MANAGEMENT + SYSTEMS
bottom half of the hits ranking report are sold fewer than 10 times per year. This usually results in a shaking of the client’s head and a slow, steely glare in the direction of the purchasing manager. After a few tense moments, I remind them of the opportunity. Now we know where to look. In the hits report, the final column is “number of months on hand”. This is where I want us to zero in on. Is there any
“ Hunting for cash in your stocking inventory is all about choosing the right tool for the job.”
reason we should have more than 12 months of inventory on hand? I can’t think of too many. Remember the golden rule about stocking inventory - more bad things, than good things, happen to anything we bring into stock. The one good thing that happens is we sell it. On the bad side: it leaves the building
without documentation, we damage it, we lose it, it becomes obsolete, etc. Think of all the bad things we can do in a year. Use the “months on hand” column to look for stocking levels to lean out. This will generally require a change in your inventory replenishment parameters.
Choosing the right scope Hunting for cash in your stocking inventory is all about
choosing the right tool for the job. I am often surprised that more distributors don’t analyse product movement the way I have described. Your distribution software is a very powerful tool. Some of us just stop at the ordering, buying and invoicing functions. There is a whole lot more under the hood. Take some time and learn how to extract the data your system collects on a daily basis. You will be bagging the big game in no time. Good luck with the hunt and please let me know if I can help get you started.
Jason Bader is the managing partner of the The Distribution Team. His firm specialises in helping privately held distributors become more profitable through operating efficiencies. He is a regular speaker at several distribution industry events. He can be reached via email at email@example.com or online at www.thedistributionteam.com
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