Dealing with inventory means taking of stock.

PRODUCT inventory is one of the biggest investments most businesses make. But many small operations don't keep close track of what's coming in and going out--and what stays on the shelf. As the volume of shipments grows, inventory control problems can become costly. Logistics consultant Rene Jones of AHM Corp. has some advice for small business owners ready to get their stockroom in order.

"If you're having inventory problems, the first thing to do is realistically take a look at what processes or controls you have in place, and ask whether your current inventory supervisor put them there. If he did, you probably need to get someone else. You need someone who is capable of doing the job and not wedded to processes that don't work.

"Once you know you have the right supervisor, look at how your product is organized in the warehouse. Many small businesses haven't changed their methods since they opened. If your business model has changed, then your stocking, shipping and receiving plans need to change also.

"Look at how much dead space you have in your warehouse. Also look at which products are moving the fastest and the slowest. You will probably need to reorganize your products to make sure the fastest moving items are more (readily) available. Your slow-moving items should be in overstock locations at the tops of the racks of shelves.

"There are various software packages you can use to help control the accuracy of your inventory records and keep paper out of the process. These packages run from about $15,000 to as much as $1 million, but they can also help dramatically reduce your operating expenses.

"You next need to have clear, documented procedures in place for physically picking up orders, receiving products and handling returns. Employees need to know what to do when an item can't be found. Every glitch like this, and there are many that come up every day, should be brought to management's attention.

"Finally, you have to make sure that your warehouse remains clean. It sounds silly, but it' s good quality control for your people. If your employees can't keep the warehouse clean, then they probably won't use all of the new procedures you're trying to implement. If a Coke can is left on a shelf, the floor isn't swept, and the product isn't put away properly, then people assume no one cares and problems arise."

Case Study is a new feature in which experts offer advice on the various challenges that small-business owners often encounter. If you face an issue of challenge you think applies in others as well, please contact the Business Journal al [e-mail].