Most business’s largest expense is inventory. Between raw materials, work-in-progress goods, finished goods, and the supplies to make the goods, a great deal of cash is tied up in inventory. Cash tied up in inventory means that it is unavailable for reinvestment.
Firms that implement a dedicated inventory control system see a 20% drop in inventory costs. A company pushing a million dollars in sales could, for example, see savings in the fifteen to twenty thousand dollar range – annually.
Inventory control is central to the success of any business. New techniques of inventory management offer savings to both the purchaser and the supplier.
Regardless of the size or type of business, an inventory control system should perform at least four basic functions:
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Provide a master file of part numbers and part descriptions, shipping requirements, reorder quantity, cost history, and vendor history.
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Track incoming material, transfers of material, and any rejections and scrap. This information should be made available in real time reports.
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Improve efficiency in purchasing by looking at prior usage of materials and estimating the reorder count. Lead times, shipping requirements, and quantity price information should be provided as well.
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The system needs to provide across the board accessibility to the data from management to accounting. Information needs to be easy to find and share across multiple locations.
While you can develop inventory control software in-house, we feel that it is best to purchase an already established company’s software. A purchased package offers immediate savings with few surprises; self-developed systems require debugging and refinement, which can be problematic while trying to operate a company through the normal course of the day. Purchased software packages also offer documentation, training, and technical support.
An advanced inventory control system can realize major savings for most firms, streamlining procurement while tracking operations from incoming material to finished goods to sales.
With this in mind, Oates and Company is ready to assist in implementing an efficient inventory management program for your business.
