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Answer Upon - Inventory Reduction Frequently Asked Questions
In the fast-paced corporate environment change management is something that occurs even faster than it ever has before and this is why you corporate executives need to understand change management better. Too often we find in corporate organizations a loss of efficiency when one team member is moved to another department or fired.But just like any sports team one member does not make the team, nor does two. If you are involved in corporate management shakeups or change management you may witness the streamlining and deficiencies go out the window. But that does not mean that you should allow it to affect your judgment or allow fear to rule your day.Change is a good day and change management can lead to new opportunities and innovations in a somewhat otherwise stodgy organization. Organizational
Inventory reduction challenges the constraints to ensure that the result is an improvement to ‘what could be’, not just a recalculation of ‘what is’.
4. Why can’t we just use an inventory optimization program and gain those improvements?
Of course many companies will gain a benefit from using an inventory optimization program, however, the real issues are: is the benefit maximized, and is it sustainable?
On its own an inventory optimizat
A customer service rep is employed by different types of companies throughout the country and serves as a direct contact to customers. They are responsible for ensuring that customers receive an adequate level of help when it comes to questions and concerns.All client service delegates interact with clients to supply information in response to inquiries about anything from products to services and to handle and resolve complaints. These complaints can be handled through various means:* telephone * e-mail * regular mail * fax * in personSome customer service representatives handle general questions and complaints, whereas other delegates specialize in a particular area. Inquiries mostly involve routine questions and requests, for example representatives may be asked to p
Inventory management is the activity which ensures the availability of the inventory items in order to be able to service customers. In an MRO environment the customer will be the maintenance and production department; in a finished goods environment the customer is the external customer. Inventory management involves the coordination of purchasing, manufacturing and demand to ensure the required availability.
Inventory reduction is the activity that minimizes the cash investment in inventory while maintaining the availability promise of inventory management. Inventory reduction focuses on identifying those items where the inventory holding is in excess, given the current actual demand and supply characteristics, and then works to reduce the cash investment in these items. This means that a significant cash release can be achieved with no change in the inventory risk profile.
2. How does the different focus of inventory management and inventory reduction impact the outcome?
Because inventory management aims to ensure availability, the focus is primarily on eliminating stock outs, where the availability promise is not met.
Inventory reduction focuses on cash and eliminating any unnecessary investment in inventory with no change in the inventory risk profile. The logic is this: any stock out triggers an action to restock and to typically overstock in order to avoid a future stock out. Therefore, opportunities exist for inventory reduction that will not increase risk. Where the inventory is already overstocked there is no trigger to take action, hence a specific program of activity is required.
Eventually, inventory management must lead to an over investment of cash in inventory as people seek to eliminate stock outs, whereas, inventory reduction results in a minimized investment of cash while maintaining the availability promise.
3. What is the difference between inventory optimization and inventory reduction?
Inventory optimization uses the existing constraints to calculate the required level of inventory for a desired level of availability.
Inventory reduction challenges the constraints to ensure that the result is an improvement to ‘what could be’, not just a recalculation of ‘what is’.
4. Why can’t we just use an inventory optimization program and gain those improvements?
Of course many companies will gain a benefit from using an inventory optimization program, however, the real issues are: is the benefit maximized, and is it sustainable?
On its own an inventory optimizati
I loved the old gal, but every good relationship has to come to an end. We had been together almost 20 years, but it was time to move on. When we first met, she had been perfect. She had a great foundation with classic lines, sturdy, yet inviting, friendly, and warm. She provided every comfort a man could want. Sure, we had been through many changes and she had only improved with age. Even though everything around us morphed and grew, we always had each other. I offered new fashions to dress her up and the latest, state-of-the-art gifts, which she easily absorbed and included in our routine. But I was aging.It wasn’t her fault. We were growing apart because of it. No longer could I easily reach the upper limits of her structure. My legs were failing and my health diminished. She could appear more youth
2. How does the different focus of inventory management and inventory reduction impact the outcome?
Because inventory management aims to ensure availability, the focus is primarily on eliminating stock outs, where the availability promise is not met.
Inventory reduction focuses on cash and eliminating any unnecessary investment in inventory with no change in the inventory risk profile. The logic is this: any stock out triggers an action to restock and to typically overstock in order to avoid a future stock out. Therefore, opportunities exist for inventory reduction that will not increase risk. Where the inventory is already overstocked there is no trigger to take action, hence a specific program of activity is required.
Eventually, inventory management must lead to an over investment of cash in inventory as people seek to eliminate stock outs, whereas, inventory reduction results in a minimized investment of cash while maintaining the availability promise.
3. What is the difference between inventory optimization and inventory reduction?
Inventory optimization uses the existing constraints to calculate the required level of inventory for a desired level of availability.
Inventory reduction challenges the constraints to ensure that the result is an improvement to ‘what could be’, not just a recalculation of ‘what is’.
4. Why can’t we just use an inventory optimization program and gain those improvements?
Of course many companies will gain a benefit from using an inventory optimization program, however, the real issues are: is the benefit maximized, and is it sustainable?
On its own an inventory optimizat
As a small business owner, at some point in time, you will most likely decide to hire your first salesperson. This process can be exciting and rewarding but only when the proper planning is completed. It is important to keep in mind the old saying; proper planning prevents poor performance. This new sales department needs a plan for performance. Listed is a performance process you want to have predetermined and in place before you hire your new superstar.1. Hire a recruiter first.Recruiters may cost a few thousand dollars or so, but a good recruiter will save you that plus tens of thousands of dollars or more that it would cost you if you hired the wrong candidate. Not only do recruiters take the time screening candidates and finding you the best performers but a good recruiter will help find you
Because inventory management aims to ensure availability, the focus is primarily on eliminating stock outs, where the availability promise is not met.
Inventory reduction focuses on cash and eliminating any unnecessary investment in inventory with no change in the inventory risk profile. The logic is this: any stock out triggers an action to restock and to typically overstock in order to avoid a future stock out. Therefore, opportunities exist for inventory reduction that will not increase risk. Where the inventory is already overstocked there is no trigger to take action, hence a specific program of activity is required.
Eventually, inventory management must lead to an over investment of cash in inventory as people seek to eliminate stock outs, whereas, inventory reduction results in a minimized investment of cash while maintaining the availability promise.
3. What is the difference between inventory optimization and inventory reduction?
Inventory optimization uses the existing constraints to calculate the required level of inventory for a desired level of availability.
Inventory reduction challenges the constraints to ensure that the result is an improvement to ‘what could be’, not just a recalculation of ‘what is’.
4. Why can’t we just use an inventory optimization program and gain those improvements?
Of course many companies will gain a benefit from using an inventory optimization program, however, the real issues are: is the benefit maximized, and is it sustainable?
On its own an inventory optimizat
Characteristics of DepreciationDepreciation has the following characteristics:(1) Depreciation is charged in case of fixed assets only, e.g., Building, Plant and Machinery, Furniture 'etc. There is no question of depreciation in case of current assets-such as Stock, Debtors, Bills Receivable etc.(2) Depreciation causes perpetual, gradual and continuous fall in the value of asset(3) Depreciation occurs till the last day of the estimated working life of asset(4) Depreciation occurs on account of use of asset In certain cases, however, depreciation may occur even if the assets are not used, e.g., Leasehold Property, Patent right, Copyright etc.(5) Depreciation is a charge against revenue of an accounting period.(6) Depreciation does not depend on f
Eventually, inventory management must lead to an over investment of cash in inventory as people seek to eliminate stock outs, whereas, inventory reduction results in a minimized investment of cash while maintaining the availability promise.
3. What is the difference between inventory optimization and inventory reduction?
Inventory optimization uses the existing constraints to calculate the required level of inventory for a desired level of availability.
Inventory reduction challenges the constraints to ensure that the result is an improvement to ‘what could be’, not just a recalculation of ‘what is’.
4. Why can’t we just use an inventory optimization program and gain those improvements?
Of course many companies will gain a benefit from using an inventory optimization program, however, the real issues are: is the benefit maximized, and is it sustainable?
On its own an inventory optimizat
Psychologists put four monkeys into a cage. In the cage, they erected a pole with a platform on top of it. They put a huge bunch of tantalizing, ripe, yellow bananas on the platform. Soon the monkeys smelt the bananas and eagerly started to climb nimbly up the pole to get at them. Immediately, the psychologists started squirting the monkeys with strong jets of icy cold water from fire hoses. They did this every time the monkeys tried to get to the bananas, and, naturally, soon the monkeys gave up trying. They sat around getting hungry. Then the psychologists removed one of the monkeys and replaced him with a new monkey who had never experienced the wrath of the fire hoses. Soon the enticing aroma of bananas assailed nostrils and he started climbing up the pole towards them.What do you think the other
Inventory reduction challenges the constraints to ensure that the result is an improvement to ‘what could be’, not just a recalculation of ‘what is’.
4. Why can’t we just use an inventory optimization program and gain those improvements?
Of course many companies will gain a benefit from using an inventory optimization program, however, the real issues are: is the benefit maximized, and is it sustainable?
On its own an inventory optimization program cannot achieve the same level of benefit as an inventory reduction program. This is because optimization programs just calculate the ‘what is’ and so only optimize an element of the total equation. Inventory reduction works on the ‘what could be’ and so minimizes the whole inventory investment.
With respect to sustainability, the ongoing achievement of a minimized inventory results from a change in the policies, procedures, measures and reporting that drive the inventory result. Optimization programs are calculation tools that don’t address these issues. An inventory reduction program ensures that all the relevant members of your team understand the impact of their decisions on inventory outcomes and sets up the policies, procedures, measures and reporting to ensure a sustainable result. Fundamentally, optimization is a tool that may be used in an inventory reduction program. In fact, if you use (or sell) an optimization program you should invest in our inventory reduction system to gain the long term impact!
5. There are lots of optimization programs but only one inventory reduction system, surely if your process was better, everyone would copy it?
Inventory optimization programs are very popular and have been around for many years but as mentioned above they are limited in their application. At Initiate Action we were the first to specifically identify the ‘7 Actions for Inventory Reduction’ and to promote the requirement that sustainable results need a change in culture.
Optimization is based on maths and statistics and because of this it is easy to package it as a simple software program. Our inventory reduction system is both a training and action program that educates your team and creates the culture change required to ensure that the inventory reduction is sustainable. Optimization alone does not provide the basis for the changes in inventory management that prevent the inventory increasing again. People are trying to copy the system – but why bother when you can license it!
6. So, what are the specific differences between a typical inventory optimization program and a
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