Wednesday, August 24, 2016

How a $10 Billion Manufacturer turn their Unprofitable Inventory into Profits




GPS Customer Case Study: 
 
How a $10 Billion Manufacturer turn their Unprofitable Inventory into Profits

A $10 billion industrial equipment manufacturer recognized they had an inventory problem:  Too much inventory!  Finance launched an urgent initiative to reduce inventory.

Sales & Customer Service pleaded their case and demanded they maintain the entire inventory, especially service parts, as it was necessary to providing immediate support for their products in the field and customer satisfaction. They believed this justified the buildup of their overall inventory, the increased need for warehouse space, and their skyrocketed overhead costs, which all tied up their valuable working capital.

An analysis of the inventory identified a significant amount of excess and slow moving parts that had sporadic, unpredictable usage but its carrying costs outweighed any future sales or cost benefits.  These slow moving parts were also dragging down their very important overall inventory turns.

One of their previous reduction solutions was to sell it on the surplus market which still left them with a lot of residue.  Items sold into the surplus market at cost or below often ended up competing against them, or even worse, their customers!  They also found items were showing up in their customer returns for full credit. 

Their other option was to send the slow moving inventory to the scrap yard but this only provided a short term result. Besides, it was a painstaking effort to determine what to scrap and what to keep. Often within days of disposing of the inventory they ended up having a customer demand. This demand forced them to repurchase the items, usually at higher prices, with long lead times and minimum order requirements which created more slow moving inventory.

GPS Inventory Solutions was called in to help organize and optimize their inventory reduction initiatives.  Our profit driven GPS Inventory Bank programs offered them cost effective solutions that reduced or eliminated their overhead and inventory costs and had a positive impact on profits and shareholder value. 

Additionally, they retained immediate availability of the items so they could continue to provide a high level of product support to their customers.

Over a four year period of time by using the GPS Inventory Bank Program our customer:


  • Reduced their inventory by $24 million and avoided over $21 million in inventory carrying costs
  • Retained availability to satisfy 5,576 customer line item demands amounting to $5 million (at cost) of inventory activity for profitable customer sales 
  • Protected their brand and market integrity
  • Provided immediate item availability for long term product support
  • Freed up valuable warehouse locations and working capital
  • Improved workforce efficiency
  • Improved cash flows
  • Increased profits and shareholder value

Now that our customer has a proven cost effective exit strategy in place for their entire excess and slow moving inventory, they are no longer spending countless hours and multiple meetings trying to decide what to do every year.  Today they can use these resources to better focus on managing their profitable active inventory or other corporate initiatives.


For more information or to schedule a presentation to learn more about how our proven Profit Driven Inventory programs can work for your company, please contact us at (800) 896-0477 or email programs@gpsinventorysolutions.com.

GPS Inventory Solutions, Inc.

Email: programs@gpsinventorysolutions.com 
Website:  www.gpsinventorysolutions.com 
Toll-Free: (800) 896-0477




About us: 
 
GPS Inventory Solutions has been an innovative leader in managing slow moving inventory for manufacturers in a variety of industries for over 30 years.  Our goal is to significantly reduce or completely eliminate your costs of carrying excess and slow moving inventory without impacting your customer service, sales or profits.  GPS headquarters are located in the Dallas/Ft. Worth area with additional locations in the Nashville, TN area.


Too Much Inventory – Not Enough Space

GPS CUSTOMER CASE STUDY: 

Too Much Inventory – Not Enough Space 


A manufacturer of large industrial machinery was running out of room to store all of its production and service parts.  They had already established an exit strategy for their excess and slow moving parts by using one of the GPS Inventory Bank programs.  This created some much needed space and cost savings.

However, they were at the point of having to add another building to their footprint along with all of the additional costs. During their analysis of their inventory, a large batch of parts were identified that had slow unpredictable movement but they had not yet met the threshold to be completely reserved and scrapped.  One option considered was to move these items to a local 3PL warehouse to be stored and managed. They reached out to GPS Inventory Solutions for other options.

GPS presented its 3.5 Inventory Bank program as a solution that allowed this manufacturer to retain ownership of the inventory but move it to GPS facilities for storage and distribution.

How the GPS 3.5 Inventory Bank works for slower moving inventory:

  • OEM retains ownership of inventory -  No write off required
  • GPS warehouses, manages, and distributes inventory
  • OEM reduces annual inventory carrying costs to a minimal
  • GPS provides unlimited storage & distribution for a flat annual 3.5% fee of the total inventory value – No other transaction fees apply 
  • OEM realizes normal profit margins from sales transactions 
  • Easy transfer to Standard Inventory Bank once reserves are available for write off 


Here are the benefits gained by using the GPS 3.5 Inventory Bank Program:

The manufacturer found that the GPS simple 3.5% annual fee was much less than the costs quoted by the local 3PL.  Plus, there would be no additional transaction fees when they needed to move inventory.

After the designated inventory was moved to a GPS facility, the manufacturer was able to free up the space needed for new products without the costs of adding a new building.  They also found that they significantly reduced their inventory carrying costs using the GPS 3.5 program.

Once this manufacturer is ready to write off this inventory, one phone call can easily transfer it to the Standard Inventory Bank program.

For more information or to schedule a presentation to learn more about how our proven Profit Driven Inventory programs can work for your company, please contact us at (800) 896-0477 or email programs@gpsinventorysolutions.com.

GPS Inventory Solutions, Inc.

Email: programs@gpsinventorysolutions.com 
Website:  www.gpsinventorysolutions.com 
Toll-Free: (800) 896-0477




About us: 
 
GPS Inventory Solutions has been an innovative leader in managing slow moving inventory for manufacturers in a variety of industries for over 30 years.  Our goal is to significantly reduce or completely eliminate your costs of carrying excess and slow moving inventory without impacting your customer service, sales or profits.  GPS headquarters are located in the Dallas/Ft. Worth area with additional locations in the Nashville, TN area.


Thursday, February 11, 2016

Increase Your Profits by Reducing Your Inventory Carrying Costs

What is the GPS Inventory Bank?
It’s not JUST Inventory Management.
It’s all about INCREASING YOUR PROFITS and SHAREHOLDER VALUE!  
And, one of the easiest ways to increase your profits is to reduce your inventory carrying costs.
At GPS Inventory Solutions, we focus on significantly reducing or completely eliminating your costs of carrying excess and slow moving inventory WITHOUT impacting your customer service or sales.
Many companies like yours use our proven Inventory Bank programs daily to manage their slower moving inventory for several reasons.  Some want (or need) to get the inventory off of their books, but also realize that they need to retain item availability so they can continue to provide long term product support to their customers.
Some need additional warehouse space and find that sending their slower moving parts to one of our Inventory Bank programs frees up the space needed. Plus, once again, they still have access to these parts to continue providing high level customer service.
Others are just trying to reduce brick and mortar warehouse and overhead costs. By using our Inventory Bank programs, they are able to reduce their space requirements, or even completely vacate a facility.
Even companies that are using a 3PL for their warehousing and distribution functions have realized that they only transferred their costly slow moving inventory to a third party – they didn’t solve the problem or eliminate its cost to maintain it.   
Our programs are based upon the 80/20 principle. We target the bottom 60% of a typical inventory that usually provides only 5% of the total annual activity. While this inventory has little activity, it still incurs 60% of your overall carrying costs, and eats away at the profits of your active inventory!
In a brief meeting we can demonstrate why using our Inventory Bank programs for managing your slow moving inventory is so important for your long term customer service, sales, and operating profits.
For more information, visit our website at www.gpsinventorysolutions.com

To schedule a demonstration of our programs, contact us at (800) 896-0477 or email us at programs@gpsinventorysolutions.com

Friday, October 2, 2015

How to eliminate carrying costs to increase profitability

Imagine that this is your warehouse full of inventory.

If you view a typical Inventory using the standard 80 20 Rule, you can easily break it down into five 20% increments:

The first 20% increment are your top sellers that account for 82.7% of your sales activity
and the second 20% accounts for 11.75%of your sales activity. Together, the top selling 40% of your inventory accounts for 94.45% of total sales!

 Now look at the next three increments of inventory:

The third 20% only accounts for 2.3%.
Fourth                                          1.85%
Fifth                                             1.40%

Together, the bottom 60% of your inventory accounts for ONLY 5.55% of sales activity!!  And, the cost of carrying this bottom 60% outweighs its profits, and eats away at the profits of the top 40%

But, what if you could move all of this bottom 60% of your inventory over to the GPS Inventory Bank?

It could completely eliminate your inventory carrying costs! Carrying Costs average 25% or more per year. And you would have immediate availability to any item needed for future customer service or production demands. Plus your market and brand integrity is always safe with GPS!

What would this do for your company?

Reduction of inventory and its annual carrying costs = Increased Profits and Improved Cash Flows
And what can you do with all of this freed up warehouse space?  Add new and more profitable products? Open up space for new production?  Reduce your building footprint?

Whether you are ready to write off inventory and get out of your facility, or you just need to free up valuable warehouse space, GPS has a solution for you!

Wednesday, September 16, 2015

Reducing inventory carrying costs on slow moving inventory is the fastest way to increase your profits!

Did you know that the top 40% of an average inventory accounts for almost 95% of your sales activity?  But, the bottom 60% of this same inventory accounts for only about 5% of your sales activity?


With inventory carrying costs averaging about 25% annually, it costs a lot to carry this 60% just to get 5% sales! Plus, these costs eat away at your profits from the top 40% and your bottom line.


However, there is still value in this bottom 60%.  Over 50% of these items will have activity over the next 10 years.  Due to the random usage of the items, you just don’t know which ones will be needed or when they will be needed.


Using our GPS Inventory Bank programs will eliminate as much of your inventory carrying costs as possible while keeping this slow moving inventory available for future customer service needs.  Visit us at www.gpsinventorysolutions.com or call (800) 896-0477 for more information.

Remember: Reduce Inventory to improve cash flows and ultimately increase your profits!

The easiest way to increase your profits is to reduce your inventory!


Are you tired of slow moving inventory eating away at your profits?  The easiest way to increase your profits is to reduce your inventory!

You cannot afford to hold onto excess and slow moving inventory because its carrying costs average 25% or more per year!  And, it’s probably taking up valuable warehouse space too – space that could be used for more productive inventory.

Should you surplus it?  You may get a minimal return on this inventory but is that worth having it out in the surplus market possibly competing against you, or worse, your CUSTOMERS??

Or just scrap it?  You don’t need to destroy your best possible level of shelf availability by scrapping it.

The day that you scrap or surplus this inventory is the day that your customer will need it! If it is not available for future demands, you will recreate more excess of the same items that you just scrapped or sold as surplus for pennies on the dollar.

YOU CAN’T AFFORD TO KEEP IT, BUT YOU NEED IT!  What is the solution?

Try our GPS INVENTORY BANK programs to:
  • Eliminate inventory carrying costs that average 25% or more EACH YEAR
  • Free up warehouse space
  • Provide 24/7 availability for exceptional customer service
  • Free up cash flows
  • Retain availability for long term product support
  • Increase your profits!

For more information contact us at (800) 896-0477 or visit our website at www.gpsinventorysolutions.com

Wednesday, July 8, 2015

COMMON MISTAKES WHEN DEALING WITH SLOW MOVING AND EXCESS INVENTORY


When inventory is recognized as slow moving, everyone in the corporation wants to weigh in on the situation. Some will say “there is someone out there that wants it and will pay good money for it”… but not really. Super salesman Dave will say “let me have at it. I can sell it. I know someone”. But it is like the tire advertisements, if you don’t need tires, it doesn’t make any difference what the price is.
Generally, slow moving inventory doesn’t become slow moving because of poor inventory management. It usually happens because the end product it was designed for has aged and the field population and requirement has diminished. Today’s systems don’t track inventory demand by the population of the end product. Therefore, the system will leave you with inventory based on what has happened rather than what is happening because this demand and inventory can’t be forecasted.
Whatever the reason, you now have this inventory and a decision needs to be made. It makes your financial statements look bad; it’s taking up space in the warehouse and probably affecting corporate incentive programs. No one person wants to make the final decision, so a committee develops and studies the problem for months. And…they often never make a decision. And…the inventory just sits there costing more money, eating away at your profits!
Here are some things you don’t want to do.
Don’t let it collect dust  
This is an expensive option that destroys your operating profits. Don’t let it collect dust in your high volume, high velocity distribution system and warehouse. That dust gets more expensive by the day. You investment in this inventory keeps growing because of the ongoing inventory carrying cost. You need to reduce or eliminate this hidden cost.
Don’t go to the surplus market
The surplus market will give you cents on the dollar which may seem great if you haven’t been a student of how the surplus market actually operates. If the surplus market is interested in your inventory, it is because they know more about your product than you do. They know they can buy from you at cents on the dollar, cherry pick the inventory and sell it to your distribution channels or their competitors at a discount off of dealer net. Not only does this mess up your customer image and destroy the association with your distribution channels, it often will come back to you in dealer returns.
Don’t bite the bullet and scrap the inventory
Out of frustration, lack of time and resources some companies will say “to heck with it.” After months of review by the many departments within the company, no one can agree on what can be scrapped and what should be kept. The write off will be larger than corporate wants to take, so a dollar amount is set that won’t destroy the profits, incentive programs, and the employment of some departmental managers. After all of this you haven’t resolved the long term problem.  And even worse, next year it starts all over again! You end up making an even larger investment into Inventory that really just needs to be managed cost effectively.
Here is what you should do
The best practice for maximizing your return is to utilize the services of a company that is an expert in physically managing slow moving Inventory.  One that will maximize your customer service level and profits, while reducing or completely eliminating your cost of keeping this Inventory available.
GPS Inventory Solutions provides a long range plan for managing excess and slow moving Inventory that will satisfy your department heads and corporate office.  GPS Inventory Bank programs provide the only true long range Exit Strategy for your Inventory that is cost effective every year.
Just because an Inventory doesn’t meet your turnover and ROI objectives, it still plays an important role for the company. There is still a market in your customer base, all be it small in volume and unpredictable. For those of us who track this type of Inventory, the history shows that 50% of a slow moving Inventory will have a demand of 5-6% annually, and over time, 50% of the items will be needed for customer service requirements.
Typically this Inventory will have been depreciated over a specific time period until it is ultimately written off. When you start your depreciation process you should also start reducing your operating cost of keeping this Inventory available for the future unpredictable requirement.
GPS Inventory Solutions offers different options depending on whether you are ready to write it off or want to still retain ownership of the Inventory.  Our programs take over the storage, management and distribution of these products which significantly reduces or completely eliminates your carrying costs.
Using GPS Inventory Solutions and its Inventory Bank programs will maximize your profits and enhance your customer satisfaction.  Contact GPS Inventory Solutions for a FREE Inventory Analysis and customized long range management plan for your excess and slow moving Inventory.
For more information contact GPS at www.gpsinventorysolutions.com or (800) 896-0477