Inventory Management 101
5 min read
Poor inventory management is one of the top reasons Egyptian brands plateau. You either have too much cash tied up in slow-moving stock, or you're constantly stocking out of your best sellers. Here are the fundamentals that fix both problems.
The four questions of inventory
Good inventory management answers four questions in real time: What do I have? (units per SKU), Where is it? (warehouse, with courier, returned), What did it cost? (COGS per unit), and How fast is it selling? (sell-through rate). If you can't answer all four instantly, you have an inventory problem.
Physical count vs. system count
Your inventory system should match your physical reality. Discrepancies happen: items get damaged, stolen, miscounted, or lost in transit. Run a physical count monthly and reconcile against your system. A consistent 2–3% shrinkage is normal. More than that suggests process issues or theft.
Velocity: the metric that matters
Sell-through rate (or velocity) tells you how fast each SKU is moving: units sold ÷ units in stock. A product selling 20 units/week with 40 in stock has 2 weeks of stock left — reorder now. A product with 200 units selling 5/week has 40 weeks of stock — you're overcapitalized. Velocity guides your buying decisions.
Setting reorder points
A reorder point is the stock level at which you trigger a new purchase order. Formula: reorder point = average daily sales × (lead time in days + safety buffer days). If you sell 10 units/day and your supplier takes 7 days to deliver, and you want 3 days safety buffer, reorder when stock hits 100 units.
The biggest inventory mistakes
Over-ordering bestsellers (cash trap), under-ordering consistently popular sizes, failing to account for returns restocking, and not tracking damaged/unsellable units separately. These compound: overstock costs you in tied-up capital, stockouts cost you in lost sales and poor reviews.
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