Last week in talking about the inventory turn component of T&E ratio we focused on the Turn standards. Today let’s focus on the E for Earn to get your Goss Profit. We want to focus on items that generate high gross profit. All items and their mix are very important, but remember the 80/20 rule.

Those ABC’s again

We talked about the Pareto Rule several years ago and below is the effect that we will use as a shortcut to get our T&E ratio for our highest GP items anf focus on those for tuning our ratios.

Using ABC codes for cycle counts helps you with factor one, but knowing your real gross profit is the next step. Keeping your costs correct has a dramatic effect on Gross Profit and reporting.  Make sure you have all the cost indentified (especially you processors.)

One of the easist method to determine profitability is to use item categories to coincide with the ABC codes attached to your items.  Looking at profitability by those categories will let you see the most profitable items you sell and their volume.  Focus on those items for inventory control and the short cut is set.  Now you can use the ABC method to focus on the turns of your most profitble items and genenrate more profit per dollar of inventory invested.

TURNING YOUR THE MOST PROFTIABLE ITEMS MORE OFTEN
IS USING YOUR INVENTORY LIKE THE INVESTMENT IT REALLY IS.


Issue 631 - Turn and Earn, we need a reminder.

Being that a lot of vacations are happening right now I thought it would be a good time to re-publish our turn and earn issue that we did back in 2005. Although it's an older News Letter it's one that shows you how good your inventory is doing from a profitability standpoint.

Read more ...