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%.
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!
Friday, October 2, 2015
How to eliminate carrying costs to increase profitability
Posted by The guy at 9:13 AM
Labels: 3pl, carrying costs, inventory, inventory solutions, profitable
Wednesday, September 16, 2015
Reducing inventory carrying costs on slow moving inventory is the fastest way to increase your profits!
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!
Posted by The guy at 3:27 PM
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
Posted by The guy at 3:23 PM
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
Posted by The guy at 8:09 AM
Labels: excess inventory, mistakes, slow moving inventory
Location: Dallas, TX, USA
Friday, January 2, 2015
Support for our Community
GPS Inventory Solutions is proud to support The Stewpot. The Stewpot offers a safe haven for homeless and at-risk individuals of Dallas, providing resources for basic survival needs as well as opportunities to start a new life. Since May 2008, The Stewpot has been the sole meal provider at The Bridge (Dallas' homeless assistance center), serving 1,500-2,000 meals per day, 7 days a week. Join us in supporting this worthy effort at www.thestewpot.org
GPS Inventory Solutions is proud to support the National Parkinson Foundation. The Center for Disease control rated complication from Parkinson's disease as the 14th leading cause of death in the United States. Worldwide, it is estimated that four to six million people suffer from the condition. Support research for a cure. Donate at www.parkinsons.org
GPS Inventory Solutions is proud to support Texas Scottish Rite Hospital for Children. TSRHC treats children with orthopedic conditions, such as scoliosis, clubfoot, hand disorder, hip disorder, and limb length differences, as well as certain related neurological disorder and learning disorders, such as dyslexia. TSRHC is not a United Way agency and does not receive state or federal funding. The hospital relies on the generosity of individuals, organizations, foundations, and corporations to continue its missions. Join us in supporting them at www.tsrhc.org
GPS Inventory Solutions is proud to support the Semper FI Fund. The needs of our wounded continue to grow. Many service members will need long-term assistance as they adjust to lives that are forever changed due to the extent of their injuries. Every donation, both large and small, from corporate gifts to individual contributions, does make a difference. Join us in supporting them at www.semperfifund.org
Posted by me at 5:16 AM
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