Eight Money-saving Ideas for 2005

Having too little of an item will create backorders, which creates cancellation risk. Too little inventory also increases your outbound freight, because you may have to send orders in more than one shipment. Then there are costs associated with backorder notices, customer dissatisfaction, etc.

If yours is not a fashion catalog and you have an initial fill rate of less than 90 percent (less than 80 percent for fashion), or if your inventory turns fewer than five times a year, you most likely have a large opportunity for cost savings.