Introduction
Efficient inventory management plays a pivotal role in the seamless functioning of any business. It not only helps in cost reduction but also maximizes profitability. One critical aspect of inventory management involves the periodic review of purchasing activities to identify potential new Stock Keeping Units (SKUs) for the shelves.
In this blog post, we will delve into the importance of regularly evaluating purchasing activities. We will also discuss the necessity of utilizing a system report or register to pinpoint non-stocked SKU activity and establish guidelines to determine when an item should be added to the inventory.
Reviewing Purchasing Activities
Frequent scrutiny of purchasing activities is essential for recognizing opportunities to introduce new SKUs. This process entails a thorough analysis of purchasing data to spot trends, patterns, and gaps in the inventory. Through these reviews, businesses can make informed decisions regarding which items should be included in their stocked inventory.
Utilizing System Reports and Registers
To streamline the review process, it is crucial to have access to a system report or register. This tool enables businesses to meticulously track and monitor purchasing activities, offering valuable insights into SKU movements. By scrutinizing this data, companies can identify instances of increased non-stocked SKU activity, prompting them to take appropriate actions.
Identifying Non-Stocked SKU Activity
The system report or register should be equipped to detect activity related to SKUs that are not currently in stock. This information holds significant importance as repeatedly ordering non-stocked SKUs can result in additional costs, such as excessive freight and handling charges. Furthermore, it can lead to heightened internal processing costs, potentially impacting overall profitability. By flagging these non-stocked SKUs, businesses can proactively assess their potential for inclusion in the stocked inventory.
Establishing Criteria for Inclusion
Establishing well-defined guidelines is crucial for determining when an item should be added to the stocked inventory. Each business will have unique criteria depending on their industry, the contracts they service, and the nature of their products.
For industries supporting engineering functions, like mining, inventory turnover might be low due to contractual obligations. Conversely, businesses dealing with Fast Moving Consumer Goods (FMCG) will only consider adding items with high SKU movement to their inventory. By comprehending the specific needs and dynamics of their industry, companies can set appropriate criteria for inclusion.
Flagging Contract-Affected SKUs
To streamline the inventory management process, it is advisable to flag SKUs affected by contracts. This can be achieved by assigning a specific data field, such as ‘C,’ to these SKUs. While reviewing Slow-Moving and Obsolete (SLOB) stock, it is important not to overlook these flagged SKUs as they are tied to contractual obligations. Periodic evaluations of these items are necessary to ensure that the stock-on-hand (SOH) values align with expected liabilities.
Importance of Inventory Management Courses
For a deeper understanding of inclusion criteria and efficient inventory management practices, enrolling in an inventory management course is highly recommended. These courses offer valuable insights into industry best practices, strategies for optimizing inventory turnover, and techniques for minimizing costs associated with excess stock or non-stocked SKUs.
Conclusion
Regularly reviewing purchasing activities and adding new SKUs to inventory are pivotal aspects of efficient inventory management. Implementing a system report or register to identify non-stocked SKU activity empowers businesses to make informed decisions and prevent unnecessary costs.
Establishing clear inclusion guidelines, tailored to the specific industry and contractual obligations, is crucial for optimizing inventory turnover. Furthermore, flagging contract-affected SKUs streamlines the review process, while periodic evaluations ensure that SOH values align with expected liabilities. By prioritizing effective inventory management, businesses can enhance operational efficiency, reduce costs, and maximize profitability.
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For further information, please feel free to contact me. Additionally, for more content –
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