I remember how funny David Letterman's Top Ten List was, and also getting a point across.  Today I'll dust off the archives to do a top ten that isn't a funny, but hopefully drives home the point about inventory. Last newsletter we discussed the turn and earn ratio, now we'll hit the top ten ways to improve that key business number by lowering AVERAGE INVENTORY.

  1. Understand the elements of carrying costs. See Chart Below


  2. Eliminate excess and obsolete Inventories.

  3. Improve the accuracy of your demand forecasts with automated purchasing forecast technologies.

  4. Lower the operating costs of the warehouse by improving processes. Efficient picking documents and “warehouse routing” of pickers are some simple processes to fix.

  5. Use your vendor’s inventory to order just in time where possible. If feasible “drop ship” larger orders you never touch the inventory.

  6. Improve your data accuracy if you don’t know how much you have or where it is, it’s as if it doesn’t exist.

  7. Implement cycle counts and practice them like a new found religion.

  8. Reduce your lead time. Don’t put it on the floor unless you plan to do something with it. Replace a 6 day lead time item with a 2 day lead time item. If you have an out of stock situation, it is only for 2 days. Press vendor to deliver more often.

  9. Increase the velocity of your operation.  Are there any opportunities to reduce the time between when you receive product and when you can ship it?  Review receiving hours, putaway, picking and shipping shifts to see if a better combination exists.  Sounds simple but have you looked at your velocity lately?
  10. Clean your attic, increase turns on items to increase profit. If your carrying obsolete or old inventory because you might lose customers you have bigger problems than the top ten list can help.

LOWER AVERAGE INVENTORY AND INCREASE YOUR TURN AND EARN RATIO

 

 

 

.

 

Issue 646 - Checking those Resolutions.

Last year we were early to declare our New Years Resolutions 2018. A lot has changed over in 2018, but I believe it's not quite too late to make sure we have addressed some of those resolutions.

Read more ...