eKourier July 2014

FEATURES

item in stock. Counts are commonly employed with all types of inventory and the objective of the inventory count is to ensure that all inventory records are accurate. Should the physical count and the records not agree, the differences need to be examined and variances reconciled in accordance with company best practice. I will discuss this topic in more detail in the next edition. • Balance the stock as to value, size and price line in proportion to demand or sales trends. • Plan the winners as well as move slow sellers. • Secure the best rate of stock turnover for each item. • Maintain a business reputation for always having new, fresh merchandise in desired mixes. Let us now examine why we need to count our inventory and some key decisions to make before conducting a stock count. To conclude, Inventory control helps: • Reduce expenses and markdowns.

sales on a regular basis over time that eventually results in profitability. The stock turnover rate is the rate at which the average inventory is replaced or turned over, throughout a standard operating period, typically one year.

The next step is ‘receipting’/entering inventory in Storman with quantities consistent with the document. A similar streamlined documentation and accounting of sales, display stock, customer give-aways, theft etc. is equally important.

“ Unless we know exactly what inventory is in our centre and that it’s in usable condition, it is difficult to accurately determine when to reorder . ”

2. Stock review is a process for frequent review of damaged/obsolete stock (can be in the context of demand) and is necessary as items sitting on the shelf that are obsolete are simply dead capital. Keeping inventory up to date and devoid of obsolete merchandise is another critical aspect of good inventory control. 3. Stock turnover is really the way businesses make money. It is not just the profit per unit of sale that makes money for the business, but

Deciding how much stock to keep and the stock turnover depends on a lot of factors and can vary from centre to centre like location, demographics, customer base etc. and to a certain degree, the type of stock involved. 4. Physical Inventory counts it is an understatement to say that the efficiency and effectiveness of any inventory control system hinges on a systematic and independent physical stock take system. An inventory count is a process that involves a physical count of each

To be continued….

Let us look at some comments and what they mean in the context of Inventory Controls

Sathish Gopinath Financial Controller

11 Kennards Kourier July 2014