by Jon Schreibfeder | Jan 15, 2018 | General
It’s 2018. Make this the year your organization achieves the goal of effective inventory management. That is, to meet or exceed your customers’ expectations of product availability with the amount of each stocked item that will maximize your organization’s...
by Jon Schreibfeder | Dec 15, 2017 | Stocking Decisions
I worked with a distributor last week that had over 100 locations selling directly to end users. Despite the fact that over 35% of the distributor’s inventory (based on value) was in excess of a one-year supply and that most locations were experiencing frequent stock...
by Jon Schreibfeder | Nov 15, 2017 | Stocking Decisions
Last month, we discussed safety stock as a necessary cost of doing business. It is required to help you prevent stockouts. But this insurance is expensive. We don’t want to provide a specific item with more safety stock than it needs. The deviation method of...
by Jon Schreibfeder | Oct 15, 2017 | Stocking Decisions
Safety stock provides protection against stock outs due to unexpected demand for a product or delays in receiving a replenishment shipment from a supplier. It is insurance. Like most other types of insurance, it is an expense and there is no “right” or optimum...
by Jon Schreibfeder | Sep 15, 2017 | General
Many organizations assess profitability by calculating the gross margin of products. Gross margins are calculated with the formula: Annual Profit Dollars ÷ Annual Sales Dollars The problem with this metric is that the amount of inventory maintained in stock is not...
by Jon Schreibfeder | Aug 15, 2017 | Purchasing
A vendor’s quoted price of an item is commonly referred to as the “replacement cost”. Many organizations make the mistake of basing their purchasing decisions and profitability analysis on this amount. But, in many cases, other costs are incurred when buying a...
by Jon Schreibfeder | Jul 15, 2017 | Replenishment Parameters
When you replenish the stock of an item, you must decide how much you should order. Many computer systems utilize the economic order quantity (EOQ) formula in helping to make this decision. The formula was originally developed by Ford W. Harris in 1913. Since that...
by Jon Schreibfeder | Jun 15, 2017 | Technology
On an average workday, I receive five to 10 emails advertising a new technology. Each of these “revolutionary advances” promises to: Lower operating costs Increase sales Improve profitability How do you decide which of these opportunities is a worthwhile investment? ...
by Jon Schreibfeder | May 17, 2017 | Forecasting
Maintaining a high level of customer service is primarily dependent on when you reorder a product. For example, let’s say you sell two pieces of a product per day, and the item has a seven-day lead time. That is, it takes seven days to receive a product once it has...
by Jon Schreibfeder | Apr 15, 2017 | Forecasting, Stocking Decisions
What Affects Forecasts Other Than Past Usage Most computers systems calculate forecasts of future demand based on past sales or usage. The theory is that what you sold or used in the past is a good indication of what you will sell or use in the future. But there are...
