| While a strong inventory -- both deep and broad -- can | | | | Then inspect what you expect. |
| certainly be a competitive advantage, smart business | | | | Assume that suppliers never ship too much. It's not that |
| executives are careful to limit the amount of capital | | | | you don't trust your suppliers, it's just a good business |
| they're willing to commit to this critical asset. No | | | | practice to compare actual quantities received against |
| company, not IBM, not Wal-Mart, not Home Depot, and | | | | the quantity you ordered.o Adopt a policy that calls for |
| certainly not your company has enough capital to | | | | the drivers of incoming delivery vehicles to drop off |
| ignore inventory levels. | | | | their shipping papers at the office or at the guard gate |
| Inventory and accounts receivable account for | | | | before proceeding to the yard or warehouse. Instruct |
| approximately 80% of total assets in most businesses | | | | receiving personnel to use the purchase order as the |
| and 100% of manageable assets, so getting a handle | | | | receiving document. |
| on both will provide any business with much needed | | | | If you implement this idea, instruct your forms supplier |
| capital to grow. | | | | to "black out" the quantities on the receiving copy of |
| In this article I want to share with you several inventory | | | | the "PO" so receiving personnel will not be tempted to |
| management ideas that will help you optimize inventory | | | | assume accuracy.o Instruct buyers to walk the yard |
| turnover and minimize out-of-stocks:o Establish | | | | and warehouse on a daily basis to gain firsthand insight |
| clear-cut goals for buyers; make sure buyers | | | | into inventory levels, product quality and the way |
| understand how their jobs are measured. Inventory | | | | specific sku's are being stacked or stored.o Educate |
| turns by category, gross margin, and out-of-stocks (or | | | | employees involved with inventory management as to |
| incidences of backorders) are good places to start | | | | the dollars and cents effect inventory accuracy has |
| keeping score.o Conduct regular cycle counts -- at | | | | on the company's profitability.o Clearly label stacks, |
| least monthly. Establish a counting calendar that | | | | racks, and bins to reduce mistakes, especially by |
| specifies the days of the month to count specific | | | | seasonal or part-time employees.o Document all |
| products. Adjust quantities in your computer system as | | | | inventory procedures.o Each month, assign someone |
| discrepancies are uncovered; this procedure will | | | | who is attentive to detail to carefully scrutinize all |
| prevent big surprises at year end. Conducting cycle | | | | computerized inventory reports.o Spot check the |
| counts on schedule should be a condition of | | | | accuracy of annual physical inventory counts.o |
| employment for whoever is in charge of this critical | | | | Periodically inspect what you expect from personnel |
| task.o Discuss with your software vendor the effect | | | | assigned to all inventory-related tasks. |
| on inventory counts when processing inventory | | | | Inventory control requires periodic review so the |
| receipts on sku's that are showing negative quantities. | | | | personnel on the front lines won't develop bad habits. |
| Ask your software vendor for advice on procedures | | | | Take the above list of recommended inventory |
| to avoid compounding problems.o Make sure that your | | | | procedures and spot check how well your people are |
| inventory receiver is not just whoever happens to be | | | | following the rules you have established. If you have |
| available at the time a new shipment arrives. Assign | | | | some aspects of inventory control in your company |
| accountability to one or more specific individuals to | | | | that are not documented, assign a responsible |
| receive inventory. | | | | employee who is good at designing systems to create |
| Then train them. | | | | the documentation. |