Viewing entries tagged inventory management

Inventory Planning

Posted by Super User
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on Wednesday, 04 June 2014
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Companies can find great benefit in effectively managing their inventory, just as they can find great peril in ineffectively managing inventory.

For the small business, or for a business just starting out, planning initial inventory levels, setting up inventory control processes, and managing logistics can seem like daunting tasks.  To make matters even more difficult, folks in inventory and logistics management often communicate using language that’s challenging, at best, for the novice to understand (just what did he mean when he referred to our shipment as “JIT via 3PL, FOB Origin”?).

As intimidating, and not doubt boring, as it may seem, however, inventory planning is very important, and should be given great consideration.

Let’s take a brief look at the importance of determining the amount of inventory your company should have on hand.  There are many companies that have struggled greatly from overloading their inventory to address every possible scenario that could possibly happen (and some scenarios that couldn’t happen), and there are those companies that wrestle with having too small an inventory of fast-rotating items, thus limiting production & increasing transportation costs.  The key to finding the correct inventory levels for your company is determining the right balance between tying up your assets in slow-moving inventory, and being unable to meet your company’s production requirements.  In all cases, however, avoid the “yeah, that looks about right” method of determining inventory levels.  Instead, utilize quantitative measurements, and well-considered forecasts.

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The “Golden Rule” of Inventory Management

Posted by Super User
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on Friday, 15 November 2013
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art storageThere’s a popular misconception that stringent business practices are detrimental to customer service.  OK, that’s a pretty boring opening line to a blog post, so I’ll back up, a bit, and tell you a tale.

When running a small business, it’s very easy to manage exceptions.  Here’s a typical scenario for a small artistic business:  A friend of yours may see some of your artwork in the back of your car, and ask to buy it.  She’s a friend, and you trust her, so you agree, and you make a mental note that she owes you a bit of money for the artwork.  This is good customer service in action, as your customer happily has your artwork, and your business management system (your brain) can handle remembering that your friend owes you for some art.  Because your business is not too busy, you can easily handle the little complications that arise, such as keeping track of what pieces your friend took, accounts receivable, and maybe even paying sales tax.

Jump forward into the future, a little bit.  Now, instead of selling a piece or two a week to a friend, you’re selling a couple of dozen pieces a week.  Some are original pieces of art, others are limited edition prints.  Now your Aunt Matilda drops by your place to say “hi”, sees some of your pieces on a table, and says she would like some.  You’re an obliging artist that’s not so far removed from the “starving artist” stage of your life that you forget how good a sale feels, so you agree, and Aunt Matilda takes some pieces with her when she leaves.  Oh, oh.  Did Aunt Matilda take an original with some prints?  Did you remember to number and sign any of the prints?  If an original just walked out the door, you usually charge a lot for that, and will Aunt Matilda be agreeable to a large amount?

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