Inventory: On the Shelf Vs. When You Need It

Thursday, July 28, 2016
Over the years, I have heard some pretty amazingly misinformed things said about distributor inventories. Let me share a few: A peddler can’t sell from an empty wagon and a distributor can’t sell without a full warehouse. It’s the distributor’s main job to provide local inventory; no inventory, no value. If the distributor doesn’t stock your product and lots of it, you’ll never get the company’s full commitment. We want distributors to prove their commitment to our company by placing a large stock order up front. The distributor’s stock provides a margin of error for logistics problems at its suppliers. While all of these probably made sense back in the day, those days are over, dead and gone. Or at least they are for the knowledge-based distributor. Astonishingly, I still   [Read More...]

The shocking cost of dead inventory

Friday, June 17, 2016
What is the cost of your dead inventory? Quite often, even among well-run businesses, the actual costs of inventory are inaccurate, underestimated and incomplete. While most resellers know they have dead inventory, many are unaware of just how much. Our experience, supported by other studies, shows that in even well-run companies, anywhere from 20-30% of inventory is dead or obsolete. The REAL Shocking Costs of Dead Inventory! While that is huge and alone could have devastating ramifications for a business, how does one calculate the real costs to determine the hit that your business is facing? The easy answer is to take the unit cost for those dead items, add them up and you have your answer. But not so fast! There are many other hidden costs to consider before determining the  [Read More...]

Improving inventory turns

Friday, May 20, 2016
After a recent seminar, one of the participants reached out to me about his company’s inventory turn rate. After learning how to properly calculate the formula, he realized that they had been overstating their turns for a long time and were lulled into state of complacency. When he looked at the real turn numbers, the results were less than stellar. They were of great enough concern that he felt his employment may be in jeopardy if a plan for improvement was not developed. Fortunately, creating a plan is easy. Execution may be a whole other story. Like many companies, this one had been a victim of misinformation and comparison. I have always been skeptical of industry benchmarks when it comes to inventory turns. Not that the method of information gathering is flawed, rather the m  [Read More...]