Inventory

Inventory

• All the goods stored by a business before they are sold
• Inventory management: the process of buying and storing materials and products while controlling costs for ordering, shipping, handling, and storage

Storage

• A marketing function that refers to the holding of goods until they are sold
• Stored until orders are received by customers
• Storage is required when supply exceeds demand
• Costs involve: space, equipment and personnel
• Most products are stored in warehouses

Private Warehouses

• facility designed to meet specific needs of its owner
• For companies with high sales volume
• Costly to build and maintain

Public Warehouses

• Offer storage and handling facilities to any individual or company that will pay for its use
• Optional additional service include: shipment consolidation, receiving, unloading, inspecting, reshipping, order filling, and truck terminal operation services

Distribution Centers

• Warehouse designed to speed delivery of goods and to minimize storage costs
• Focus is on sorting and moving products (not storage)
• Reduce warehouse and inventory costs

Stock Handling

• Purchases of items and materials delivered to the warehouse, plant or store that are received, recorded and tracked

Stock Handling Steps

• Receive goods
• Check goods
• Mark goods
• Deliver goods

Receiving

• Facilities: receiving facilities may include loading docks, backrooms, warehouses, and distribution centers

Receiving Records

• Information recorded by businesses about the goods they receive
• Includes: receiving number, shipper information, name of the carrier, number of items delivered, condition of the goods, shipping charges, date received

Checking

• Checked to verify quantity and condition of the merchandise
• Checked for damaged goods
• Sorted and counted
• Electronically scanned and sent to an inventory management system

Marking Merchandise

• Marked with selling price and other information
• Most common method is marking price with a UPC (Universal Product Code)

Marking

• Source Marking: The seller or manufacturer marks the price before delivering the merchandise to the retailer
• Merchandise can be moved directly from receiving to the sales floor
• UPC is scanned at checkout and the price stored in the computer for the code is entered for the sale

Marking

• Price tickets are placed on the merchandise
• Include: gum labels, pin tickets, and swing tags
• Identifies the price of the merchandise, model and style number, color, size, fabrics, manufacturer's number, and lot numbers

Transferring Merchandise

• Retail: merchandise is moved to the sales floor
• Stock transfers of merchandise to other departments or other stores may occur

Just-In-Time Inventory

• An inventory system that controls the flow of parts and material into assembly and manufacturing plants
• Coordinates demand and supply
• Merchandise is delivered just before it is needed
• Computer link-ups tell suppliers when to deliver merchandise
• Must correctly anticipate demand

Inventory Systems

• Good systems balance the costs of inventory with the benefits of maintaining a large inventory
• Costs include: cost of stock items, storage, insurance, and taxes
• Inventory ties up working capital (opportunity cost)

Perpetual Inventory Systems

• An inventory system that tracks the number of items in inventory on a constant basis
• Tracks: new purchases, returns, and sales of current stock
• Can be collected manually by the employees or through computer-based system (point-of-sale terminal)

Physical Inventory System

• An inventory system where every so often, stock is visually inspected or actually counted to determine the quantity on hand

Inventory Count Methods

• Cycle Counts: a small portion of the inventory is physically counted each day by stock-keeping units so that the entire inventory is accounted for on a regular basis
• Stock-Keeping Units (SKU): unit or a group of related items in a unit control inventory system; the smallest unit used in inventory control

Stock Control

• Monitoring stock levels and investments in stock so that a business is run efficiently

Stock Control

• Unit Control: a method of stock control that measures the quantities of merchandise that handles during a period of time
• Dollar Control: the planning and monitoring of the total inventory investment that a business makes during a stated period of time

Stock List

• Basic Stock List: used for staple items that should always be in stock
• Model Stock List: used for fashionable or rapidly changing merchandise
• Never-out List: used for best-selling products that make up a large percentage of sales volume

Real-Time Inventory System

• An internet technology that connects applications, data, and users in real time