Inventory Management

Key Indicators

Inventory is a key indicator of a publisher's health, yet many publishers fail to monitor how this indicator changes over time.

1. Months of Stock

The first indicator that publishers should watch is Months of stock. This number tells you how many years of stock that you have on hand. If you see this number steadily increasing you probably have a serious problem. Most publishers aim to keep this number in the range of six months to 2 years depending on the type of book that they publish. For expensive professional texts you might aim for 2 years of stock. For trade books you generally want to keep the stock at 12 months or less.

Example:

10,000 units sold in 2002

25,000 units in stock as of 12/31/2002

Years of Stock = 25000/10000 = 2.5

2. Work in Progress

Another indicator that we tell our clients to watch is work in progress. If this number is growing it could mean that your production department needs guidance in moving books from in-production to to-print.

Money that is invested in work in progress is money that can not generate income. Often we will sit down with a publisher and show them how they can reduce their WIP by either accelerating production schedule.