What are your best practices for managing inventory?

I look forward to learning more regarding this topic! One of my current "work in progress" businesses would require mass amount of inventory. I'd love to hear from others before I take this next step. 

OMG. That's how I must start. OMG! Managing our inventory has been one of the biggest challenges we have faced with Bellybar. It's both an art and a science, right?! Especially when we were starting out and short on cash - it was so difficult to know how much to produce, how many samples to make, etc. Our products are perishable so we had that added challenge. I suppose my biggest learnings were that even though you save money ordering big volumes, I wouldn't do it again with a perishable product. We were too optimistic :) about our customer sales and then we were stuck with product about to expire. It's so tough! My biz partner is a whiz at this stuff and even then, it was a challenge. Another big learning for me was that inventory was our top cash sink so we had to be super careful with it. Again, back to the idea of not ordering too much to get a discount. In the long run, keeping a super tight eye on inventory is one of the best learnings I have!

Inventory management is a method of accounting for and controling assets.  Contrary to what accountants are taught, inventory does not mean retail.

In terms of retail inventory, if all you do is buy and sell a widget, then QBO inventory is marginally sufficient, but woefully lacking in reporting and functions.  Desktop inventory is more fully functional but is still lacks some usual inventory functions and reporting.

Perishable items, or any item with a short shelf life, should not be stocked as inventory, especially in any QB version.

Thank you so much for sharing your experiences with QuickBooks @Rustler. Super helpful and informative!

Thank you @LeslieBarber for sharing your experiences; super honest and informative. I can definitely take this and apply it to my current business venture! 

Rustler is exactly correct. I will go one step further and give an example of a QB shortfall I am dealing with right now.

My company manufactures commercial traielrs, so obviusly there are tons of raw materials/inputs that I need to track as inventory. These raw material inventories need to be reduced when a Finished Good is sold. QB does that just fine.

The problem is with the Sales Order step. My sales guys have to sort through more than 100 items in the drop down box to find the trailer they are selling. This causes mistakes and frustrations every day!! There is a work around by making items in-active, but this then stops the inventory tracking of the raw materials.

Why QB does not allow you to track raw materials and only allow sales people to see and select Finished Goods when taking and order is beyond me, it would seem like common sense. I mean you can't sell Paint Labor or Raw Steel. 

Because of this major shortfall for manufacturing I am being forced to look at competitors of QB for a better accouting system. (Yes we have Enterprise Platinum) 

@Hansen

Sales orders, invoices, etc all have that product selection issue you are dealing with, and there is no real simple way to cope.

There are two work arounds I have seen used, neither is optimum

1.  Create a dummy item named in all caps, SELL THESE ITEMS, make the items for the trailers sub items of that parent and train the salesmen to only select from that group.  In the item list drag and drop that parent/sub to the top of the item type section

2. Pretty much the same, but use service type items, that puts them at the top of the selection listing.  BUT that means when a sales order or estiamte is created using the service item, someone has to create a new SO or estimate with the details.  The company that does it this way uses the same estimate/SO number and adds a -P to it, for parts. ie
12434
12434-P

Here is the problem:

"These raw material inventories need to be reduced when a Finished Good is sold."

They get relieved from stock and invested in the finished good, when the Trailer is Built; not Sold.

If you want stuff to be gone from inventory when the Trailer is Sold = make a Group Item, not an Assembly Item.

Examples:

The 1 trailer is an Assembly; it can be sold with either of 2 Hitches. That = Group.

"There is a work around by making items in-active, but this then stops the inventory tracking of the raw materials."

It only affects a few reports. You can Make the Common Parent Active, run those reports, then make the entire Structure Inactive, again.

The downside with QBO is when it comes to raw material inventory management. So that's if you're a manufacturer and you are constantly using up materials which are being allocated to specific sales and manufacturing orders.

In this case you can group items together as mentioned above so that your raw materials are reduced when a product is sold.

However it's likely that you could have a product on the shelf for some time, not sold, and so the materials are not being reduced in the inventory, which can cause issues with your production. 

Ideally you would use an app like Katana, which will track your materials in real-time, allocate them to specific sales orders, and immediately reduce them from inventory once they are committed to a sales or manufacturing order.