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01-05-2014, 08:19 PM
Top 7 Steps to Turn Inventory into Cash

What both you and your business need that you may have been generating because you don't have the money today? Let's begin together with the biggest, most evident source your balance sheet, specifically inventory. As a manufacturer with $300,000 or ナイキ エアジョーダン (http://bcalmpoweryoga.com/Images/aj.html) a greater portion of inventory (garbage, work within process or finished goods) then STOP! We found it. Why? Because inventory will be an unproductive asset. Inventory is money, inside them for hours it already there your factory shouldn't be where your income belongs. So if we reduce inventory to JustInTime (JIT) levels, then we can eliminate 85% if not more of the inventory, which can mean $250,000 in cash. That's don't assume all. Additionally, you'll save another $50,000 or longer in annual inventory carrying costs. With less inventory, one can find lower costs of holding inventory. Below are a few ways to reduce inventory and increase cash.

Increase Demand Forecasting Accuracy. We just need enough inventory to get to know demand, that is where part of the problem exists. If demand cannot be accurately forecasted, will we find themselves compensating for this purpose unknown with inventory.

Increase Manufacturing Cycle Efficiency. Just how well manufacturing resources are utilized to build a product determines the cycle efficiency. Defective product, product rework, and long lags between manufacturing cells cause inefficiency, which are often easily calculated. Coal could be become finished goods as soon as possible. The pace the point at which this happens defines your manufacturing cycle efficiency.

Increase Logistics Turns. Improving the quantity of times purchases are intended may increase acquisition costs and unit costs owing to smaller order quantities. But you will benefit by improving your net income and eliminating the carrying cost of the inventory (warehousing, material handling, taxes, insurance, depreciation, interest and obsolescence totaling 25% to http://www.quickval.com/images/uggs.html 35%).

Eliminate safety stock. Safety stock is very basically a buffer for forecasting variance and supplier delivery time. Although levels are positioned arbitrarily in automated MRP systems, your safety stock levels must be reduced on account of improvements most desirable forecasting accuracy, manufacturing cycle efficiency and allow chain turns.

Reduce purchasing errors. This could reduce overstocking and, more importantly, minimize stock outs that induce expensive expedited http://bcalmpoweryoga.com/Images/nb.html purchases. Sell excess and obsolete inventory or put it back to the vendor.

Eliminate delivery variance. Do not let vendors to send earlier or later make certain the delivered quantity is not going to range between the order quantity. After all, delivery errors increase the risk for must carry more inventory. Instead, provide suppliers with forecasts of future needs.

Train purchasing personnel. Provide your purchasing and material management personnel with formal training. This should arm using better negotiating skills that may trigger better prices and terms.