First you get a count or measurement (in the case of chemicals) of all items in the factory, you then calculate the dollar value of that inventory. Then comes the most difficult part: reconciling that number to the number that the accounting systems say you should have on hand.
In preparation for this massive undertaking, I had a meeting with the manager of the chemical department and her small staff. This woman was exceedingly intelligent and good at her job. I must also add that she was Russian and had an intriguing accent. While discussing the plan of attack for measuring her chemical inventory, one of her staff guys came up with a super-simple suggestion. She looked at him and said, "you are so young". As I said, she had a heavy Russian accent -- think Natasha in the old Dick Tracy comic strip. The truth of the matter was that this young guy had a terrific idea that the two of us
Because we were overthinking it.
Let me confess, I am as guilty as the next guy of overthinking just about everything associated with my jewlery business. I analyze my sales after every show. I analyze my wholesale and consignment sales. I obsess over my every-growing inventory of raw materials. I'm not very good at taking my own advice about overthinking, but on those occasions when I do relax a bit, what happens? The short answer is, nothing bad happens. And sometimes good things happen. Most times, your own time can be better spent doing something else -- like creating new designs.
I'm not saying that you shouldn't analyze and reflect and make wise decisions regarding your business. All I'm saying is that sometimes your gut feeling is just as good as hours of analysis. Trust that gut.