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...
