Inventory forms the bigger part of our clientele statement of financial position and our phased approach to effective management of inventory arises from proper inventory records that by and large will contain the following information if well analyzed.
a) Warehouse or store number
b) Item number
c) Item description
d) Number of times the product was sold/transferred/used in production in each of the past 12 to 24 months (optional)
e) Lead time for the item from the primary replenishment source
f) Minimum reorder quantity from the supplier
g) Current replacement or average cost per unit
h) Sales dollars of the item during the previous 12 months (optional)
i) Current on-hand quantity
In our second phase analysis we will profile your inventory by reviewing the current inventory and this analysis includes:
a) Identification of possible dead stock and excess inventory.
b) Identification of products that might or should be stocked in each location.
c) Review of usage history including possible unusual activity.
d) Review of your future demand forecast accuracy.
e) Determination of the most accurate forecasting method (based on your historical usage) for each item from our library of forecast formulas.
f) Determination the best method to incorporate market conditions and collaborative information from customers and salespeople into the forecast.
g) Suggestion for each item’s replenishment parameters.
h) Suggestion for each item’s replenishment source (i.e., vendor or transfer from another company location).
i) Review of current versus target inventory investment and turnover.
j) Review of inventory ranking (i.e., identify the products that contribute most to your success).
k) Suggestion of primary storage location quantity for each product.
l) Review of maximum and average product quantity that needs to be stocked in a surplus storage location Our third step provides complete documentation and step-by-step instructions so you can produce this type of analysis at any time in the future with updated inventory and sales data.
However, analysis provided for a particular company is dependent on factors such as:-
a) Industry
b) Market conditions
c) Number of stocking locations (i.e., warehouses or branches)
d) Number of products stocked in each location
e) Profitability objectives
The final analysis stage is the visits to your facility (or facilities) and reviews all your inventory-related policies and procedures including:
a) What are your corporate policies and procedures for processing every type of inventory-related transaction?
b) How do you ensure that on-hand quantities remain accurate?
c) What criteria do you use in deciding what products to stock in each location?
d) Are the tools available in your computer system adequate to meet your organization’s specific needs?
e) Do your existing tools need to be supplemented by spreadsheets, a supplemental database, or other software products?
f) How do you predict future customer demand of each product?
g) How do you decide when to reorder products and how much to reorder?
h) What replenishment source and quantity results in the lowest total cost of each item while retaining a high level of customer service?
i) Do you have to implement special tools or practices to deal with:
Inconsistent vendor lead times. Importing products from overseas, consigned inventory, Special purchasing opportunities, continual introduction of new products o Replenishment from distribution centers or central warehouses within your organization
a) Do your employees understand “best practice” inventory control and inventory management procedures? Are they getting the most benefit from the software tools currently available to them?
b) Are products stored in your warehouse in order to minimize your warehousing costs?
c) Can your warehouse space be better utilized?
d) How do you identify and liquidate dead inventory and excess stock?
e) How does your current inventory investment compare to an “ideal” inventory investment utilizing best practice inventory management techniques?.