What are the goals of inventory management?

Objectives of inventory management system

• To provide undisturbed supply of production at minimalistic cost
• Provide an unperturbed supply of sales at minimum cost
• Provide uninterrupted customer service levels at a minimum cost

What is a good inventory management system?

• Has a good starting count
• Good implemented policies
• People who follow these policies
• An in-place system that tracks all activities in inventory
• Has units of measure
• Has short and distinct unit numbers
• Has good location names which are not ambiguous
• Has good location names which are well organised

Inventory management strategies

Just in time- The method involves companies to receive items as and when required instead of  maintaining inventories.

Materials requirement planning- The method involves scheduling delivery based on sales assumptions.

How can inventory buildups happen?

Inventory build ups can happen due to:

• Bad quality of inventory
• Production delays buildups

Some terms

Inventory in transit

Goods and materials which are with the transporter, but has the ownership of the firm

Inventory level

The amount of product that a business owns in stock

Inventory loading

Encouraging the purchase of inventory items by agents or retailers in an effort to avail the volume bonus or to maintain the agency's status

Inventory management information system

A database used for effective management of data which is required for effective warehouse inventory management

Inventory model

The mathematical formula or equation that helps in determining the economic order quantity and the frequency of ordering so that the services /products to customers keeps on getting supplied without getting delayed.

Inventory obsolescence

The condition in which the actual value of inventory on balance sheet gets deteriorated due to overstocking or demand shortage making the inventory unsaleable.

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Safety Guidelines For Effective Warehouse Management

Warehouse Management is an efficient process when some guidelines are followed by all working in a warehouse. Here are a few guidelines that help you with warehousing.

• ·         While handling sharp or pointed objects or materials, you ought to wear gloves.
• ·         One should not climb racks but use lifting devices or standard- approved ladders for elevated places.
• ·         One should keep clear of areas where fire-fighting devices, exits, electrical control panels or alarms are present.
• ·         While working in perilous places, approved eye protection should be used.
• ·         While working in areas that include harmful chemicals,  protective clothing and other defensive equipments should be used.
• ·         When not being used, the moving hand trolleys and trucks should be kept at their respective places and should be not kept in mid way prohibiting the passage unnecessarily.
• ·         Materials should be stored in a stable position.  
• ·         Nails and other sharp objects should be kept away from passages.
• ·         A minimum of 18 inches distance should be maintained from heads of sprinklers.
• ·         Chemical drums or other storage devices need to be checked regularly for leakage and heat. They should also be away from fire.
• ·         Round materials should be prevented from rolling by either tying them up or by choking them.
• ·         Long pipes, bars and other materials that are out of the racks or their storage places should be flagged.
• ·         Gas cylinders should be stored in a straight position and should be prevented from falling off.
• ·         Other flammable materials should be stored away from fire or excessive heat.
• ·         Packing materials when not in use should be thrown away immediately.
• ·         Use signs extravagantly wherever possible. For example signs of exit or of dangerous materials can be used.  

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What Is Inventory Management?

Inventory management is nothing but management of idle resources which have future economic value. These resources are idle but are categorised as usable.Inventory management also maintains a supply for a demand pattern for a given financial investment.

It also deals with defining optimum policies and processes for procurement. Inventory is a list of goods available with a company as a stock. Material management and its tracking are all what comprises inventory management. Inventory management is prevalent in both production as well as in the service industry.

Other facets of inventory management are as follows:

 Inventory balance reconciliation

·         Target setting

·         Actual and projected inventory status reporting

·         Refill procedures

·         Cycle counting support

·         Keeping a track of lots

·         ABC analysis- This kind of analysis includes segregating stock or inventory into three different categories- A, B and C. A means outstandingly important, B means average important while C means relatively unimportant. More attention should be given to A, less to B and more less to C category inventory.

Inventory is controlled to reduce the total cost of inventory. Varied costs involved are:

·         Cost of shortage

·         Cost of placing an order

·         Cost of holding the stock

Inventory is divided into one of the following categories as below:

·         Raw materials- They change their form and become finished goods.

·         Components- The only difference with a raw material and component is that the components are converted into finished goods in an assembly operation while raw materials are converted into finished goods in a manufacturing operation.

·         Maintenance, repair and operating inventories (MRO)- These include materials consumed by routine maintenance and repair of operating devices.

·         In-process goods - These are helpful in case of variations and are basically goods in the process of manufacturing but not yet converted into finished goods. 

·         Resale goods- Goods which are bought for the purpose of reselling.

·         Finished goods- Goods which are sold and delivered after getting manufactured from raw material state.

·         Construction goods- Goods which are used in the construction of buildings/bridges.

·         Hard/Soft Goods- These are categorized on the industry where there are used. For example in IT industry, soft goods will be web products and applications while hard goods will be computers and mice.

To know more about inventory management, call us at +91 8459136607 ; +91-9717771415 or e-mail at info@boundlessindia.comor visit us at http://www.boundlessindia.com.

All That You Wanted To Know About Supplier's Quality

What Is Meant By Supplier's Quality ?

Supplier's quality is the ability of a vendor to produce a quality product for its customer. This is achieved through an interactive relationship between a supplier and his/her customer. Supplier's quality is aimed to ensure the fitment of aproduct  according to a customer's requirement with minimum or no adjustment.

How to measure supplier's quality ?

There are certain metrics through which one can measure a supplier's quality.

·         Cost of quality - This metric measures the cost incurred by an organisation to manufacture a quality product. This cost is further divided into cost of bad quality and cost of good quality.

·         Percentage of compliant products - The metric pertains to products belonging to food and drinks, to defence and to pharmaceutical sector. The product produced should be compliant with government regulations. The metric refers to the percentage of products manufactured which are compliant with government guidelines.

·         Overall equipment effectiveness or OEE - The metric lists as to how often an asset should be available for manufacturing a product for a customer according to the specifications. Secondly, when an asset produces a product according to specifications of a customer, how close is the asset manufacturing to its theoretical maximum. Third, OEE measures the percentage of products produced within quality specifications.

OEE = Availability * Efficiency * Quality

·         New Product Introduction or NPI-  NPI is defined as a percentage of new products introduced in the market that affects time, quality and volume deadlines. Profit's growth depends on the introduction of new products in market as well as on how good a company hits NPI targets.

·         No shipment delays - A quality product should be produced but not at the expense of delayed shipment or delivery.

For more on supplier's quality measurement, call us at +91 8459136607 ; +91-9717771415 or e-mail at info@boundlessindia.comor visit us at http://www.boundlessindia.com.

About Supply Chain Management

What Is Supply Chain Management ?

Supply chain is nothing but effective management of flow of goods and services. The process involves storage and movement of raw materials, inventory and finished goods from source to destination.

It may also be defined as the process which includes designing, planning, execution, control and monitoring of supply chain activities.

Objectives of Supply chain management process

·         Measures performance globally

·         Balance demand and supply

·         Logistic management

·         Helps build effective infrastructure

·         Above all, creates net worth for a business

What Is Reverse Supply Process ?

Reverse supply process is the process of management of the return of goods. This is initiated from where the goods were delivered. It is in sync with the reverse logistics process which is the procedure of returning the goods back to inventory or warehouse. Returned goods are sent back to the vendor from where they were brought for replacement purposes or are scrapped.

What Are Supply Chain Centroids ?

Supply chain centroid is an area where a high proportion of the human population exists. It is also where a high proportion of a company's manufacturing exists generally within 805 km. of distance.

What Are The Components Of Supply Chain Management ?

·         Leadership structure and power

·         Reward structure

·         Attitude

·         Culture

·         Risk structure

·         Management Methods

·         Information flow facility structure

·         Organisation Structure

·         Work Structure

·         Product flow facility structure

For more on supply chain management, call us at +91 8459136607 ; +91-9717771415 or e-mail at info@boundlessindia.com or visit us at http://www.boundlessindia.com.

General Ledger Accounting

What is a General Ledger

A general ledger (GL)  is a record that keeps track of a business' transactions.All transactions relate to a company's assets, its liabilities, expenses, revenues and owner's equity. It contains both financial and non-financial data for a company. In ERP systems, GL is a database of all modules such as accounts receivables, accounts payable, cash management, procurement, projects and fixed assets.

GL is divided into two segments ie debits and credits.

Debit is recorded on the left hand side of the ledger while credit on the right hand side. A rise in an asset or its account is debit while a rise in a liability or its account is credit. Also a decline to an asset account is credit while a decline in liability is debit. Further a decline in income is debit while a decline in expense is credit. Also a rise in income is credit while a rise in expense is debit. A rise in equity is credit while a decline in equity is debit.

If an account is debited then another is credited in an effort to keep both sides equal, thereby keeping the GL balanced.If GL is not balanced on both sides then it means, an error has occurred.It can also be said that the difference between the total credits and the total debits in a single account is the account's balance.If debits surpass credits then it is said that it is a debit balance but if credits exceed debits then it is said that it is a credit balance.

GL is based on the formula :Assets=liabilities + Shareholder's equity

The ledger should comprise balance for each account, a description associated with it and a date. Segregated into seven segments, it consists of assets, liabilities, revenue, expenses, profit and losses and owner's equity.

In large entities, GL can be quite lengthy and can take several hours to be  prepared.

General Ledger terminology is nothing but accounting using general ledgers for a business.For more on general ledgers, call us at +91 8459136607 ; +91-9717771415 or e-mail at info@boundlessindia.comor visit us at http://www.boundlessindia.com

ReconcilationOf General Ledgers

What are general ledgers ?

General ledgers are records that contains all transactions of a business relating to the firm's revenues, expenses, assets, liabilities and the shareholder's equity. General ledger or GL is divided into two categories ie debits and credits. It contains both financial as well as non-financial data.

How to reconcile general ledgers ?

Reconciliations are comparisons between two separate reports or documentations. The process is performed to minimise errors. It means reconciliationof accounts such as accounts payable and cash.
The process is nothing but a business' internal controlling mechanism that identifies mistakes and errors.Theprocess make a business' financial statements accurate.

Follow steps below to perform reconciliation of general ledgers.

• The first step towards reconciliation is to be familiar with all balance sheet accounts. Businesses reconcileon a monthly basis, all balance sheet general ledger accounts such as fixed assets, accounts payable, receivable, cash, investments and inventories. In banks, cash and investments are reconciled to bank and a brokerage company's statements. In inventory, an inventory count and valuation can be performed at least once every year.

• It is imperative to know your revenue statement general ledger accounts. Businesses reconcile their income statement accounts like for example they compare the internal payroll expenses each quarter or each year with external payroll statements. Businesses also reconcile other expenses such as rent and other bills by comparing actual bills with ledger amounts.

• The next step is to run a trial balance statement or a balance sheet report to ensure that your general ledger is balanced out. At times, out-of-journal entries are noted unknowingly due to a system error or by a human error. Systems often enable you to identify out-of-balance transactions while some systems will allow you to export the journal entries to excel and further will allow you to analyse errors in excel.

For more on general ledgers, call us at +91 8459136607 ; +91-9717771415 or e-mail at info@boundlessindia.comor visit us at http://www.boundlessindia.com