Friday, December 17, 2010

Purchasing Power and Excess Inventory

Even Fast-moving Items Can Result in Excess Inventory

Many companies are surprised when they find excess inventory of fast-moving items during a physical inventory. After getting over the initial surprise, they shrug their shoulders and say, "These are fast-moving items, and they should sell." What they fail to realize is that even though fast-moving items will sell, they carry unnecessary storage costs that affect their bottom-line profit.

Here are some common symptoms from having the wrong purchasing information: Excess levels of inventory found during physical inventory.  Constant worry about being out-of-stock, even on the most popular items.  Gut-feeling purchasing.  Buying that is out of control. These typically lead to a ripple effect of unnecessary expenses.

New process controls help to identify these issues and support better management of inventory levels, so management does not have to worry about being out-of-stock and not meeting customer demand.  Shipping inventory shortly after receipt, because the right tools exist to identify and track the inventory. 

Better forecasting results in better inventory levels without sacrificing customer service.  Just-in-time inventory is often the far-off dream.  Buying what is needed, when it is needed to meet forecasted customer demand is more practical. 

Do not go with your gut feelings.  Avoid buying out of control situations.

Does your forecast system include current inventory levels and low order points, item maturity based on sales history, outstanding open orders, Vendor’s delivery history? 

Is your purchasing department using accurate information?  Have you invested a lot of time and money in a system that just plain does not work?  Does your system meet your needs or do you meet your system's needs?  Is your company's culture stuck in the past?  How well is you company able to meet today's business challenges?  Are you selling on the Internet?

There is no one perfect solution.  It takes time and energy to select the right software.  Dolvin’s team approach with VAI and IBM partnerships ensures that we have a good match or we make a referral to another vendor.  We value successful partnerships and not having a good match between your challenges and our solutions does not help anyone.

For more information about Enterprise Resource Planning (ERP) software solutions, and how they can improve your bottom line, check out Dolvin Consulting’s web site by clicking this link. 

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