Inventory Management

With declining revenues and less available credit, companies are looking for ways to save. Besides the more obvious possible cuts, it is also time to take a closer look at the available inventory. By accurately managing the inventory, companies can possible save thousands of dollars in payroll and transportation costs. If stored longer and not moved quickly enough, inventory becomes a liability, ties up cash and is a sign of a troubled business.

The ultimate goal should be to hold as little inventory as possible, whithout decrease in sales. This is referred to as “just-in-time” inventory. The idea is to supply just enough stock to cover the current demand. This is usually acomplished with the help of the right inventory management software (QuickBooks, EnterpriseOne Inventory Management, Order Manager, Mycrosoft Dynamics, etc.) or by measuring the inventory cycles. One cycle is the annual sales divided by the value of the inventory. Example: Annual sales of $100,000, available inventory value is $10,000 will indicate 100,000 / 10,000 = 10 cycles. That means the company is moving entire inventory ten times a year. The more cycles, the better.

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