A Publisher’s Cash Management Plan: Part 4–Managing Your Inventory

January 2003
by Howard Fisher & Dan Siburg

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Inventory management is critical to keeping your publishing business operating smoothly and your customers happy.

Inventory is usually one of a publisher’s two largest assets, the other being accounts receivable. Every company needs to manage all aspects of their inventory–from what titles and quantities to print to what it costs to carry unsold books.

Publishers generally deal with printed books inventory, and sometimes raw materials and printed books on consignment in foreign warehouses. A publisher may also have several other forms of inventory to monitor, such as catalogs, and “sold” inventory in the distribution channel that is still returnable.

Each title in your inventory when viewed individually may not warrant concern, but the impact of all titles in inventory is greater than the sum of the parts.

 

The Total Process Approach

A publisher’s overall objectives are:

To have the correct stock levels for all titlesTo create the most overall margin from book salesTo maintain the lowest inventory investment and carrying cost while achieving objectives 1 and 2.

Forecasting book sales and determining the best order quantity for every book is a challenge, of course, and unfortunately publishers often respond by using the economic order quantity (EOQ). The EOQ is designed to produce a numberHdoR a print run that will minimize the combined costs of producing the book and carrying it…IBPA Members – Click here to view the full article (login required).

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