Posts Tagged ‘slow moving inventory’

Can your sales team use its enterprise mobility hardware to reduce the damaging effects of inventory obsolescence? In order to answer this question, it’s important to reflect upon how companies typically view a drastic decline in sales. Most companies would concern themselves with lost gross profit, others with lost revenue, and still others might be more concerned about the company’s declining market share. Still, others would reflect upon the ups and downs of business cycles and rationalize that declining sales are always followed by a sudden increase in customer demand. Unfortunately, few would stop and think about the costs of holding inventory without sales, and even fewer would understand the high costs of holding inventory customers can no longer purchase. However, there are other companies who use the lull in customer demand to liquidate their outdated inventory. More to the point, they use their enterprise mobility solutions as the catalyst to get that initiative going. Therefore, can a salesperson’s rugged handheld computer help liquidate that inventory before it’s too late? Absolutely!
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How much does inventory damage cost your enterprise? Have you taken the time to define these costs and their impact on your bottom line? More importantly, do you know why damage occurs so frequently within your warehouse? When answering these questions, think of the high costs of managing a supply chain with manual processes. Think of the number of data entry errors that occur as a result of managing inventory via excel spreadsheets and tables. Think not of how fragile your inventory is, but how purchasing more than needed forces your warehouse personnel to overstock shelves with huge volumes of finished goods your company has no orders for. Ultimately, think of how much more damage is likely to occur the longer you hold that excess inventory.

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There are two cost drivers that often mean the difference between making a profit on a sale and incurring a loss. One pertains to the high costs to finance inventory, while the other pertains to the high costs to finance receivables. Every business would love to be able to lower both. One includes having high inventory turnover rates, and the other relies upon finding customers who pay on time, every time. Most companies understand that doing both is extremely difficult, if not next to impossible. Unfortunately, both of these costs are exacerbated when companies run manual processes, processes that are based on running inventory and accounting on excel spreadsheets. Imagine the damage that is incurred when companies run both of these business functions on separate spreadsheets. Imagine how difficult it is to reconcile inventory and accounting when neither of these methods is live and neither of are capable of “speaking” with one another. It is the perfect storm and easy to see how manual processes do nothing more than make these costs more severe. What is the solution for those enterprises that want to do away with these high costs?

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Have you tried in vain to convince yourself that your manual inventory management practices are working and are actually helping you to increase your inventory turnover rates? Have you relied too heavily on excel spreadsheets and tables to manage the complexities of your supply chain? Most importantly, how often have these processes let you down and left you with inaccurate inventory counts? Few companies ever take the time to answer these questions, let alone even ask them. Instead of relying upon enterprise mobility hardware to better manage their warehouse, they instead rely upon antiquated and outdated processes, ones that can not possibly keep pace with the speed of their business. Stronger warehouse management starts by doing away with these outdated processes and instead relying upon real-time tracking through mobility management solutions. If your enterprise wants to increase its inventory turnover rates, then it must finally put an end to using manual processes. Those processes may have worked when you first started, but they can not be a part of any long-term supply chain solution. So, how can the right enterprise software help your company better manage its warehouse and increase your turnover rates?

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Managing slow moving inventory is never easy. There’s the constant concern of the inventory becoming damaged or worse, ruined beyond repair. Companies must therefore be proactive in selling this inventory when the opportunity presents itself. In this regard, a number of companies become concerned with the impacts and costs of slow moving inventory on their bottom line. So, how does inventory become obsolete and what strategies can companies adopt to stop it from happening?

When thinking of slow moving inventory, think of the company’s financing costs to retain and hold inventory for extended periods. The longer it’s held, the higher the costs and the more likely the inventory will become obsolete. To quantify these costs, Continue reading “Inventory, How Does it go From Slow Moving to Obsolete?” »

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