Recently we met a prospect, who is into manufacturing of OEM items.  He was looking for an ERP solution on could that helps him to streamline his process. This is a 40+ yrs old company and at one stage enjoyed a profit margin of 25%. A discussion with company’s Director explained the challenges that he is facing.

Today’s Business owners are pressurized from both Customer, who wants to pay less price and office & other expenses that are increasing. In summary, the profit margin is squeezed to a level they can’t manage any more. Earlier profit margins of 20%+ is no more available and they work with 4% to 8% at maximum.

Most of the business people focus more on Sales and marketing as a tool to expand the business and gain a financial control. In a hurry to achieve this, they miss what’s infront of them that’s the first thing to control and that’s easy to begin with.

Yes, Inventory or Stocks – a liquid cash that’s been wasted. Managing the stocks and its cost is very crucial element for the business success.

There are multiple factors that affect the Cost of Finished goods

  1. Price of Raw materials
  2. Production costs (Labor, Machine costs)
  3. Inventory holding cost (few cases this could be added as an Overhead cost too)

What is interesting is “Inventory holding cost”, because many business owners don’t realise this until they have an excess stock or inventory, out of date quality and piled up with items that can’t sold.

At the same time holding too little stock can give your clients motivation to shop somewhere else or situation will cost your business investment.

To effectively maintain stock to build your benefits requires making the adjustment of recognizing what to keep, how much to keep, what’s moving and so forth, Preparing for your future needs and acting admirably upon them.

Here are a few rules that could help you deal with your stock management:

  1. Analyzing Supply Demand Tendency: Look at all the Sales and Purchase patterns to understand the regular movements of inventory. Products can then be requested or made to meet surges and cutting in inventory request.

 

  1. Master techniques to gain better control on your inventory systems: Make a stock or inventory control system and method to enhance and keep up consistency and effectiveness of stocks that will help decrease costs and enhance benefits.

 

  1. Strategies to improve business productivity ­: Distinguish the stock or inventory that moves frequently. Effective stock inventory can show you about what entirely help you take out and what doesn’t for moderate moving or dead stock inventory.

 

  1. Use Material Requirement Planning (MRP) software that could help you with managing changes that happen during the production, purchase, etc. However this requires a lot of work to set them right as you need to know the Purchase Lead times, Quality Check Lead times, etc.

A well efficient inventory management system is the only key to balance a business’ profit margins over a period of time.

AcTouch Technologies is a start up company based in Singapore with its development centre at Bangalore, India. We focus on SMEs with our cloud ERP solutions. Today many SMEs of USD 100K to 10 Million are depending on us Company Founders have Management and Engineering degrees from prestigious colleges like INSEAD Business School France, NUS Singapore, BITS Pilani etc. Prior to starting this company, Founders have worked for 20+ years in large MNCs & Indian IT Big companies (Infosys Technologies, Misys, Thomson Reuters etc) and managed multi-million dollars of Software business heading APAC Regions.

11 Comments
  • 98Carina says:

    I must say you have hi quality articles here.
    Your blog should go viral. You need initial boost only.

    How to get it? Search for; Etorofer’s strategies

    February 24, 2017 at 2:32 pm
  • There’s certainly a great deal to know about this subject.

    I really like all the points you’ve made.

    March 2, 2017 at 9:14 pm
  • Elidia says:

    You actually make it seem so easy with your presentation but I find this matter to be actually something that I think I would never understand. It seems too complicated and very broad for me. I’m looking forward for your next post, I will try to get the hang of it!

    March 4, 2017 at 8:19 am
    • Sure. thanks Soon will be back with some exciting blog or article.
      Please read and comment us.

      March 9, 2017 at 7:35 am
  • Damien says:

    You have got an excellent weblog here! would you like to create some invite posts on my blog?

    March 5, 2017 at 9:39 am

Leave a Reply to Actouch Technologies Cancel reply

*
*