eKourier Oct 2014

FEATURES

For Error... (Part 3) Inaccurate inventory counts can also

held etc. and can vary between centres. The best way to reduce the amount of time spent taking a physical count is to make the physical inventory and every transaction every day as accurate as possible. While accuracy in physical counts assists in identifying demand, product-mix etc. the timeliness and frequency of physical counts can be even more important. Simply by increasing the frequency of counts, recent trends or changes are promptly recognised and appropriate actions can be taken. For example, slow and fast moving stocks, obsolete items, to discontinue/introduce a particular product line - knowing these in a few months can save thousands of dollars as opposed to identifying it a year later. Key decisions to make before conducting an Inventory Count: • Why are you counting your inventory? • What are you going to count? • When are you going to count? • Who is going to be doing the counting? We already have a good reason for counting our inventory. But this is a good time to consider other benefits to keeping track of our inventory, and the reasons for tracking it. • Asset Tracking and Valuation – It is important to know how much capital is tied up in inventory, where they are, when they were purchased, for how much, etc. This information facilitates decision making. • Insurance - If disaster strikes how quickly will we be able to account for all of our stock? And if we keep track of these, where are those records kept- on site or elsewhere? When we count our stock, ask the question - what would I want to know if everything was gone tomorrow? What would our insurance company want to know? Once the importance of physical counts is understood, proper counting procedures need to be established and documented for a well controlled count. Always remember that it takes no longer to take a good, accurate physical inventory than it does to take a sloppy, inaccurate physical inventory. And, the benefits are many. To be continued…

Based on the framework of Best Practices for merchandise articulated through Skillbuilder, it is important for centres/Team Members to identify and develop an inventory control system that works best for them. If Team Members can rely on the effectiveness of the system, they can save time. Instead of running to the floor or stock room to check on a product’s availability or performance they can rely on the system. Freeing up this time can result in improving controls and accuracy – and even more important – better customer service . An effective inventory control system reduces or eliminates any discrepancies/variances in stocks. However, what do we do when variances become a recurring feature during stock counts? The first reaction to any physical inventory count that results in variances outside an ‘acceptable range’ should be to increase the frequency of counts until the results fall into line. What is an acceptable range depends on a number of factors like total stock turnover, value of stock

lead to buying and business decisions made based on incorrect information which can have an even more adverse effect on sales, profits and lost customers. For example if the physical inventory count

of Medium Heavy Duty Boxes inaccurately shows stock levels as too low the centre may wrongly order unneeded merchandise. This can also work the other way if the inventory count indicates that the centre has too much inventory. In this case the centre may avoid placing additional orders and sales can be lost.

“Once a sceptic on the inaccuracies of KSS Inventory Control I am pleased to say I am now a convert. I have been motivated and have renewed confidence now. Regular articles from Sathish in our Kourier followed on from the informative presentations at Skillbuilder by both Sathish and Bill. They emphasised the attention and actions needed by Teams offering simple examples and suggestions on how we can contribute and the benefits. My conclusion is, what we think should be simple to control, really is simple to control. Order only what you should sell, but don’t run out of stock. (Historical sales & purchases and a bit of gut feel). Ensure we get what we paid for (count stock, enter it accurately and follow up damage claims). Sell merchandise in a tidy/orderly manner and double check what’s given, cross count it to the sales invoices and account for giveaways or transfers immediately. A discrepancy should only arise from either the delivery or sale. Don’t accept the error, go look for it. Trust me you will find it 99% of the time. An error is easier to locate in a weeks’ activity rather than the whole month. Count the stock regularly; it doesn’t take that long, (chunk it down if you have to) make it a goal to have zero discreps come month end. It works.” Steve Jansen

Sathish Gopinath Financial Controller

Kennards Kourier October 2014

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