The level of basic inventory of your business would have to provide an assortment with products and sufficiently great being to cover the normal sales with the company. If these beginning, you will not have present sales or figures necessary to anticipate the necessary product stock, therefore you must project the annual sales based in your plan of businesses.
When you consider the basic stock, you must have in mind the factor of time of retardation that exists between the order and that the products arrive at your warehouse. For example, if the time of delivery of your supplier is of 4 weeks and the product in particular is sold at the rate of 10 weekly units, then you must realize an order before the inventory level lowers of 40 units. If you do not rearrange and you realize that order at the time of which you need stock products, you will be waiting for 4 weeks without the product.
The levels of insufficient inventory mean losses in sales and increase of costs by the required time to remake the order. Operating without raw materials or parts that are vitally important for your productive process it also means operational costs. Your employees will begin to make money to only be seated, because there is no sufficient work to do; when the inventory returns to raise or arrives the order, they will be making more money to work in extra time by reasons for the loss of production by inventory problems. In some situations, you could even get to pay more by those products in cases of inventory emergency.
A form to protect you of being out of stock is creating a safety margin to emit an order. In order to be certainly safety margin it is the adapted one, it tries to think about all the external factors that they can contribute to the delays, like the suppliers that tend to delay themselves or products that are sent from other countries. Once you already have been working by a time, you will have better feeling in the times of delivery and will be able easily to consider your levels of security inventory.
Avoiding the Excess of Inventory.
To avoid the excess of inventory is especially important for the companies with highly cyclical products, such as the clothes, accessories for the home, vacations or gifts. These products have a small time of life and low rotation at the moment at which they are not in fashion. The entrepreneurs who sell equipment without cyclical or seasonal problems, like equipment of plumbing, articles of office or car parts, have the more freedom because it is not so easy that their products are obsolete.
It does not matter of which type is your business, but always the excess of inventory is something that is to avoid. This hill extra money, due to the loans of money to buy an excess of inventory or not to destine those resources for other effects, additionally can have an increase in the taxes due to the inventory without even selling or an increase in the insurance. In fact, a consultant of merchandize esteem that the cost of maintaining products in inventory increases between 20 to a 30% with respect to the original cost of the investment. Buying an excess of inventory also reduces your liquidity, something that we must avoid.
When you are with an excess of inventory, the natural reaction will be probably to reduce the price and to sell it quickly. Obvious this solves the problem of products stock, but also it reduces your return of the investment. All financial projections assume that you will receive the complete price by all those goods. If you reduce the prices in 15 to 25% not only these reducing your inventory, if that also you are losing money that you had considered in your plan of businesses.
Other beginning entrepreneurs can react to the excess of inventory being cautious in the next order of purchase. Nevertheless this increases your risks of having a lack of inventory and of entering to the circle of costs by errors. In order to avoid accumulation an excess of inventory, it establishes these a realistic margin and it only buys what safe that you can sell.
No comments:
Post a Comment