A successful farm operation will have a smooth-operating inventory system. This includes goods on hand, but it can also include the costs involved with storage space, handling, and risk and service. It’s a balancing act to zero in on the most efficient and profitable amount of inventory to operate with.
John Wodehouse is an extension educator at Penn State University and says inventory is a critical component of the balance sheet because it has a value.
"So therefore, it is important to count it and to assign it a value and organize it. How do we do that? We organize our goods," says Wodehouse. "And, goods are any farm product intended for sale. It could be vegetables, it could be hanging baskets, it could be your growing crops not yet harvested. It could be seeds not yet planted or in inventory, they have a different value than the planted seeds in the field that have yieldable fruit."
Unless you have a mind like a steel trap, you’ll need a way to keep track of it all. One of the most popular software systems for managing inventory is QuickBooks, but there are others as well. He explains why you should invest the time and money in a computer program.
"What I have found in my research is that inventory is complex and it’s way too much for us to remember. That’s point blank. And there are so many steps to integrate your inventory value, your ordering process, your pipeline and supply chain management to do it all by memory," he says. "But I think the biggest thing that I learned is that inventory trends and benchmarks are relatively simple to see in some of these different apps and softwares."