Create Cash Flow With Your Old Inventory

Two of the biggest dreads of any business owner are too little inventory and too much inventory. As bad as both these situations can be for your business, too much inventory is definitely the bigger dragon to look out for. By excessive inventory we do not mean an extra bulk of fast-moving merchandise that is likely to sell in a couple of months, but what we are talking about is those slow-moving products that have been lying on your top shelves for months, and refuse to budge.

Old inventory spells disaster for your business for two reasons- the first one is that it keeps your cash flow strapped, hence reducing your productivity; and the second is that it requires you to spend more money on its maintenance and the probable risks involved. To cut a long story short, the bottom line is that old inventory is best gotten rid of. When it comes to generating cash flow from an old inventory, a common mistake made by most business owners is not being willing to offer a significant discount on the products.

However, when you think of it logically, this is the simplest and most efficient way of clearing your inventory.
The benefits that you get from putting your slow-moving products on sale are as follows-

• You convert a liability into cash, and you can use this cash on a more productive venture, like say investing on more fast-moving merchandise. 
• This is a great way to draw prospective customers to your business, and while they shop for the discounted items, chances are that they shall also add a few of your best selling products into their shopping carts. 

The only deterrent to this approach, from the business owner’s point of view, could be the perceived loss of offering a huge discount on any of his merchandise. To understand how this is not actually a loss, consider this simple example- a product costs you $100, and you sell it for $200. In order to clear your inventory, you sell it at a 50% discount. If asked how much profit they generated from this deal, most business owners would say they ended up with zero. However, when you think of it, what you are getting is actually a $100 gain, since the cash and space that you have got from a product that was giving you zero cash, can now be used for a more profitable item.

McLane Logistics Technology provides customized Inventory Management Software system for businesses to effectively manage their inventory functions. You can contact them at 4001 Central Pointe Parkway, Temple, TX 76504 or call them at 1-800-989-7568.

Controlling Your Open-Stock Inventory

Inventory control, when well-organized, can be a streamlined process, in which all the records tally with each other, and the inventory manager can instantly give an account of any random product, if required. However, when we are talking of open-stock inventory, the tables turn, and it is no longer easy to maintain accurate records of consumed products versus available products. An open-stock inventory refers to an inventory that deals with a bulk of products that are usually difficult to count, and are mostly inexpensive, yet are part of product development process.

The products in an open-stock inventory could be anything from a nails to office stationery. These products have been a nightmare for inventory managers, as it is virtually impossible to determine reorder quantities for them, and maintain stock levels with the accuracy that is normally common place in an inventory. The flow of these products is determined by the frequency of their need by the user, and even though they might be seemingly unimportant individually, their shortage can halt the entire production.

Ideally, the controlling of an open-stock inventory should include a way to be able to record every material disbursement that takes place from the inventory, in order to be able to predict when the need for a fresh supply arises. However, considering how these materials are used in bulk and are individually of little value, it is nearly impossible to impose strict regulations to make sure that each of these materials that leave the store is accounted for. This would mean asking customers to record the accurate item number when buying nails in bulk, or asking workers to maintain a record of every nut and bolt that they use.

Since none of this is feasible, the most practical way of controlling an open-stock inventory, is to devise a way to track the rate at which the open stock needs to be replenished. This means dividing the supplies into on-hand quantity and container quantity, with the former being the amount of material available in bulk storage, and the latter being the open-stock material available in open containers for usage.

Each time a box of material is moved from bulk storage to open-stock, it should be accounted for, and hence the future demand for each item can be forecasted. The usage history for each product, which is the number of containers that were dispatched from bulk storage during a particular period, should be monitored. Also, any unexpected increases in replenishment should be looked into, to detect pilferage or any other problem in the inventory.

For customized inventory management systems for your business or to know more about stock inventory management, visit McLane Logistics Technology at 4001 Central Pointe Parkway, Temple, TX 76504 or call them at 1-800-989-7568.

Why Is Inventory Turnover Important?

As a business owner, the biggest investment that you are probably going to make is that of your inventory. Inventory management plays a key role in streamlining the supply chain, as well as in gauging how successful your business is. One of the most efficient barometers of your business’ success is your inventory turnover. To put it in technical terms, the inventory turnover is the sales generated from goods over the past year, divided by the cost incurred in replenishing the inventory.

In simple words, the inventory turnover is the number of times your inventory was completely emptied, and re-filled. So how is this important for your business? Looking at it plainly and simply, it is evident that a higher turnover is what we are looking for in any business. A higher turnover means that the inventory is flowing, and customers are actually buying what you are stocking. On the flipside, a low turnover is a reason to worry, since it means that you have an overstocked, slow-moving inventory.

The concept of inventory turnover can be better understood with this simple example- Business owner A invested $15000 at the beginning of the year on his inventory. By the end of the year, he had generated sales worth $20000, amounting to a gross profit of $5000. On the other hand, business owner B invested $5000 at three different intervals over the entire year, refilling his inventory each time it got emptied, and also generated a gross profit of $5000 by the year’s end.

The inventory turnover for A is 1, while that for B is 3. Even though their profit might be the same, but B’s business is considered to be more successful, since for the first period of the year, when he had invested $5000, he still had $10000 in hand, which he could use for other profit-generating purposes. On the other hand, A had his entire capital amount tied up in inventory, which means that he ultimately generated lower profit than B.

Apart from this basic advantage of having a high inventory turnover, the other essential application of inventory turnover for any business is that it helps in identifying the slower moving products in an inventory. Inventory tracking software or spreadsheets can be used for a better understanding of your inventory, and hence in the reevaluation of business plans.

McLane Logistics Technology provides customized Inventory Management Software system for businesses to effectively manage their inventory functions. For more information visit them at 4001 Central Pointe Parkway, Temple, TX 76504. You can also call them at 1-800-989-7568.

Planning Your Warehouse Layout

The first step to designing an effective warehouse layout is clearly outlining the objectives. These objectives must be in sync with the overall supply chain strategy of the company. The two major considerations that should form the base while defining warehouse objectives are customer satisfaction and cost effectiveness. These objectives also need to be efficiency-centric, which means that they should help to make maximum possible utilization of the available space, attain optimal efficiency with the available resources, and accommodate enough scope for future expansion.

Once the objectives of the warehouse are laid down, the next thing that needs to be done is gathering all the necessary details about the warehouse. This includes referring to architectural drawings of the warehouse, with an aim of enlisting all details that might affect material handling and storage in any way. You might consider using a 3D design simulation tool to get a clear picture of what to expect from your warehouse layout. Before planning the layout, it is very important to have a clear picture of height restrictions, doorways, columns, storage racks, docks, etc. In addition to these design specifications, the external factors that are likely to affect shipment, receiving, etc., must also be carefully noted.

With the analysis of details completed, the warehouse plan should not be carefully created, highlighting the major changes that need to be brought about, and breaking them down into smaller tasks. Based on the availability of contractors to execute the plan, a time limit during which the layout is to be implemented should be decided. Ideally, the warehouse layout should be worked upon at a time when there is no additional movement of materials, such as on a weekend, or after the plant is shutdown. If the regular working of the warehouse must be carried out simultaneously, additional warehouse resources might need to be employed.

Once the plan is implemented, it is important to incorporate all changes that have been made into the warehouse management system, so as to facilitate easy location of all products when needed. It is also a good idea to carry out a physical inventory of the warehouse after the implementation of the warehouse plan, to make sure that the system accurately depicts the current warehouse.  Be sure to conduct regular post-implementation checks and follow-ups, to make sure that the warehouse is being operated as per the devised plan, and that there are no operational problems being caused by the new layout.

McLane Logistics Technology provides customized warehouse management software system for businesses to effectively control their warehouse processes. To know more about the services provided, visit them at 4001 Central Ponte, Parkway, Temple, TX 76504 or call at 1-800-989-7568.