Inventory (1 of 2): Controlling Cost & Quality - John M. Leask II CPA/ABV, CVA

Inventory

Part 1 of a 2 part series

Warning Signs:

    • 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.

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>>Inventory (1 of 2): Controlling Cost & Quality
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