Over Stocks Inventory
Over Stocks Inventory
Monitoring Inventory Costs
Accounting of Inventory Cost
Major components of inventory cost are:
Capital Cost is an internal cost of funds rate multiplied by the value of the product. This cost tends to increase as product moves downstream as it moves along the supply chain.
Storage Cost of inventory may take up physical space, and may incur costs for heating, refrigeration, insurance, etc.
Obsolescence Cost arise when a technology or fashion shift make current products obsolete and severely deflate their value. The more the inventory is, the higher is the exposure to this sort of loss.
Quality Cost is the result of huge inventories which give rise to the myriad costs associated with low quality which are difficult to quantify precisely.
Lowering Inventory Cost
Here are some of the most common techniques for lowering inventory costs.
Transaction Costs In the office, using computer to generate purchase orders EDI for their transmission, advance shipping notices reduce expediting costs. In manufacturing, pre-planning; pre-staging of needed materials; use of special tools or equipment; changeover initiation; teamwork and work-division; maintaining equipment temperatures and in the distribution center, counting scales, statistics-based inspection and checking, bar code scanners for data entry, certifying key vendors to eliminate receiving functions all reduce transaction costs.
Holding Costs Improve space utilization in leased, contract, or public warehouses.
Safety Stock Using the appropriate number of product classes, updating safety stock levels dynamically, and basing the service levels for each class on the financial goals of the business all serve to reduce safety stock inventory.
Forecasting Using manually edited arithmetic forecasting models to reduce forecast error will reduce overstocking, back orders, holding inventory levels closer to only that required to support the desired customer service level.
Forecast Events If one-time demand clutters or are part of the future, then they need to be taken into account in any forecasting done-both in terms of editing them from history and in terms of incorporating future events into the routine demand forecast.
Delay For parent products from which multiple SKUs can be manufactured, only partially completing manufacturing, placing semi-finished product in inventory, and then completing manufacturing of the final SKUs to order reduces total inventory. Similarly, component products from which final SKUs may be assembled can be purchased to inventory and then the final SKUs assembled to order.
Removal of inappropriate product from the product line may reduce inventory significantly if handled in a constructive manner, as follows:
Lead Time For either manufactured or purchased product, any reduction in lead time, whether supplier lead time, transportation time or receiving cycle time, provides a one-time, permanent reduction in cycle stock inventory proportional to the degree of lead time reduction.
Joint Procurement Joint procurement from a common supplier serves to effectively reduce unit purchase transaction costs and thereby reduces both cycle stock inventory and annual purchase transaction expenses. Similarly, joint procurement from different suppliers located in close physical proximity reduces the incremental transportation cost portion of purchase transaction costs and reduce cycle stock inventory.
Purchase By comparing the total cost of ownership for purchased products as quoted prices with no minimums to reduced prices with minimums we should determine if the reduced prices really provide savings.
Demand Plans Hard information on upcoming needs from customers reduces demand variability, thus reducing the safety stock required for a given customer service level.
Send Demand Plans Sharing demand forecasts with suppliers is more indirect, however, in the long run it will serve to reduce the supplier’s finished goods inventory and associated costs .
Overstocking Manufacturing or purchasing to order when the acquisition and customer lead time relationships and order quantity relationships reduce inventory.
Shipments With effective use of joint replenishment, the potential increases in inbound transportation costs associated with purchasing to order can be mitigated. Cross-docking customer shipments facilitate purchasing to order In a similar manner, aggregating purchase requirements for multiple DCs into a single order and cross-docking to multiple DCs effectively reduces purchase transaction costs and reduces cycle stock inventory.
Stocking In multiple DC tier environments, stocking certain SKUs in fewer/ upstream facilities as opposed to more/downstream facilities yields obvious benefits. Likewise, within a single tier of DCs, not every SKU needs to be stocked in every DC.
Payment When negotiating long- term purchase agreements, getting the best payment terms at a given unit price is the most direct way to increase the portion of inventory funded by the vendor. If improving payment terms can be coupled with increased turnover, then the improvement in working capital effectiveness is significant.
Price/Quantity Breaks Taking price/ quantity breaks into account will reduce the inventory investment. Sometimes, by not quantifying breaks at the time of sourcing or negotiation, not having an effort to take them into account, or lack of understanding of the impact of purchasing larger quantities may increase the unit cost.
Transfer When inventory of an overstock SKU in one location needs to be purchased to replenish inventory in another location, transfers are a smart way to reduce inventory. We must be assured that additional warehousing and transportation expenses aren’t unnecessarily incurred and the reduction in holding cost does not exceed the cost to transfer.
Liquidation when it is absolutely clear that the value to be gained through liquidation-whether through sale at reduced price, sale as distressed product, salvage, or charitable donation-is greater than the most optimistic estimate of future gross margin from conventional product sales, then liquidation is the best decision.
Merge-In-Transit When two things are shipped from different locations and then married in transit so that they reach the customer as a single shipment is seen as a technique for reducing inventory if the need for the customer to receive simultaneously. Merge-in-transit represents an extension of postponement beyond the distribution center walls.
Friends Collaborative Planning and Replenishment is an open set of pre-defined business processes and IT/communications standards created to facilitate collaboration between supply chain partners. It can reduce inventories through inventory balance, forecast, demand and other data visibility and associated collaboration in the planning area.
Vendor-managed Inventory With the appropriate incentives, allowing suppliers to assume the responsibility for replenishment of inventory, because of their visibility into both their own inventory and production schedule and demand data, can reduce inventory.
Vendor Stocking Programs VSPs require a supplier to commit to an extremely high service level for delivery of specific SKUs within a fixed time at a pre-defined mark-up over cost. VSPs can reduce or eliminate inventories for slow-moving products.
Genesis Inventory Management Systems
|
|
BI-LOK STOCK I HAVE AN INVENTORY SHEET READILY AVAILABLE. OVER 1,000 ITEMS!!! $10,000.00 |
|
|
Marvel: Ultimate Alliance $16.99 Product Features Platform: Xbox 360 Experience the full scale of the Marvel universe – A combined cast of over 140 characters — choose Universal team Upgrade system – Balance your heroes’ powers, or customize each member to maximize th Outfit your heroes with power-boosting equipment, create a team name, team icon and team vehicle; es Change the course of the game – The missions you accept, the o… |
|
|
New Selectsoft Publishing Webgraphics 1: Icon, Buttons & Parts Compatible With Windows 98/Xp/Vista $9.46 Make your website come to life with Stock Clips’ Icons, Buttons, & Parts! Choose from over 600 original designs specifically created for web use, including borders, buttons and more. Quickly add individuality and interest to any web project! Themes include: Animals 600 original images |
|
|
Just in Case: How to be Self-Sufficient when the Unexpected Happens $7.33 Just in case disaster strikes, you need a plan to ensure your family’s safety and comfort in all eventualities. What would you do if the power went out for several days in a row? Or if your family had to quickly evacuate the area? Kathy Harrison shows you how to set up a simple home system–covering food storage, alternative heating sources, toiletries and clothing, pet supplies, emergency communi… |
|
|
Defense inventory inadequate controls over Air Force suspended stocks : report to congressional requesters (SuDoc GA 1.13:NSIAD-98-29) … |
|
|
Defense Inventory: Inadequate Controls Over Air Force Suspended Stocks $10.05 The BiblioGov Project is an effort to expand awareness of the public documents and records of the U.S. Government via print publications. In broadening the public understanding of government and its work, an enlightened democracy can grow and prosper. Ranging from historic Congressional Bills to the most recent Budget of the United States Government, the BiblioGov Project spans a wealth of gover… |
|
|
3M(TM) Adjustable Fabric Wrist Band 2224 with 10 ft. Coiled Cord, Burgundy [PRICE is per EACH] $49.22 3M(TM) Adjustable Wrist Straps are the front line of defense in all static control processes. Ensure a comfortable, custom fit with these adjustable wrist bands. One size adjusts to any size wrist to provide reliable, 360 degree protection. These wrist straps feature a silverplated, monofilament, continuous thread woven together with elastic nylon to assure full conductivity, comfort and reliabili… |
|
|
3M(TM) Adjustable Fabric Wrist Band 2214 with 5 ft. Coiled Cord, Burgundy [PRICE is per EACH] $35.47 3M(TM) Static Control Wrist Strap is a premium, adjustable, knitted fabric wrist band with a 5 foot coiled grounding cord. These wrist straps feature a silverplated, monofilament, continuous thread woven together with elastic nylon to assure full conductivity, comfort and reliability, while providing rapid and continuous drain of static charge. Adjustability also simplified ordering procedures and… |
|
|
3M(TM) Adjustable Fabric Wrist Band 2204, Burgundy [PRICE is per EACH] $13.61 3M(TM) Adjustable Wrist Straps are the front line of defense in all static control processes. Ensure a comfortable, custom fit with these adjustable wrist bands. One size adjusts to any size wrist to provide reliable, 360 degree protection. These wrist straps feature a silverplated, monofilament, continuous thread woven together with elastic nylon to assure full conductivity, comfort and reliabili… |
|
|
QuickBooks Basic Payroll 2012 $44.99 QuickBooks Basic Payroll for up to 3 Employees 2012 Retail Small Package… |
|
|
Filemaker Pro 11 $294.99 FileMaker Pro is powerful, easy-to-use database software that helps you and your team get any type of task done faster. Millions of people in business, government, and education use FileMaker Pro to effortlessly manage all their information on Windows, Mac, and the web. Create custom databases for your own unique needs. Click to enlarge. … |
