Thursday, July 24, 2008

Inventtory Control

What is Inventory Control?
Inventory Control is a list for goods and materials, or those goods and materials themselves, held available in stock by a business. Inventory are held in order to manage and hide from the customer the fact that manufacture/supply delay is longer than delivery delay, and also to ease the effect of imperfections in the manufacturing process that lower production efficiencies if production capacity stands idle for lack of materials. You must make ensure that all stock is in control to prevent overstocking and losing expired stock which go to loss.

Inventory Control Ideas
Several inventory management ideas that will help you optimize inventory turnover and minimize out-of-stocks:
• Establish clear-cut goals for buyers; make sure buyers understand how their jobs are measured. Inventory turns by category, gross margin, and out-of-stocks (or incidences of backorders) are good places to start keeping score.
• Conduct regular cycle counts -- at least monthly. Establish a counting calendar that specifies the days of the month to count specific products. Adjust quantities in your computer system as discrepancies are uncovered; this procedure will prevent big surprises at year end. Conducting cycle counts on schedule should be a condition of employment for whoever is in charge of this critical task.
• Discuss with your software vendor the effect on inventory counts when processing inventory receipts on sku's that are showing negative quantities. Ask your software vendor for advice on procedures to avoid compounding problems.
• Make sure that your inventory receiver is not just whoever happens to be available at the time a new shipment arrives. Assign accountability to one or more specific individuals to receive inventory.

Proper Inventory Control
Inventory or stock as it is also called, can devastate a business. A business carrying inventory has a much more difficult chance of survival, as opposed to a business rendering a mere service. A service business has a reasonable shot at surviving. Many business owners have major concerns with their inventory.
Herewith, some of the most common difficulties associated with inventory, and its most probable causes.
a) Business is booming, but cash flow is slow. (Debtors leniency/mark-ups)
b) Business is slow, but inventory is low or short. (Shrinkage /pilferage)
c) Lack of cash to "stock up". (Cash flow planning)
d) Inventory on hand remains high. (Slow moving inventories)
e) Cannot find sufficient inventory. (Planning)
f) Remain in a loss position. (All of the above)

Administration and accounting for inventory should become a habit. A lot of savvy is also required if you going to make your inventory carrying business succeed.

• Start by doing a proper inventory count on hand and valuation.
• Identify slow or slow moving items in your inventory lists.
• List inventory that becomes obsolete rapidly (highly important with restaurants)
• If possible, code inventory items electronically.
• Research mark-up and margins, and implement a reasonable gross profit margin. (If it is too high, the goods will not sell, if it is too low you will remain stuck in a cash flow rut).
• Prepare a spreadsheet for your incoming and outgoing inventory. If an advanced point of sales system is in place, which interfaces with your accounting system, even better.
• Consider taking out insurance for possible inventory losses, like fire, theft or natural disasters.
• Stay on top of your inventory on a daily basis.
The most advanced computerized inventory system however is not enough. Regular inventory checks, is of paramount importance.

2 comments:

cstoreoffice1 said...

I don't have an idea about Paper Inventory control I know about Inventory management thankful to you for this info But if you have more info about Paper Inventory share with me it will be appreciated.

David Thomson said...

Inventory management helps in maintaining a trade off between carrying costs and ordering costs which results into minimizing the total cost of inventory.