Every business has its books and keeping these books in order is no mean achievement. After all at the end of the day these books give you an honest picture about the state of affairs in your sales and your expenses. Your inventory books come under the purview of important retail management. Inventory management is an important and crucial feature of retail management where a list of goods and materials are held in stock.

CAP Retail helps in keeping your inventories in order. In fact the software of CAP Retail POS, helps you manage your inventories like a well-oiled machinery.

Reasons being:

It reduces costly inventory errors, improves customer service, thereby increasing the value of your business. And CAP retail inventory software and inventory tracking systems are easy to use and implement without the cost or complexity of larger inventory tracking systems.

This retail software is designed to suit specific needs of a retail atmosphere and not a generic one that caters to a larger scope where the metrics for tracking are multiplied.

The usage of barcode technology that is in-built in this software makes checking out faster, accurate with minimal scope of human errors. It is this unique feature that ensures all goods going in or out are accounted for with the least amount of human error. Its uniqueness lies in the complete inventory tracking solutions that has been created and backed by leaders in small business productivity.

An investment in software of this magnitude is worth all its money with its diverse functionalities and features that would definitely see a gain in your profits.

Tags: management inventory, Retail Inventory Control, state of affairs, inventory control software, complete inventory, inventory tracking solutions, business productivity

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Retail Inventory Control Software

Asset Tracker for Networks is an inventory tracking tool for auditing software and hardware components installed on the network computers. This asset tracking software will collect your inventory information, provide the Network Administrator with detailed comprehensive reports and allow him to export invenory information to external data sources. It is an excellent solution for auditing all types of software assets in a corporate network including, but not limited to, operating system details, processor, memory and hard disk drive information, software inventory, network printers, network adapters, operating environment and much, much more.

This inventory software does not require any network setup on each individual network workstation. Instead, the Network Administrator starts the program on his/her workstation and clicks the Inventory Network button. The program inspects the corporate network to find computers and network devices there and automatically provides the Network Administrator with the network management information on each computer or device found in a few minutes.

Asset Tracker for Networks offers statistical reports for your needs. General workstation information report, processors, memory and operating systems reports, installed software and software licenses reports are already included with Asset Tracker for Networks. Additionally, you can request more specific types of reports which can be tailored to your requirements or even develop them by yourself.

Asset Tracker for Networks also offers an easy way to export inventory management information to ODBC data sources, CSV files, text files, web pages or to Excel. The program's template-based export engine allows the user to add new export types without changing the program itself. You can also create your own export types or order export type creation from Alchemy Lab.

The price of Asset Tracker for Networks 2.0 ranges from $199 for 25 PC's to $799 for 500 or more PC's. Site and Worldwide licenses are also available. Further information and a fully-featured trial download are available for free from http://www.alchemy-lab.com?c=art.

Tags: asset tracking software, network printers, information report

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Asset Tracker for Networks: Network Inventory Solution

Intellinet Systems is a software development company providing electrical panel Inventory Control Software,erp costing control software applications for Enterprises, Warehouses, Manufacturers, Distributors and companies needing to track and manage their assets.

Intellicosting A GUI based Costing,comprehensive inventory management and inventory control software application - MIS tool for the Panel Industry developed using Microsoft technologies. This is an innovative product targeting the Electrical Panel Industry, automating the core processes of the Panel Industry.

Intellicosting Covering such areas as: Costing Sheet / BOM (Bill of Material),SOP (Schedule of Price),Composite BOQ,One Click Swap Make,Product Recall, Batch Assembly, Processing, Invoicing and Inventory Management.We also have developed a comprehensive set of analysis tools to help you make intelligent decisions about your inventory.

Intellicosting Software can control inventory in:

1.Warehouse inventory, stockroom inventory , logistics inventory , inventory management.

2.Assembly manufacturing software with BOM, "made to order" or stock inventory.

3. Process manufacturing software with or without lot tracking and expiration dates.

4. Serial number and asset tag inventory.

5. Distribution software with inventory tracking, pick and pack logic.

6. Customer furnished material for kiting and packaging etc.

Key Features:

AUTO GENERATION OF....

1. Costing Sheet / BOM (Bill of Material).

2. SOP (Schedule of Price)

3. Composite BOQ.

4. One Click Swap Make

5. One Click Alter Discount.

INTELLI - MIS :

AUTO GENERATION OF....

1. Weekly Enquiry Report.

2. Monthly Quotation Report.

3. Follow Up Plan.

4. Orders Booked Summary.

5. Orders Lost Summary.

Hilery is the expert of Electrical Panel Inventory Control Software

Tags: inventory logistics, inventory management, manufacturing software, Software, Technology Internet

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Electrical Panel Inventory Control Software

This is an excerpt of a paper originally written by George Miller, Founder of PROACTION. It has been modified and updated by Paul Deis, PROACTION CEO.

This article is also available on our website: PROACTION - Generating Best Practices

Does your company need to improve inventory accuracy?

Often, writings on inventory accuracyimprovement focus on techniques, such as cycle counting. While this is a very important item in thetoolkit of the inventory or materials professional, cycle counting is onlymainly a measurement and diagnostic tool. Think of it as SPC (Statistical ProcessControl) for inventory accuracy. Youprobably aren't going to cycle count your way to inventory accuracy, withoutalso making major improvements in the material handling, transaction control,reporting and feedback process. For manycompanies, using cycle count adjustments to correct inventory record errors islike trying to bail out the ocean with a spoon, since errors may be made farfaster than they can be economically corrected.

So what should you do?

Aneffective inventory accuracy program should consist of the following elements:

· Inventory accuracy measurement criteria (metrics)- including item/part number identification, quantity and unit of measure,location and posting timeliness. Somecompanies also measure other related data, such as customer/contract number,configuration/revision letter, lot, serial number, grade and expiration date. I have visited companies claiming to have 95,98 or 99+% record accuracy that quickly shrinks to mid-double digits when weapply our uncompromising criteria objectively. Sometimes companies have invalidcriteria, sometimes they deceive themselves, sometimes their employees deceivethem, sometimes unconsciously or unwittingly.

· A clearly defined material anddocument flow, with control and tracking points identified. These should beclearly marked out in the shop and employees should be thoroughlyindoctrinated. A simple flow chart of the desired system is an excellenteducational tool. It should include material, document and transaction routing,"drop points," flow times, logging, batch controls, reports and auditing.

· Adequate facilities, space, storage andmaterial handling systems and other equipment. Good housekeeping practices are a must. Itmight be necessary to physically secure the inventory with fences, gates andlocks, if floor discipline cannot be achieved otherwise. Make sure that there is a place foreverything- materials, equipment, documents, and of course, people. Use signsand markings to make these obvious.

· Effective policies and procedures formaterial handling, storage, identification, packaging, labeling, datacollection, counting and transactions. Use good forms and tools to structurework properly.

· A training/certification/assessment program for all people who handle or track inventory, or who are in a position toinfluence how well that works. Consider PROACTION's Inventory AccuracySeminar. Use APICS materials.

· An ongoing assessment and diagnostic program,such as cycle counting. Such programsmay be administered in any one of several organizations within the company, aslong as the manager in charge is sensitive to the needs of inventory accuracyand earnestly dedicates the needed effort to the program. That being said, webelieve that 3rd party oversight, by an internal or external auditgroup or an outside consultant, is needed to keep the program on track.

· Effective inventory transaction cut-offcontrol and reconciliation procedures, including accounting for alltransaction documents. Don't dare even THINK about real cycle countinguntil you get control of this, although it is recommended that you start earlywith a small control group, to debug the process and begin error diagnostics.Expand to a larger cycle count program only after you know what you're doing.

· Transaction control system to posttransactions and provide inventory status to all departments needing it,preferably via an on-line computer system. Bar code and other automated data collection systems are desirable, ifcost-effective, but are no means mandatory to run an accurate system. Visual control systems, such as Kanban,2-bin, pallet squares, etc, can sometimes reduce or even eliminate the need formost transactions and automated systems, in the proper circumstances.

So, you maybe thinking, all of this is fairly straightforward—why isn't everyone doingsomething like this successfully? It'sactually much harder than it looks—why:

· Attitude: Not everyone agrees thatinventory accuracy is important. I say: Are you satisfied with the alternative?It requires a high degree of consensus on the approach, responsibilitiesand "ownership." In extreme cases,company executive leadership may need to step in to help change the culture andoversee required changes.

· Discipline is needed, day after day, yearafter year. This is not a one timecleanup job that management can declare victory for and just go home. It requires that someone be at least a parttime "Accuracy Czar," to keep the effort focused and permanently active.

Implementation Ideas

Setting up the system:

Issue executive directive on need for inventoryaccuracy and accountability. Formally announce improvement and maintenanceprogram. Establish management authority and accountability for dataaccuracy/integrity.
Create transaction and facility flow charts.Train everyone involved.
Fix and use part numbers (make sure BOMstructured properly), locations
Write inventory stock keeping and transactionprocedures and training materials- train everyone involved.
Publish a data integrity policy and work theseconcepts into company procedures and training.
Review the adequacy of facilities and equipmentto store and handle material. Make needed improvements to support the materialcontrol approach agreed upon—Space, racks, shelves, bins, conveyors, fences,gates, fork lifts, ladders, scales, etc.
Develop performance measures. Publish themregularly, on paper, bulletin boards, hold people accountable, with appropriaterewards an punishments, reflected in performance reviews, compensation, praise,etc. Use tools, such as cyclecounting/Statistical Process Control.
Establish an objective auditing program.

Operational Recommendations

Use PROACTION recommended data accuracy criteriaand cycle counting procedures
Keep flow charts on nearby walls- refer to themwhen needed
Maintain locator controls as practical
Use appropriate storage media—Racks, shelves,bins, pallets
Make judicious use of automation where feasible—conveyors, automated Storage and Retrieval Systems (AS/RS), automated datacollection, such as bar coding, automated counting/weighing scales, automaticbaggers, pallet wrappers, etc.
Use standard container sizes, weights,quantities. Mark weights and standard quantities on containers.
Use authorized sealed cartons- Recounts of these sealed cartons not usuallynecessary
Use visual control methods- KanBan squares,clear plastic calibrated containers, etc.
Post transactions as real time as is practical
Put most frequently used items in the mostaccessible place. Store at point of use, if practical and controllable.
Practice excellent housekeeping.
Be careful with descriptions, units-of-measure.
Purge obsolete, discrepant, unneeded material.
Use good labeling practices.
Label, track, monitor shelf life items.
Array material for easier access and counting.

Inventory Tracking Approaches

Perpetual- computer or manual transactions
Discrete issues control
"Backflush" issues control
"2-bin", min-max or kanban control, visuallydriven
"2-bin", min-max or kanban control, perpetualinventory driven
Job lot control
Out of control (not recommended)

Verification Methods

Control group (start with this)
Periodic inventories
Cycle counting
Location audits
Transaction review

WIP Inventory

Maintain excellent housekeeping
Report transactions as timely as possible,including scrap, adjustments, exceptions
Use hook or station numbers on production lines
Use standard container sizes, weights. Markweights and standard quantities on containers.
Have standard bins, racks marked
Minimize WIP, remove all material not needed forX hours
Mark quantities on sealed containers
Assign workers responsibility for monitoringcertain items
Use feeder lines, cells, make as needed and keepparts on line where practical

ABOUT THE AUTHORS

George J. Miller, CFPIM, is Founder of PROACTION. Prior to selling the company to Paul Deis, George had worked with dozens of companies in assignments involving productivity, quality and service improvement, business systems, change management, acquisitions, divestitures, expert witness testimony, and others. Prior to founding PROACTION in 1986, he was Vice President of Marketing for Western Data Systems; Director of Planning and Development and Assistant Director—Operations for Purolator Technologies (PTI); Consultant for Booz-Allen & Hamilton, and Manufacturing Systems Manager for Becton-Dickinson.

Tags: Industrial Goods and Services, Retrieval Systems, inventory accuracy, Cycle, paul deis, Western Data Systems, George J. Miller

does anybody else think that wasp inventory control is less than intuitive

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Inventory Accuracy Hints

This article is also available on our website: PROACTION - Generating Best Practices. It is an excerpt of a paper originally written by George Miller, Founder of PROACTION. It has been modified and updated by Paul Deis, PROACTION CEO.

Overview

In spite of the great advances in industrial management in areas such as JIT, Flow Manufacturing, Lean Manufacturing, MRP/MRPII, ERP and Supply Chain Management, and now, Electronic Commerce, inventory investment management continues to be a major issue for many organizations. Installing the latest software and mouthing the most popular buzzwords is no guarantee of good inventory management. As with almost all Best Practices, it is the effective use of available tools by properly educated and trained people that creates the desired result.

This paper covers how to set up and maintain Aggregate Inventory Management for improved investment and operations management. It is a "macro," top-down approach that complements a company's "micro" SKU (part number) level management techniques.

Definition, Goal and Objective

• Definition—the APICS Dictionary defines Aggregate Inventory Management as "Establishing the overall levels of inventory desired and implementing controls to ensure that individual replenishment decisions achieve this goal."

It includes:

• How to assess overall investment levels and set targets.

• How to identify inventory investment level "drivers" and help control them

• How to link aggregate inventory management "macro" strategy to "micro" controls and develop accountability

• Performance measurements

• Specific techniques, such as ABC analysis, control parameters, inventory buildup charts, and input-output control.

• Goal—Helps manage assets and make money.

• Objective—Optimize inventory levels within the parameters of service, cost, logistics, process and investment objectives/constraints. Inventory management should be exercised to keep the lowest level of inventory consistent with achieving the objectives. Too much inventory reduces Return on Investment and Return on Assets (lower profits). It also tends to increase expenses, in the form of interest payments, handling and storage, management, damage, loss, obsolescence, tracking, taxes, insurance, etc.

Although most managers, accountants and taxing authorities regard inventory as an asset, treating it as such for operational purposes may create liabilities. You have probably heard stories about factories working to "keep people busy" or maximize "efficiency" and other similar nonsense. If they are making inventory that is not needed now, they are often wasting money. If they work just to keep people busy, they are still consuming material, energy and other resources that may not earn adequate profits. They may use resources that could better be used for more immediate and profitable needs. If inventory is deployed improperly, it may create liabilities. A customer of one of our clients had branch managers who would "hoard" products at their remote branches so that they "wouldn't run out." This created an excess of material in the wrong places.

How to Assess Inventory Investment Requirements

Survey

First, understand market, customer needs and service expectations; your own company needs, expectations, process, abilities; supplier abilities and mindset; industry norms and mindset; world-class best practices.

From this, you should learn how fast and reliably customers expect to get their shipments, what is involved to get raw materials and production completed, what the best in the industry are doing and plan to do, and what might be possible. For instance, if all competitors are shipping from stock, then you will either need to duplicate that feat, or determine how to manufacture very fast, or convince customers that your product is so great or so cheap that it is in their interest to wait while you make it to order. Or, you might figure out how to procure better or manufacture better in a way that allows you to carry less inventory.

The result of this step is to establish what industry inventory standards might be and what is possible. Make sure you have an "apples-to-apples" comparison: there may be significant differences among companies. For example: One company might stock finished goods, another one may sell it to another division or to a distributor.

Measure Current and Historical Inventory Levels and Performance

Measure current and historical company inventory levels and performance, not just overall statistics, but broken down into levels of responsibility, commodity, area, type (raw material, work-in-process, finished goods, consignment) and market. Do this to help isolate figures down to levels of accountability and to show inventory investment performance by market, process or even product line. You may find that your systems are unable to do that, meaning that it is past time to make changes to them, whether that be to replace them, modify them or put in separate inventory tracking and control systems (recommended as a last resort).

The result of this step is to establish how your own company is doing and has been doing with inventory management.

Establish Performance Metrics

Establish performance metrics - Inventory is usually measured in currency value, such as U.S. Dollars ($USD). Another, complementary way is to measure it in velocity. For example, you might measure it in "turns" which relates to how many times it moves or "turns over" per year. For example, if there was an average of $100 in inventory in the last year and annual cost of sales for the last year was $2000, that would be calculated as cost of sales ($2000)/average inventory ($100)= 20 turns.

More turns (or "turnover") is usually good, provided that cost, service or quality aren't unacceptably affected. If they are, the answer is not simply to increase inventory, but to try to improve the underlying "drivers" influencing it instead, if possible and cost-effective. There are variations of the turnover (this term should not be confused with the European "turnover," which usually refers to total sales for a period) formula, mainly in addressing how to calculate average cost of goods sold or inventory.

Sometimes, turns are calculated by comparing full sales value with average inventory cost or even equivalent sales value. To maintain easily comparable figures, state all numbers in fully "burdened" costs, using industry standard overhead/burden calculations, unless this is contrary to the standards of your industry or locality. Hopefully, future standard world accounting practices may help to reduce confusion in this area.

It is becoming more common to measure inventory performance in days coverage instead of turnover. People seem to relate to it better.

Inventory and sales may also be commonly measured in more industry-friendly terms, such as tons (steel), bushels (corn), housing units (construction or real estate) or ounces (gold).

A further refinement is to stratify the inventory by "Quality," as asserted by Gary Gossard of IQR International. The idea of classifying inventory as active, slow-moving or obsolete has been around for a long time. Constantly track it, to highlight any change in inventory quality or condition, such as a new requisition for an item which is already in excess or obsolete. The active, weighted "good" inventory not exceeding your "days coverage" target, divided by the total inventory, multiplied by 100, it equals the Inventory Quality Ratio (IQR) number. 33-40% is typical for mediocre companies. 66% is considered pretty good.

All of these numbers can be time-phased, to show changes over time, due, for example, to seasonal supply and demand changes, or planned improvements. These can then be applied in still more detail to the appropriate organizations, product lines, trade channels, warehouses, planning groups or other responsible entities and then monitored for results.

The numbers should be capable of being "drilled" down or up, from the entire enterprise level to an individual SKU (Stock-Keeping Unit) transaction or part number. Managers or employees should be able to look at total figures for their areas of responsibility and readily identify specific problem areas down to lower levels and finally to specific items, policies, orders and decisions that accounted for them.

Here are typical Inventory System Metrics, which should be broken down by organization/responsibility, area, type, commodity, market/product, and time phased, with targets and actual values:

• Inventory Turnover or Days Coverage

• Inventory value or other unit of measure, such as tons

• Inventory "Quality," including IQR and summaries of amounts of each type

• Customer service level, expressed how the CUSTOMER perceives it

ABC Analysis

Perform an ABC analysis, a simple, common and powerful tool for inventory management. It is based on Pareto's law of "80-20." The most common approach is to calculate demand in units, preferably for future periods, then calculate the total usage value at cost for each item (total cost of sales multiplied by units required) for a given future period. If future demand data are not available, the next best thing is to use history, but this won't work well for items with major swings in demand over time. Sequence these in descending value. Typically, the top 10 to 15% of items account for 75-85% of value ("A" items), the next 20-30% account for 10-20% of value ("B" items) and everything else accounts for the rest, about 60-70% of the items, usually about 5% of the total value ("C" items). Your inventory should be less than these percentages for the "A" items, because they are much more tightly controlled and a little higher for B's and significantly higher for C's.

Then compare the list to actual values in inventory, plus actual and planned commitments. The answers will often suggest immediate corrective actions!

An ABC list suggests what to concentrate on to control most of the inventory investment. What it doesn't tell you is that being short of a $.10 screw might prevent the shipment of a $5,000,000 radar unit, so ensure that there are control systems for all items, just control the expensive ones much more carefully. Err on the side of caution for the cheaper items, allowing a safety stock coverage or "two bin" approach to avoid stock outs, but keep inventory from getting out of control.

Create an Inventory Buildup Chart

Another good analysis tool is the inventory buildup chart. Use a standard x-y coordinate chart. Plot the cost build-up over time, by product group, with cost on the "y" (vertical axis) and time on the "x" (horizontal) axis. Normally, raw material cost accumulates first over time, followed by labor and overhead application. Allow for safety stocks, lot size inventory, transit stock, defects/rework/scrap, and normal finished goods and distribution pipeline stocking. Show the affect of consignment arrangements. Some people also treat accounts receivable as sort of a de facto inventory, until it is paid for. Once this chart is completed, show it around for shock value. Presented correctly, it will really make people think about the effect of constraints and decisions (just another form of constraint) on inventory. Then, work on changing the rules!

One company had a 14 month buildup curve, which was reduced to 4 months. At another company, the longest lead time material item accounted for only 20% of the product cost, so stocking only that item, instead of finished goods or instead of only reacting to orders, enabled them to radically reduce the response time for orders by 70%. It also added the flexibility of being able to use that raw material to make a number of different end items.

How to Identify and Control Inventory Drivers

Inventory drivers are things that tend to make inventory go up or down. Identify them and you will have some clue of why inventory changes. Understanding them is the beginning of gaining control. I've stated things that would drive inventory up, e.g.: more SKU's. I refrain from stating the obvious: doing the opposite would reduce inventory. e.g.: reduce SKU's to reduce inventory.

Key Drivers are covered briefly, as follows:

Number of SKUs

The more items you have, the more inventory you will need, in most cases. If you sell 500 widgets a year of A, then replace it with 250/year of A and 250 of B, you will probably need to carry more inventory. Why: demand and supply variability and total economic order quantities are likelier to be higher for 2 items than for one.

The more SKU's in a product, the harder it is to bring matched sets of parts together at the same time. Because there are multiple items, with multiple vendors, kept and routed through multiple places or paths, with more opportunity for delays, defects, etc, more inventory will be needed.

The more operations there are and the longer that they take, the more inventory you will tend to have. More operations mean a longer supply chain. It may also mean differing lot sizes per operation and more places for delays and defects to occur. Process simplification helps reduce inventory.

The more facilities that inventory passes in and out of, the further apart those are and the harder they are to reach and pass material in and out of, the more inventory you will tend to have.

The more times inventory passes from the control of one system or organization to another and the less efficient the transfer is, the more inventory you will tend to have.

Lot/Batch Sizes

Lot/batch sizes greater than customer order delivery sizes tend to increase inventory. If customers order a product one at a time, but economics, handling or process considerations suggest that you make 1000 at a time, then you will have more inventory available than will be consumed per order, resulting in an accumulation of inventory. If you need to order things in cases, dozens, carloads, tons or weeks' supply, but they are needed downstream in the supply chain in smaller increments, you will tend to accumulate more inventory.

The longer the lead time, the more inventory you tend to have. If something takes 16 weeks to get instead of 16 days, there is more inventory needed in process to cover the "pipeline" time. Whether it belongs to you or your vendor, it is increasing somebody's cost, which ultimately will affect your cost and your customer's cost. Longer lead time also means more chance of running out or having something go wrong out while waiting for it, which is usually dealt with by having additional inventory.

Carrying cost

This refers to the cost of owning inventory. Let's look at what goes into inventory "cost of ownership", frequently called the "carrying cost" and expressed in terms of percent cost of inventory valuation per year of ownership. For example, a 25% carrying cost (typical) would indicate that it costs about $.25 to own each $1.00 of inventory each year. These costs consist of:

• Cost of money - The cost of capital to the company or, in some cases the "opportunity cost" or return that might be earned on the money by applying it productively elsewhere. The cost of money has ranged anywhere from 6% to 18% in the USA in the last 25 years. Obviously, this has a very significant impact on investment strategy.

• Obsolescence - The risk of inventory never being used, or needing rework to make it usable, needs to be factored into the cost of owning INVENTORY. In theory (and practice), the larger the inventory is, and the longer it is held, the more likely engineering changes, customer preferences and technological changes will render that inventory unusable. In the clothing industry, it is not uncommon to see inventories depreciate as much as 90% when styles change. Certain portions of the electronics industry have problems with inventory becoming obsolete very quickly, due to technological changes.

• Shrinkage - A portion of inventory becomes unavailable to the owner due to loss, damage, theft or spoilage. The longer inventory is there and the more there is, the more likely this is to happen. Steps to prevent it only raise carrying costs in other areas, such as security, climate control, better control systems, recruiting policies, etc.

• Quality Factors - Allowances for yield, attrition, scrap and rework. This is really more of a function of the process than the amount of inventory invested and is more related to throughput, but is sometimes included as part of the aggregate inventory carrying cost.

• Technological or Price Obsolescence - Prices don't always go up. In fact, in industries such as electronics, prices often plummet due to constantly improving designs, product and process technology improvements. Therefore, it is desirable to minimize inventories in high-risk areas.

• Taxes - There are two dimensions to this: 1) in some areas, a tax is levied on inventories, so the more inventory, the more tax is paid. 2) inventory is regarded as an asset by most accounting and tax rules. Therefore, increasing inventories shows "profits" and profits are usually taxed, usually by multiple government entities.

• Insurance - The cost of carrying insurance on inventory needs to be considered, as well as insuring the space, equipment, people and other resources needed to control it.

• Space - Costly storage space sometimes occupies 25-30% of the total facility, when one considers raw material warehouses, stockrooms, work-in-process storage, receiving, shipping, outside warehouses, MRB and residual storage areas. Inventory reduction campaigns can help companies avoid the need to move to large facilities, or permit them to shut down or cut back existing facilities.

• Manpower - All of this inventory needs people to order, receive inspect, record, move, count, store, retrieve, post it to the ledger, etc. People are the largest or second largest expense (behind material) for most manufacturers.

• Record Keeping Systems - Software, procedures, equipment and paper must be used to track and control inventory.

• Material Handling/Storage Equipment - Conveyors, fork lifts, bar code readers, scales, automated storage and retrieval systems, trucks, carts, bins, racks, shelves must all be purchased, leased, maintained and cared for.

• Physical Inventories, Reconciliations - Must be conducted to ensure that inventories are properly accounted for and maintained.

• Transportation - Must be provided to move inventory in and out of the facility, to vendors, within the facility, to different workstations and storage areas.

• Energy - Heat, light, humidity control, air conditioning, refrigeration and fuel must be consumed to make all this happen.

• Inappropriate Lot Sizing - In inventory formulae, the carrying cost of inventory is often expressed as a flat percentage of the inventory value, for convenience of computations, but that is an oversimplification of reality. For instance, consider material handling/storage costs. Just because a dollar of inventory is added, doesn't mean that carrying costs go up, say, $.02. In reality the costs would not usually go up in a direct proportion at all, but only when we had to pay for an additional expense, or make the next capital investment in equipment or space to accommodate the inventory. So actually, most of these costs are step functions, rather than continuous curves.

We urge caution in the use of so-called EOQ (Economic Order Quantity) formulae in planning. While these can be useful guidelines in some cases, they can easily go awry and are hypersensitive to changes in carrying costs and order costs, which are usually no more than guesstimates, at best. We smile in amusement at PhD's made or lost on the study of such arcane calculations, often failing to consider basic realities such as; how much space and money do we have, anyway? You can refer to Paul's book, Production & Inventory Management in the Technological Age, pages 137 to 139 for a detailed explanation of why this lot sizing method is weak and should be used with caution.

• Supply variation—refers to the reliability of the supplier to deliver the desired units in the needed quantity, at the right time, at an acceptable quality level. If this can't be done reliably, then companies tend to carry a buffer (safety) stock to make up for the deficiencies in the supply system.

• Demand variation - refers to the ability to reliably forecast what the customer will require (whether that is an internal or an external customer). Lower reliability tends to encourage buffer (safety) stocks.

• Defects —Extra inventory is often carried to allow for probable rejections. This is just a specialized form of safety stock for supply and demand buffering.

• Logistics constraints/transportation costs - This also sometimes falls under the heading of supply and demand variation and it certainly can affect it. For example, one of our clients transports parts by ocean freight to a plant in Portugal, or at least they do that if they don't have to ship by air to get them there faster. Because ships traveling between economical ports only leave every few weeks, a 20 or 40 foot long container is the most practical shipping size. A certain amount of time is required for packing, transportation to the terminal, Loading, transport, unloading, customs and transport to the consignee. These are very real logistics constraints that must be built into the "pipeline" portion of the inventory model.

Another company studied ships fresh flowers from Latin America to the U.S. Air freight is the only feasible way to handle shipment, due to shelf life and care issues. It results in a shorter "pipeline" and higher transportation costs, which end up either directly costed to inventory, or get rolled into overhead, or cost of sales—same ultimate effect.

As unit costs rise, so will inventory, but the turns, or days coverage, will remain the same.

How to set Inventory Targets

After considering the current situation, drivers, and external situation, estimate what inventory levels should be, given certain sets of circumstances. There are impressive supply chain modeling tools to help you do this. Our experience is that developing an accurate detailed inventory behavior model is quite a chore to create and a major task to maintain, so we usually don't. Normally working on projects with limited budgets, we study past behavior and focus on the main drivers, seeking to change a few with the greatest potential impact to achieve assigned objectives- sort of a "delta' approach.

Don't let us talk you out of sophisticated modeling tools, though. They have their place. When there are very large amounts of money involved and/or tricky constraints to work around, modeling tools will sometimes help. Many of the detailed control methods presented below contain elements of modeling.

Warning: Calculating or modeling inventory behavior solely by using the rules and parameters will nearly always be wrong. Why: If, for example, you assume that inventory will be an average of ½ times the order quantity plus safety stock, you'll most often be wrong. Actual supply and demand variability will differ. Defective items/customer returns may result in buildup. Unmatched sets of parts due to shortages will result in buildup. Generally, it is higher than the model would indicate.

Even the best laid plans can go off track if something changes unexpectedly- a major customer cuts orders, unexpected defects occur, requiring ad-hoc reaction, rather than careful, deliberate, advanced planning.

There are two major directions to approach inventory management from—Top-Down and Bottom-Up. Most successful companies use a combination of both.

• Top-Down — this is the "macro" approach. Start with a goal, objectives, ABC (Pareto) analysis of estimated or historical usage, knowledge of overall processes and lead times. Set overall targets, by business unit at a minimum, preferably at a lower level, so that middle managers or even individual supervisors, work teams or administrative control personnel might be held more accountable. It takes more effort as the control is moved to a lower level.

Establish a tracking system, such as actual inventory versus target level. Compare numbers to actual sales, forecast. Monitor commitments and production plans against targets... Hold managers accountable for results and make them come back with reasons why targets cannot be met and solutions to the problems. Motivate them to solve underlying problems. Help them with problems outside of their scope of authority.

Another good tracking tool is Input-Output Control. Simply build a time-phased table of planned starting and ending inventories, showing starting, input, output and results. Then task employees to make the "delta's" happen and track the actual values per period.

• Bottom-Up—Look at each item- determine cost, lead times, supply and demand reliability/variability, defect rate, transportation, storage, set-up/batch size considerations, buffers, process, handling considerations. Then set the proper planning methods and control parameters, to either default down from the enterprise, product line, commodity or department level to default down, or just establish them at the item/part level.

This takes a lot more effort than merely exercising Top-Down control, but it can deliver better results.

Educate and train people in inventory management and control approaches.

How to Control Inventory

After you do all your research and analysis, set targets and establish your control system, then you get to the hard part - actually making it happen.

Quick hits - Simply establishing the aggregate targets, understanding drivers, educating and training, setting up responsibility, establishing accountability and tracking results usually has significant effects. I have seen greater than 50% reductions from this alone. This can be the cheapest, fastest way of making some change happen, but it has a limited effect, because the approach lacks detail and won't make major permanent changes in the ways that the business works without additional actions.

What is "Control?" - Control means to make something happen or to know why if it doesn't, so that something might be done about it. Using that definition, there is no such thing as an uncontrollable situation. Someone once told me that he couldn't control service inventory, because of unreliable vendor lead times. Nonsense! Unreliable lead times might be controlled by several strategies, such as: multiple sourcing, re-sourcing, safety stock, exhorting supplier to improve performance, ordering sooner, improving your own planning and reaction times, changing designs, alternate routing, training customers to order differently, having vendors stock raw materials. At least some of these would work in almost any situation.

Detailed Control Methods

Most of the detailed control methods that follow have some inventory management rationale built in, but it must be properly set-up and tuned for best use. Provide and implement control tools such as:

• Order on demand- Order only to fill customer orders. This is the most direct, intuitive method and tends to avoid excess inventory. It will only work if it can meet customers' lead time and cost expectations. It works best for custom ordering and when it will result in delivery service meeting customers' expectations.

In most cases, organizations must anticipate customer wishes to be successful. This often involves committing inventory in advance, to be able to deliver in time and to produce in economical quantities. So other techniques are often used, such as:

• Reorder point- Keep a certain amount available and on order to help ensure that it is available when needed, but not in excessive quantities.

• Min-max- This is a modified form of order point, with upper and lower limits established.

• Kanban- This is a more sophisticated type of reorder point. Instead of having a single order point, with a relatively large and lumpy order quantity, one replenishes a smaller quantity every time it is consumed. This method was popularized by its success at the Toyota Motor Company in Japan.

• MRP (Material Requirements Planning) - formalized in the 1950's by Dr. Joseph Orlicky, MRP uses a master schedule developed from a demand analysis of orders, forecast and production plans. It then considers available inventory, parts requirements calculated from the bill of materials, then factors in open purchase orders, lead times, logistical considerations, safety stock and other ordering rules, to develop a materials purchasing and factory schedule to meet planned and actual demand.

In current times, a company's MRP system is often a subset of its ERP (Enterprise Resource Planning) or Supply Chain Management System, which incorporates MRP as only one portion of an overall "Enterprise" level system. MRP is not always the most appropriate approach for all environments. In recent years, it has been modified successfully, by incorporating techniques of Kanban, JIT, Lean Manufacturing, Repetitive Scheduling, Theory of Constraints and others.

• DRP (Distribution Requirements Planning) — this is a specialized form of MRP, for distribution networks. It uses the same principles, but may also consider the dynamics of multi-level distribution networks, service level planning, cross-docking, shipment staging, truck loading, inventory deployment optimization and other considerations.

• Supply Chain Planning/Optimization- This is the next level of sophistication for MRP and DRP. It creates a model of the supply chain, which may include suppliers, manufacturing, various levels of distribution and even monitoring of inventory through one or more levels of customer ownership.

• Repetitive scheduling- Designed for continuous flow production.

• Process monitoring/control - Control of an ongoing, often continuous, process, usually by monitoring and controlling process parameters, such as raw material properties, desired attributes, temperature, pressure, speeds, viscosity, finish, byproducts, etc.

• Safety stock/safety lead time - Most of the above techniques might be enhanced by building in supply and demand buffers to allow for fluctuations/uncertainty of what will be needed and when and what supply will arrive and when. It can be done by adding on a fixed quantity or time coverage. The trouble with this approach is that people tend to make the wrong allowances, usually on the high side. This inflates inventory, may actually confuse priorities and use up needed capacity, by working on things not actually needed. The best approach is to try to reduce process variation for supply and demand, so that less safety stock is needed.

• Vendor-Managed Inventory - a form of delegation that is proving to be quite popular and sometimes very successful. One provides the supplier with demand and logistics data and makes him responsible for ensuring that the right quantities are available at the right time and place for you to meet demand. It needs cooperation, monitoring and common interests and objectives to be successful.

• Input/Output - Don't forget to implement the input-output method, described earlier as a tool to help make reductions.

Pitfalls of using control parameters

With the use of MRP, MRPII, ERP and now "Supply Chain Management " systems, there are more opportunities to improve inventory management, but also more chances to lose control! Unless there is a clearly stated Aggregate Inventory Management approach imbedded in the system, through education, training and parameters, yes- I said parameters!, you will likely fail.

War story from George Miller: "Years ago, I worked for a specialty niche MRPII/ERP company. After I left for the consulting world, a customer of that company called to inform me that the "software wasn't working" and summoned me to come and help them. After only a day on site, I told them that the problem was that the system was carrying out their instructions at the speed of light, spewing forth recommendations to acquire inventory, based on their unrealistic parameters. You see, most of these systems have various ‘gauges' and "levers," to set control parameters to tailor the operation of the system to the company, products and process. These might be set, for example, system-wide, but can usually be overridden at the business unit, plant, department, product line and/or part number level. Each level normally defaults down to the lower level, unless you override it.

"For example, they used unrealistically long process times in the item master planning records and had safety stock and scrap factors planned at multiple levels in the bill of material, "pyramiding" (increasing) demand calculations considerably. No surprise then, except to them, that they were well upon their way to doubling their inventory investment in record time, without significant benefits. The prescription was:

1.The management team to get personally involved in setting the system parameters.

2.Educate employees in inventory management concepts and train them in proper use of system tools.

3.Establish and monitor a special report to assess the effect of "order modifier" parameters, such as safety stock, scrap and attrition factors, order planning method, order quantity rules, order multiples, lead time, review time, inspection time."

Conclusion: Inventory can be systematically managed. It doesn't happen on its own. Needed is a rationale, a plan, education, training, organization, tools, policies, procedures and management willpower.

References:

1.APICS Dictionary, 7th Edition, APICS, Falls Church, VA

2.Production and Inventory Control, Second Edition, George W. Plossl, Prentice Hall, 1985 (originally 1967)

3.Production and Inventory Management, Second Edition, Fogarty, Blackstone, Hoffman, Southwestern Publishing, Cincinnati, Ohio, 1991

4.Inventory Reduction, George Miller, 1990.

5.IQR Manual, IQR International (Proprietary document), San Juan Capistrano, CA

Tags: time, micro sku, Stock-Keeping Unit, paul deis, apics dictionary, Inventory, Control

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Aggregate Inventory Management

DAILY RFID has recently unveiled HF (High Frequency) RFID Reader DL5510, specially designed for inventory tracking, with high identification rate of up to 50 pieces per second. It can help to improve efficiency of inventory management and reduce labor costs.

Integrated 13.56MHz RFID reader into RFID inventory management system, it would help to collect data from hundreds of items in few seconds, simplifying the inventory process. Since there is no need to make an inventory by individual scanning while keeping accurate counts of the inventory.

In addition to the fast tag processing speed up to 50pcs per second, the HF Reader provides long read range up to 40cm basing on a special HF RFID Antenna DL5510. With an advanced anti-collision algorithm, it enables entire trays of tagged items to be simultaneously scanned into RFID inventory tracking system, even when stacked in a pile.

This HF RFID Reader DL5510 can be used in variety inventory management applications, such as jewelry management, library management solutions and supply chain management, etc.

Please visit HF (High Frequency) RFID Reader for more information or contact our sales.

About DAILY RFID CO.,LIMITED

DAILY RFID CO.,LIMITED ( www.RFID-In-China.com ), which belongs to PAN Group Co., ltd, is the leading company focusing on the research and development of EPC & RFID technology in China.

DAILY RFID specialize in producing arguably the world's most extensive line of RFID Tag, RFID Label, Smart Card and RFID Reader, which are suitable for any vertical markets, and have obtained the National Integrated Circuit Card Register Certificate, IC Card Manufacture License and ISO9001 Quality Management System Certification. Also, we own a factory covering an area of 26,000 square meters.

Tags: Business Finance, quality management system, inventory management system, accurate counts, jewelry management

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High Frequency Rfid Reader for Rfid Inventory Management

Every company needs a good database design.  Anyone that has an online or traditional business will benefit from today’s integrated autoresponder inventory tracking software.  

The more business you do, the more you need accurate inventories.  But, even the small business owner benefits from having accurate information at his or her fingertips.  

Company newsletters are increasingly popular marketing tools.  Providing everyone that visits your website the option to sign up for your newsletter is a wonderful idea, but without an auto-responder, it is extremely time consuming.

Once you have your newsletters going out automatically, your business will start to grow.  You will receive more orders for whatever services or products your company provides.  There’s really no doubt about that.  Newsletters are very effective.

Your existing database may not be good enough to allow for this increase in business.  Customers are not going to wait around on back orders.  They want their items now and they can be very impatient, which is frustrating for your employees.

So, to keep everyone happy, you can take advantage of integrated autoresponder inventory tracking software, which will notify your employees when it is time to place an order.  Depending on the software that your vendors have installed, your system may be able to interact with theirs, making the orders without taking time from your employees.

You may have already implemented automatic shipments.  But, as your business grows, you can never be sure if the amount of merchandise that you have on hand will be sufficient to match your orders.  Hopefully, your vendors will be able to keep up with you as you grow.

Developing an online presence is an excellent way to grow your business.  But, it is not unusual for business owners to become overwhelmed as things “take off”.  Sometimes the number of orders received is simply unexpected.  

With autoresponder inventory tracking software, you won’t be taken by surprise.  You can set up the program to print out the number of orders received and the number of items on hand in a timely manner.  With this report, you can easily place the orders for the items that you need to replenish your stock.

An integrated database can also provide shopping cart technologies, which allow your customers to place their orders online.  If you have a shopping cart system, you really need autoresponder inventory tracking software, because orders can come in 24 hours a day.  Without the right program, your staffing needs could be astronomical.

A good database is essential for any business owner today.  Automating your system will save you money in the long run and time from the moment you go live.

Tags: company newsletters, tracking software, cart technologies, Software, time, business owners, business customers

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Autoresponder Mapped Into Database Tracking Software Improves Business Inventory Orders

Proper inventory reconciliation management is a very important area of concern as far as successful and efficient auditing and financial control is concerned. Many companies, business houses, organizations and commercial and financial institutions lack the necessary policies, procedures and training to ensure that their periodic financial statements accurately reflect the real picture. Outsourcing this mission-critical function is a wise option in this context.

Inventory management refers to the procedure of organization the stocks of finished products and supplies by a compact. Inventory management, if done accurately, can transport down expenses and increase the profits of a compact.

Not a substance what the business size it must administer many fixed assets, types of assets, quickly changing asset bases, many locations, and ever-changing tax laws and requirements. Fixed asset inventory software can also reduce encumber of fixed asset reduction calculations for financial and tax exposure, asset inventory tracking and reconciliation services, and private property tax filings.

Types of inventory management software:

QuickBooks Peachtree Sage Line 50 Quicken MYOB IRIS La Certe Pro Tax

Inventory software can create the assignment of fixed asset managing easier. Software such as this eliminates superfluous data entry, enhances accurateness, and reduces costs over handbook tracking of fixed assets. There is inventory software accessible from the essential system of normal bar codes to the more complicated long range asset management. Some business offer inventory software on the internet.

OBKS accounting are personnel conduct a systematic and consistent review of your inventory and fixed asset to ensure that the inventory value is correct and accurately represented within the accounting system. OBKS accounting services can maintain updated list and records of your organization's inventory reconciliation.

Tags: business size, fixed assets, Technology Internet

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Why Inventory Reconciliation Is Important?

Where do you start when you know you want to improve efficiencies, and you have heard about barcode and inventory management software, but there are so many choices on the market and the prices range all over the board? Read on for more insight to selecting the right inventory management software for your business environment.

Well, we have tested many of these and have some answers for you. Many businesses work with small inventories or just need to manage a tool crib or a supply room. For businesses like this we suggest very simple and inexpensive inventory management software that can run on a standalone PC or on a network. Tool cribs either manage a check-in check-out process or they manage inventory reorder points and levels of consumables. For the consumable type tool cribs, we suggest the RedBeam Inventory Management Software.

This product is great for many of the following applications:

o Tool Cribs

o Supply Rooms

o Law Offices - Document Management

o Laboratories

o Small to Medium Distributors

o And many more situations.

The Redbeam inventory management software will provide the user with Reporting that includes Reorder Points and forecasting, as well as quantities on hand and reports on usage by individual. RedBeam Inventory Tracking allows you to streamline the tracking of inventory levels and item movements in your warehouse, distribution center, stock room or store.

The RedBeam inventory tracking application comes in two versions, standard and mobile. The standard editions of the software allow for data collection using cabled barcode scanners attached to PC workstations. The mobile editions allow for data collection using cabled barcode scanners attached to PC workstations as well as the ability to collect data on scanner-enabled mobile computers. RedBeam Inventory Tracking supports Windows XP, Server 2003 and Vista.

The drawbacks to this program are that it is not customizable. The program stands on its own, using a Sequel Database. There can be custom programs written to make this program interface with a flat file upload. But other than that, you get what is in the package here. This is a great program at a great price.

If your applications require a more robust solution, our recommendation is the Intelitrack Inventory Management software that can meet many needs and can be customized to your personal needs. IntelliTrack provides affordable, easy to use inventory management software packages. Depending upon the size and complexity of your business, IntelliTrack has software that's the right fit. Intellitrack offers tailored modules such as WMS (Warehouse Management System) software and ISRP (Inventory, Shipping Receiving and Picking) software both with a standard application interface for easy integration with accounting software, or enterprise resource planning systems (ERP).

IntelliTrack will also custom make modules that will work within your system. The inventory management software is built on an open source platform and can be easily customized with extensions and modifications.

The drawback on this package is that it can be expensive to have the custom modifications performed. The overall cost here is still much less then a complete custom application build though. A complete custom project requires a dedicated programmer to dive into the code of your current system and then figure out matching code to develop from scratch a inventory management program that must be beta tested, de-bugged and then launched into production. Imaging the cost and time in this project.

Both of the off the shelf inventory management software programs can be downloaded in demo mode for testing, so give them a ride and see for yourself before making the purchase. It is well worth the effort.

Tags: Do You Need Inventory Management Software, Many businesses, standalone pc

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Do You Need Inventory Management Software?

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POS Software With Inventory Tracking Is Very Cost Effective