Posts Tagged ‘low inventory’

Do low inventory counts always equate to low costs? After all, inventory is more expensive the longer it’s held and maintaining low inventory levels does help to reduce the high costs of inventory damage and obsolescence. In addition, low inventory also means the company’s is reducing its daily cost of money. However, while a company’s costs to finance inventory can be a concern, a number of companies are surprised to see just how much their inventory costs them when their inventory counts are too low. In fact, an argument can easily be made that a company’s cost to maintain low inventory is just as high, if not higher, than having too much inventory. So how is this possible? More importantly, what are the main cost drivers of a company who maintains too low an inventory count? Continue reading “Inventory Counts, What are the Costs if They Get Low?” »

inventory costs

High Volume Purchases Versus a Company’s Inventory Carrying Costs:

Companies are always troubled by that nagging concern of whether they have too much or too little inventory. It’s this constant struggle that prohibits them from making sound decisions, decisions that could help reduce their procurement costs while providing them with the right amount of inventory at the right time. It’s a balancing act and one that causes many procurement professionals headaches. However, is there a way a company can measure the savings accrued through Continue reading “Inventory – Measuring Savings” »


Most companies understand that inventory costs money, but few understand why inventory becomes more expensive the longer it’s held. Still, even fewer companies take the time to track the impact of the cost of money on their inventory. When thinking of the cost of money, think of your company’s costs to purchase and retain parts and raw materials for long periods. Think of your company’s financing costs, how those costs rise over time and ultimately, what drives those costs. More importantly, think of how long it takes to sell that inventory and how certain customers can increase these costs by taking too long to pay Continue reading “Understanding Your Company’s Financing Costs of Inventory” »

Warehouse isles

Have you taken the time to define your company’s inventory carrying costs? More importantly, are you aware of how these carrying costs reduce gross profit and impact your company’s bottom line? If not, then it’s about time you identify your inventory’s biggest cost drivers. These costs don’t merely include the price paid for parts and raw materials. They also include the per-unit freight costs on incoming and outgoing shipments, the costs of inventory obsolescence, inventory damage, ruined Continue reading “What Should Your Company Include in its Inventory Carrying Costs?” »

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