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Just In Time Inventory Management

Thu, 10 Oct 2019 06:54:40 GMT

“Inventory is money sitting around in another form” - Rhonda Adams, USA Today

Inventory management is the fundamental building block to longevity. When your inventory is properly organized, the rest of your supply-chain management will fall into place. Without it, you risk a litany of mistakes like mis-shipments, out of stocks, overstocks, mis-picks, and so on.

What is Inventory Management?

Inventory management is the basis of a well-functioning retail business. Inventory management systems track the lifecycle of inventory and stock as it comes and goes out of your business.

When businesses don’t have a handle on the activity of their inventory, or worse, track it with outdated spreadsheets and data entry, the rest of the pieces, like order fulfilment, don’t fall into place.

Inventory Management Techniques

This week we are focusing on Just In Time Inventory Management and why it is one of the most popular and effective inventory management techniques you can use to improve your business.

Just In Time Inventory Management

Just-in-Time (JIT) Inventory Management is simply creating what's required, when it’s required, within the amount required.

Many companies operate on a “just-in-case” basis – holding a small quantity of stock just in case of an unexpected peak in demand.

JIT is a great way to reduce inventory costs. Companies receive inventory on an as-needed basis instead of ordering too much and risking dead stock. Dead stock is inventory that was never sold or used by customers before being removed from sale status.

Here are some of the advantages of just-in-time inventory:

Minimize costs like rent and insurance by reducing your inventory
Less obsolete, outdated, and spoiled inventory
Reduce waste and increase productivity by minimizing or eliminating warehousing and stockpiling, while increasing inventory turnover
Maintain healthy cash flow by ordering stock only if necessary
Production errors can be identified and fixed faster since production happens on a smaller, more focused level, allowing easier changes or maintenance on capital equipment

Visit our Product Page and get your Free Quote for the best Inventory Accounting Solution for your business.

ABC Analysis

Mon, 07 Oct 2019 06:54:29 GMT

Dreading the word “Inventory”?

Inventory management processes are imperative to succeed as a retailer of any kind — eCommerce, multi-channel, brick-and-mortar, omnichannel — if you want to seriously compete.

Inventory management saves you money and allows you to fulfil your customers' needs. In other words, it enables successful cost control of operations. Knowing what you have, what is in your warehouse, and how to manage the supply chain properly is the backbone of the business.

What is Inventory Management?

Inventory management refers to the process of ordering, storing, and using a company's inventory. These include the management of raw materials, components, and finished products, as well as warehousing and processing such items.

Inventory Management Techniques

This week we are focusing on ABC Analysis and why it is one of the most popular and effective inventory management techniques you can use to improve your business.

ABC Analysis

ABC analysis of inventory is a technique of sorting your inventory into three classes according to how well they sell and how much they cost to hold:

Category A-Items – popular items that don’t take up all of your warehouse area or cost
Category B-Items – Mid-range items that sell often, however, might cost more than A-items to hold
Category C-Items – the remainder of your inventory that makes up the majority of your inventory costs while contributing the smallest amount to your bottom line

ABC analysis of inventory helps you retain working capital costs low because it identifies which items you must reorder more often and which items don’t need to be stocked as much – reducing obsolete inventory and optimizing the rate of inventory turnover.

Visit our Product Page and get your Free Quote for the best Inventory Accounting Solution for your business.

Minimum Order Quantity

Tue, 01 Oct 2019 06:43:30 GMT

Oh no, not inventory again!

Inventory is the biggest asset to your company, so in order to save money and make money, you need to protect that asset and nurture it in the right direction. Without implementing inventory management techniques, you’ll never get ahead.

What is Inventory Management?

Inventory management is the supervision of non-capitalized assets (inventory) and stock items. A component of supply chain management, inventory management supervises the flow of goods from manufacturers to warehouses and from these facilities to point of sale

Inventory Management Techniques

This week we are focusing on Minimum Order Quantity and why it is one of the most popular and effective inventory management techniques you can use to improve your business.

Minimum Order Quantity

Minimum order quantity (MOQ) is the lowest set quantity of stock that a provider is willing to sell. If you can’t purchase the MOQ of a particular product, then the provider won’t sell it to you.

The purpose of minimum order quantities is to allow suppliers to increase their profits whereas getting rid of additional inventory more quickly and eliminating the “bargain shoppers” at the same time.

A minimum order amount is set based on your total value of inventory and any other expenses you've got to pay before reaping any profit – which means MOQs help wholesalers stay profitable and maintain healthy cash flow.

Visit our Product Page and get your Free Quote for the best Inventory Accounting Solution for your business.

Economic Order Quantity

Fri, 27 Sep 2019 06:36:54 GMT

New ParagraphDo you dread the word “Inventory”? Is your Inventory a “placeholder” for your money?

A large amount of capital, if not the majority of a company’s capital is wrapped up in their inventory

For that reason, it’s incredibly important to control the coming and going of inventory as best you can to minimize losses and maximize profits – which is why we will be bringing you a blog per week on different inventory management techniques.

What is Inventory Management?

Inventory management is a collection of tools, techniques, and strategies for storing, tracking, delivering, and ordering inventory or stock.

Inventory Management Techniques

This week we are focusing on Economic Order Quantity and why it is one of the most popular and effective inventory management techniques you can use to improve your business.

Economic Order Quantity

Economic order quantity is the lowest amount of inventory you want to order to fulfil peak client demand while not going out of stock and without producing obsolete inventory.

Its purpose is to cut back on inventory as much as possible while keeping the cost of inventory as low as possible.

To help you calculate EOQ, here is the formula from Kenneth Boyd, author of Cost Accounting for Dummies :

Demand: The demand, in units, for the product for a specific period.
Relevant ordering cost: Ordering cost per purchase order.
Relevant carrying cost: Carrying costs for one unit. Assume the unit is in stock for the time used for demand.

Important to note that the ordering value is calculated per order. The carrying costs are calculated per unit. Here’s the formula for economic order quantity:

Economic order quantity = square root of [(2 x demand x ordering costs) ÷ carrying costs]

That’s easier to visualize as a regular formula:

Q is the economic order quantity (units). D is demand (units, often annual), S is ordering cost (per purchase order), and H is carrying cost per unit.

Visit our Product Page and get your Free Quote for the best Inventory Accounting Solution for your business.