Inventory — is it an asset or a liability with a host of
hidden problems? True, it is an asset shown on the balance sheet,
but what is inside that number? And, more important, how can an
owner or CEO stay informed as to how that line item affects the
company's bottom line results?
A company's owners and key management personnel often spend
their time working on sales, product development and operating the
day-to-day business. Most do not have an operations or production
background so they rely on others to manage inventory and the
production process. Even though inventory and cost of goods sold
represent significant numbers on their balance sheets and income
statements, operations managers typically have little oversight
from owners and CEO's in this area. How can owners know when
there is a problem or even more important, what information do they
need in order to identify an issue early before it becomes a major
issue affecting customers and the bottom line of the
