#inventory skills

[inventoryskills]

Inventory Analysis Measures & KPI's

Inventory management is all about striking a subtle balance between having sufficient inventory with keeping insurance and storage costs amongst other overheads to the bare minimum. Effective management calls for proper determination of the most appropriate inventory level at a particular time. Appropriate context refers to a strategy with the least cost, which at the same time, is in cohesion with the needs of the company. Inventory analysis determines the correct levels of inventory needed to meet the efficient operational needs of the organization while reducing the overheads of the company. There are various KPIs (Key Performance Indicators) to measure the efficiency of a company’s inventory management and control.

Gross margin return on investment (GMROI)

The basic objective of going into business is to make a profit. The success of any major strategy is measured by its marginal impact on profitability. Gross margin return on investment (gmroi) is a returns evaluation ratio that examines how a firm is able to move the existing inventory. It is a function of the average cost of inventory sold over the amount left at the close of a particular period. A high inventory turnover ratio is an indicator of efficiency in inventory control.

Accurate records

Accurate inventory is another important KPI that highlights the ability of a firm to keep updated and accurate books. Inventory inaccuracy often results in loss of stocks and loss of time spent searching for non existing stock, as well as lost sale opportunity.  The advantages of accurate inventory are immense and range from the proper utilization of time resources, increased efficiency in the operations and positive relations with the customers.

Rate of goods return

Rate of return as an inventory measure of success is twofold. On one hand, it helps reveal the amount of inventory that has been returned after the sale; on the other, it can also be used to indicate the causes of returns. Efficient control of inventory calls for proper analysis of the causes of these returns and formulation of the necessary steps to reduce the rate.

Carrying cost

Carrying cost is an overhead for the company in relation to storage and holding costs of inventory. A perfect inventory management system is geared towards reducing these costs to the minimum. As an important KPI, carrying cost is a function of the average inventory carrying rate and the average inventory value.

Perfect order rate

This is one of the most important KPI that is based on the calculation of a perfect process in the ordering system. It analyses the life of an order and the errors that arise during various steps of ordering. To a greater extent, it reflects on the efficiency of the ordering process and the ability of your organization to meet the expectations of the clients. With this in place, a business can be assured that its inventory turns into an asset rather than a liability.

Mentioned above are just a few Inventory Analysis Measures and KPIs that should assist you in inventory analysis and are crucial sources of information towards ensuring more efficiency in inventory management.

[inventoryskills]

Inventory Management Training – The Key to Business Profitability

Inventory management defines an essential business task that is responsible for keeping efficient records of tangible assets belonging to an organization. Those assets can comprise of products for sale, tools, equipment items, computers and other such items that a business can use for its daily operations. Business owners and concerned directors might possess the required knowledge and expertise regarding their inventory status, but they surely require training managers and operatives who are going to see and maintain inventory management within the organization.

                                Function

In most of the cases, inventory management training in a company commences with introduction of employees to the set of inventory policies and procedures in practice. Generally, there is a manual comprised of all such information that can be handed over to the employees by the concerned managers and owners.

Key roles

There is a vitally important role of ‘accounting’ in inventory skills that an organization possesses. It is the job of accountants to understand and practice how inventory related issues in a company are seen, such as sales and purchase processes, write-off process for stolen, lost and obsolete inventory, and so forth. Trainee accountants and others in an organization on inventory matters ensures that the business possesses accurate information about inventory costs.

Considerations

Inventory management training for employees of an organization is deemed more effective as on-job training rather than imparting them the required knowledge away from the place of work. Controlled supervision can better lead new employees of a company to get acquainted with the companies inventory spreadsheets ERP systems and other processes and procedures concerned with inventory management of a business.

Benefits of Inventory Management Training

The benefits of inventory management training to both employees and employers of an organization are multifaceted. Some most important of them are listed here:

Trained personnel possesses better inventory analysis techniques

–The knowledge of inventory analysis techniques will sharpen the inventory skills of employees and they will be able to assess better whether the inventory levels are correct or whether there is too much or too little on board. As a result, flaws can be reported immediately, so that effective measures can be taken. Since good inventory analysis finally leads to better inventory management; therefore, giving inventory management training to employees can prove really beneficial.

Improved inventory monitoring

– With training, employees would be better adept at monitoring everything concerned with inventory management. From the amount of raw materials present to work in progress requisites, employees with inventory management training would be able to report everything more effectively, as they would be taught proper techniques to evaluate the inventory better and to inform the superiors of how everything is coming along at the inventory. This in turn, would give the key players a better idea of what Inventory is needed and what isn’t, collectively leading to better inventory management.

                           Handling inventory management software

Most employees, who have past experience in inventory control, find it difficult to adapt to the various inventory management software used in different companies. Thus, with proper inventory training, they would not only learn ways of proper inventory management, but would also understand the working methodology of the software you use. As a result, they would be able to better maintain the companies inventory spreadsheets or ERP systems. All this would further contribute to effective inventory management and as a result, the company would be able to better utilize its resources in order to maximize profits.

Conclusion

The benefits of providing at least basic inventory management training to all employees related to inventory and specialized training for people who maintain inventory records, are immense. Each penny spent on training them would improve your company’s overall inventory management, contributing in the long run to multiply your company’s profits!