIs, and independent counts — together, not separately.

No one person should request, approve, receive, record, and pay for the same purchase.
1

Governance & Responsibility

Board/Owners — set risk policy CEO/GM — ensures accountability Finance — validates valuation and ledger Sales — provides demand Purchasing — buys approved requirements Warehouse — protects and moves stock Operations — controls consumption IT — manages access and backups Audit — tests compliance
2

System & Technology

ERP inventory — single source of truth WMS — locations, put-away, picking Barcode / Mobile — real-time transactions Batch / Serial & Expiry tracking Reorder Alerts — min/max, safety stock Access Controls — role-based, segregated Dashboards & Reports — real-time visibility Integration — purchasing, sales, finance

Clean data and standard processes before automation.

No one person should request, approve, receive, record, and pay for the same purchase.

Measure & Verify

Inventory Accuracy (%)

Inventory Turnover (x)

Inventory Days

Stockout Rate (%)

Fill Rate (%)

Slow-Moving (%)

Shrinkage (%)

Counting

Daily Exception Checks Cycle Counts — by SKU / location Full Physical Count — periodic

Controlled Count Process

1Freeze Movement
2Independent Blind Count
3Recount (Mismatch)
4Investigate Root Cause
5Approve Results
6Update Records
7Corrective Action
Clear Roles
+
Right Technology
+
Relevant KPIs
+
Independent Counts
=
Accountability & Visibility
Integrated Inventory Control

VDDL Implementation, Control & Outcome

Weakness in one pillar damages the complete system — so all four operate together, on every SKU.

Vision connects inventory policy to customer service, cash flow, and growth. Discipline, Data, and Law keep it running that way every day.
V

Vision

Connect inventory policy to customer service, cash flow, and growth.

Customer ServiceCash FlowGrowth
D

Discipline

Follow receiving, storage, issuing, counting, and approvals every time.

ReceivingStorageIssuingCountingApprovals
D

Data

Maintain one accurate record and use evidence for purchasing and replenishment.

One Accurate RecordEvidence-Based DecisionsPurchasingReplenishment
L

Law

Apply governance, authorization, traceability, and local requirements.

GovernanceAuthorizationTraceabilityLocal Requirements

Weakness in one pillar damages the complete system.

The Review Cadence
Daily
  • Critical shortages
  • Delayed receipts
  • Dispatch failures
  • Negative inventory
  • Urgent quality/expiry risks
Weekly
  • Reorders · Backorders
  • Supplier delays · Capacity
  • Stockouts · Corrective actions
  • Variances
Monthly
  • Inventory value / days / turnover
  • Slow/obsolete stock · Suppliers
  • Accuracy · Forecast accuracy
  • Margin · Cash tied up
  • Write-offs/shrinkage · Improvement progress
Issue
Root Cause
Owner
Corrective Action
Deadline
Target
Follow-Up
Reconciliation
Physical Stock
System Records
Financial Records
Visibility
+
Accuracy
+
Accountability
=
Controlled, Scalable Growth

Ready to see what your inventory is really telling you?

Start with a preliminary diagnostic — free initial consultation.

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