 INVENTORY AID: Janie Panasis runs an upscale ladies clothing boutique, Janie's Indian River Bazaar, in New Smyrna Beach. The store carries about 4,000 designer items. For less than $5,000, Panasis purchased a retail inventory management package from Microsoft Business Solutions and upgraded her equipment. She says the move cut the time it takes her to prepare shipments of new merchandise for sale. "With a manual system, we were actually handwriting price tags." |
Managing inventory is critical for retailers, wholesalers and manufacturers, among others. "Business is about maximizing resources," says Steve Klein, a CPA with Gerson, Preston, Robinson & Co. in Miami Beach. He adds, "If something is sitting on the shelf too long, it's costing you space."
? Tap information sources. Whether you use point-of-sale terminals that generate immediate information, a sales stub to later record purchases or even a simple visual control system, inventory should be monitored continuously.
? Time purchases carefully. A manufacturing business must make sure that parts are on hand to meet production deadlines. Retailers must have enough merchandise to satisfy customer needs without overbuying inventory.
? Inspect for damage and accuracy. Before moving items from the receiving area, check all shipments for damage and be sure orders are correct.
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BY THE NUMBERS
Inventory Turnover
An important indicator of a business' success is how many times it sells its inventory in a year, a term called annual total inventory turnover. Every industry turns its inventory at a different rate, so it is important not to compare businesses in different industries. Even within an industry, it is most valuable to look at the annual trend in a business's inventory turn rate rather than one specific year.
Here's the formula Current year's cost of goods sold (found on the income statement) DIVIDED BY ... EQUALS ... |
Example Cost of goods sold DIVIDED BY ... EQUAls ... |
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RFID Made Easy
rfidjournal.com
The future of inventory management is likely to revolve around radio frequency identifi cation (RFID) tags that let businesses electronically track shipments. For a guide to getting started, case studies and the latest news, check out this site from the online version of RFID Journal.
SOFTWARE
QuickBooks Point of Sale
Maker: Intuit
Cost: Starts at $799
Point of Sale
Maker: Microsoft
Cost: Starts at $799
Retail Management System
Maker: Microsoft
Cost: Starts at $1,190