For most manufacturing and distribution companies, inventory represents an important current asset. Indeed, for many of these companies, inventories are the most important part of total assets. Because of this, how a company manages its inventory has significant effects on cash flow as well as profitability.
On one hand, inventory represents money that does not earn a return. In fact, it costs money to maintain inventories. They must be stored, moved, insured, records kept, be protected from theft, devalued, or written off as obsolete. However, not maintaining inventory has its costs: cost of stock outs, cost of adjusting production, cost of producing large amounts of small orders, and costs of inefficient plant operations.
At Sisterson, our team of inventory specialists, with many years of inventory management experience in manufacturing and distribution industries, can bring its unique talent to you in helping your organization optimize inventory through practical and effective approaches, such as:
- Recommend and implement economic order quantity decision models to determine the optimal amount of inventory to order.
- We will complete inventory turnover analysis and compare your company’s results to prior periods and also to industry standards then make recommendations for improvements.
- Complete an in-depth analysis of your company’s inventory process cycle and recommend computerized inventory techniques that minimize the cash required maintaining inventory.
- Recommend and implement inventory techniques that may eliminate maintaining raw material inventory.
- Examine and recommend changes to the company’s production processes with a goal of zero defects to eliminate waste and reduce inventory levels.
- Apply ABC analysis - implement controls for those inventory items that represent a large percentage of total inventory value.
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