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 640 - Everything Cycles.

Transformation and disruption was a topic in an article in the Sunday Philadelphia Inquirer. I read about the demise of Sears & Roebuck titled The Big Stumble. They believed they had no competitors. The New York Times dubbed them "The Amazon of the gilded age." Those of us in the baby boom generation remember Sears.  As a young boy I remember thumbing through the catalog, dreaming of what I could buy if I had the money.

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