In case you missed it, this past Technology Tuesday was the first, among many future webinars, to offer CPE credits for live attendees. We were graced with our friends from Fishbowl presenting. It, however, wasn’t so much highlighting Fishbowl’s capabilities – which are many.
What Did Fishbowl Discuss About Inventory?
Unlike some webinars with informative-sounding titles featuring more of a product pitch, our presenter planted the seeds of Inventory Management Fundamentals. And, no, this wasn’t just about QuickBooks® Desktop Inventory Fundamentals either.
Instead, he delved into why it was important to track inventory to begin with, anecdotally mentioning there’s still a slice of businesses not tracking inventory at all.
The importance of controlling your inventory was characterized by these reasons or factors:
- The possibility of paying taxes on the items you do have in inventory
- Non-knowledge of having a particular item in your designated place(s) prevents you from using or selling it
- Uncertainty of that very item’s location will cost you, in terms of time spent to locate it
- It will tie up your cash flow, and warehouse real estate
Is There Really More to Inventory Management?
Our presenter dives deeply into each of these listed items, when it comes to Inventory Management; and what such means. Once you start really managing it, you will – as he said – know everything about the item. What you will end up knowing consists, but isn’t limited to, the following:
- How many, or how much, of that item you have
- Where that item is located
- How much the very item costs, along with associated costs making up its true cost
- How it’s tracked (e.g. Lot Number, Serial Number, Expiration Date, etc.)
- How long items have been sitting in their respective warehouse locations
- Turnover rate of your items
- Min and Max levels for on-hand quantity
What Are the Types of Inventory Management?
Our presenter discussed three types of Inventory Management, each being determined by your business model:
- Just In Time
What is Just In Time Inventory Tracking?
He mentioned this is the method used by Toyota. It features what our presenter termed bare bones inventory, or no inventory at all. He listed it as great for those with short lead times for getting your parts into inventory; and the most desired inventory management method.
He laid out this pointer about items possibly costing more because you usually are purchasing in smaller quantities, or purchasing with less frequency. As a result, you likely won’t get price breaks from your vendor.
How Does Stock Tracking Differ?
You intend to keep inventory on your shelves, where the aforementioned Just In Time doesn’t intend to do that; and if it does, only at the bare minimum. Other characteristics include, but aren’t limited to:
- Having a min and max level for your inventory, and accounting for emergency situations is kept in mind
- Ties up your cash with inventory
- More control being required in order to know if items are moving (sold or used)
- Commonly receiving price breaks from vendors, based on larger quantities being purchased
What Are Building Blocks of Inventory Management?
He transitioned into the layers of proper inventory management, discussing each manifestation of proper management will be dictated by what you do as a business – manufacturing, distribution, sales, etc.
Units of Measure (UOM) are key in managing how you purchase, and procure your items to sell. For example, you purchase item A by a case of 12 pieces, then sell it to your clients/customers by the individual piece.
You may find yourself asking whether it is costing more or less, depending on the unit of measure; or what other things can my Units of Measure (UOM) affect?
What Should I Know About Item Codes?
The main thing he reiterated was keeping your item codes simple. He lists other pointers, here:
- Make them so everyone in your company will know what each means
- Don’t start your codes with zeros
- Don’t make them too long.
- Having a succinct description saying what an item is.
What Are the Ways to Value Inventory?
You can value your inventory in these ways:
- Last In First Out (LIFO)
- First In First (FIFO)
- Actual Cost (Not GAAP Compliant)
He explains each method briefly during his presentation. We do have a general explanation of each of these costing methods you can read in your spare time.
What Are Reorder Points?
These are also known as Safety Stock Levels or Min and Max Levels. Our presenter gave us these formulas for calculating the Minimum Quantity On Hand:
- Minimum Quantity On Hand = (lead time [in days] + days worth of inventory you want on hand) *average unit of sales per day [usually for a given time frame, seasons)
- Maximum Quantity On Hand = (minimum quantity on hand + [Order Interval * Unit Sales Per Day])
Wanting to Learn More About Inventory Management?
If you are interested in the later items he discussed, we always make recordings of our Technology Tuesday webinars available – on demand. Usually, as I’ve seen, we have those recordings available to you on the same day – almost within an hour or two.
With it, you will be availed his further look into ABC Codes, Cycle Counts, Product Turnover, Barcoding, Part Tracking, etc.
What If I Use QuickBooks® to Track Inventory?
In case we didn’t tell you, we will be holding a series of webinars this Fall 2019! We will have two-day sessions for each of these topics: QuickBooks Desktop, QuickBooks Online, and Accounting Fundamentals. The QuickBooks webinars will provide you CPE Credits.
- QuickBooks Desktop: Seminar for Business Owners & Managers – October 3, 2019 & October 4, 2019
- QuickBooks Online: The FUNdamentals – December 5, 2019 & December 6, 2019
- Accounting Fundamentals Boot Camp – November 7, 2019 & November 8, 2019
Technology Tuesdays: Looking Ahead
This is just reminding we will have a slew of Technology Tuesdays coming up:
- Modern Payroll for Small Business #withGusto – September 24, 2019: Pat Wirth will dive deeper into the tool for your payroll and HR needs.
- Fraud in Our Industry – October 1, 2019: Our latest addition to the Out Of The Box Technology family, Dawn Brolin, covers Fraud compliance, fraud detection, prevention and more!
- Common HR Myths and Misconceptions – October 15, 2019: we welcome Senior District Manager, Chad Rabideau and Senior HR Counsel Kristin LaRosa from ADP as they address common myths and misconceptions in the field of Human Resources.
These, and others, will provide CPE credits. All you have to do is look for the logo on each of their respective pages: