Part 1 of a 2 part series
- Decreased inventory turnover.
- Increase in inventory days outstanding.
- Frequent inventory shortages.
- Sudden growth in inventory.
- Pilferage, theft or missing assets.
Steps to Improve: CONTROLLING COST & QUALITY
- Compare inventory turns to industry standard.
- Compare to inventory ratios.
- Inventory growth should not exceed sales growth.
- Compare inventory growth by category.
- Track inventory needs better.
- Negotiate purchase terms: delayed payment, consignment, storage.
- Get suppliers to store your inventory while setting pricing based on your annual needs.
- Reduce inventory handling and carrying costs.
- Sell off/liquidate excess inventory.
- Sell via samples and/or catalogs with minimum inventory.
- Sell via Internet: hold minimum inventory; collect cash before shipping.