Maintain your old Siemens Hipath system

7 Secrets to Writing Inventory Procedures

What would You do with $1,000,000

With $1 Million would you:

? Pay off debt?

? Purchase new equipment?

? Invest/save for the future?

? Give yourself a bonus?

$1,000,000 Waiting in the Wings

What do you and your business need that you have been putting off because you don't have the money today? $1,000,000 certainly would fill those needs. But where do you find $1,000,000 just lying around your business right now? Well, you probably have $250,000 in each of four areas in your everyday business, and you don't even realize it.

Money in Business Procedures

And so let's look at four places in your business where we will find $250,000 each and see how we can help you find it:

Part 1: Inventory - $250,000.00

Part 2: Receivables - $250,000.00

Part 3: Sales - $250,000.00

Part 4: Accounts Payable - $250,000.00

Part 5: Procedures - $1,000,000.00

Turn Cash into Time with a New Company Policy

But just what exactly is this source for cash? It's time. If you are looking for $250,000 then it costs you $4,808 every week that you delay. So what you do with your time quite literally amounts to either costs of delaying, or it can amount to savings when you take action and control of your time. To correct this cost of delay, an increase in velocity must follow - which will set the difference between 'good' and 'great'. The consequences of this shift in system velocity increases discipline and competency: the ability to maintain the increased velocity and the ability to make the adjustments to achieve the 'great'. So how do you realize the difference?

Eliminate Inventory and Increase Cash

Let's start with the biggest, most obvious source ? your balance sheet, specifically inventory. If you are a manufacturer with $300,000 or more of inventory (raw materials, work in process or finished goods) then STOP! We found it. Why? Because inventory is an unproductive asset. Inventory is money, and having it lying around your factory is not where your money belongs. So if we reduce inventory to Just-In-Time (JIT) levels, then we can eliminate 85% or more of your inventory, which translates into $250,000 in cash. But that's not all. You will also save another $50,000 or more in annual inventory carrying costs. With less inventory, there are lower costs of holding inventory. Let's look at an example of what we're talking about.

Manufacturing Business Procedures Case Study

A manufacturing organization with 2 Million in average inventory balances needed assistance. We examined their inventory consisting of raw materials, work in process and finished goods to understand and quantify the workflow, workload, and demand forecasting issues. Then we designed and implemented a process to improve their inventory cycle and tie it closer to their actual sales.

The metrics we developed reduced their inventories by 85% and increased their manufacturing cycle efficiency from 60% to 90% within 120 days of implementing the new procedures. With these new processes and reports, the company now tracks manufacturing cycle efficiency and delivery time variance rather than just units produced, as the measure of their manufacturing effectiveness. The result: extra capital plus a 50% increase in process capability (capacity).

Methods to Design the New Process

By becoming more efficient in the process, we can use time not as a detriment but as a significant benefit to our business. Step by step, let's take a further look at how time and efficiency plays a great role in your business.

Increase Demand Forecasting Accuracy. We only need enough inventory to satisfy demand, and that is where part of the problem exists. If demand can not be accurately forecasted, then we end up compensating for this unknown with inventory.

Increase Manufacturing Cycle Efficiency. How well manufacturing resources are used to produce a product determines the cycle efficiency. Defective product, product rework, and long lags between manufacturing cells cause inefficiency, which can be easily calculated. Raw materials should be converted into finished goods as quickly as possible. The speed at which this occurs defines your manufacturing cycle efficiency.

Increase Supply Chain Turns. Increasing the number of times purchases are made may increase acquisition costs and unit costs because of smaller order quantities. But you will benefit by increasing your cash flow and eliminating the carrying cost of the inventory (warehousing, material handling, taxes, insurance, depreciation, interest and obsolescence totaling 25% to 35%).

Eliminate safety stock. Safety stock is really just a buffer for forecasting variance and supplier delivery time. While many levels are set arbitrarily in automated MRP systems, your safety stock levels will need to be reduced due to improvements in demand forecasting accuracy, manufacturing cycle efficiency and supply chain turns.

Reduce purchasing errors. This can reduce overstocking and, more importantly, minimize stock outs that result in expensive expedited purchases. Sell excess and obsolete inventory or return it to your vendor.

Eliminate delivery variance. Do not allow vendors to deliver early or late and make sure the delivered quantity does not vary from the order quantity. After all, delivery errors cause the need to carry more inventory. Instead, provide suppliers with forecasts of future needs.

Train purchasing personnel. Provide your purchasing and material management personnel with formal training. This will arm them with better negotiating skills that will result in better prices and terms.

Procedures Provide Time Savings

So, as we have seen, we should use each element of the process to extract the most benefit from our business. With time-saving procedures set in place, you will let your efficiency work for you.

Time Savings Provide Cash in the Bank

With well-defined processes and procedures in place, you will increase efficiency by increasing inventory turns. And of course an increase in inventory turns means an increase in cash on hand. It's there - all you have to do is grab it.

Next part of this series, we will look at finding $250,000 in Accounts Receivable - another step as we work toward our goal of 1 million in savings. So not only aim to reap the rewards of extra savings to your bottom line, but also see more cash in the bank - $1,000,000 to be exact.

Chris Anderson is currently the managing director of Bizmanualz, Inc. and co-author of policies and procedures manuals, producing the layout, process design and implementation to increase performance. To learn how to increase your business performance, visit: Bizmanualz, Inc.

In The News:

'Yemen war can end if world acts now'
Fri, 16 Nov 2018 18:51:00 +0000
The world must act now to end the war in Yemen and save millions of people from the brink of famine, the man who is trying to broker a peace deal has told Sky News.

Judge orders White House to restore CNN reporter's access
Fri, 16 Nov 2018 15:30:00 +0000
A judge has ordered the White House to return the press credentials of banned CNN reporter Jim Acosta following his row with Donald Trump.

Yemen peace talks poised to go ahead, says UN envoy
Thu, 15 Nov 2018 23:04:00 +0000
The man trying to broker peace in Yemen said he is hopeful a new round of talks between the warring sides will begin within weeks provided a lull in fighting for a key port city holds.

Khashoggi supporters defend free speech at symbolic funeral
Fri, 16 Nov 2018 14:28:00 +0000
A cold wind swept through the courtyard of Fatih Mosque in one of Istanbul's most conservative neighbourhoods.

Royal Navy frigate scrambled to shadow Russian warship
Fri, 16 Nov 2018 15:06:00 +0000
A Royal Navy frigate is shadowing and monitoring a Russian warship travelling through the English Channel, in an attempt to protect UK waters.



tikatoshop.it

Erfahrungen mit Pallhuber Wein
Agen Bola SBOBET Terpercaya

Travel in comfort and at your leisure with CT Airlink Limousine & Car Service for top quality private transportation and exceptional customer service. We operate Sedans, SUVs & Vans for CT Car Services to covering all Connecticut airports including Car Service from CT to Newark Airport , Mohegan Casino Uncasville CT, Foxwoods Casino Mashantucket CT, Manhattan Cruise Terminal NYC, Brooklyn Cruise Terminal NYC and Bayonne Cruise Terminal NJ. CT Airlink hire licensed and friendly chauffeurs who have in-depth knowledge of the Areas.

The Benefits Of Helping An Online Business Newbie

Do your remember when you first ventured out in the... Read More

Top Ten Ways to Develop New Success Habits

1. Make a clear, specific commitment to what you want.... Read More

10 Reasons to Use Online Banking

With today's technology and people's need for more information it... Read More

Top 10 Tips on How To Write About Yourself

Many people find it really hard to write for business... Read More

Surviving When Clients Arent Rolling In

As the holiday season starts to settle in, the workload... Read More

No More Lists To Remember

Are the endless lists of Top-7's and Top-10's taxing your... Read More

Ten Steps To Better Listening

Talking is the least important half of any conversation. Listening... Read More

Plan Your Success In Seven Ways

Many businesses lose money yearly because they don't think creatively... Read More

The Top 10 Reasons Your Staff Wants to Quit

From an employee's perspective, management often conducts itself in ways... Read More

How to Counsel Your Non-Performing Team Members - 10 Tips

Counselling non-performing team members is a tough part of any... Read More

Brainstorming! The Key To Wealth

Advertising executive Alex F. Osborne first coined the word "brainstorming"... Read More

Private Practice Success: 10 Essentials for Starting a Practice

As a counselor, therapist or healing professional (massage therapist, physiotherapist,... Read More

Home Furnishings in India : How to Find an Exporter,manufacturer or Supplier ? Beyond a Database.

Looking for a manufacturer or supplier of home furnishings in... Read More

Positioning Your Company for Debt Financing

Positioning Your Company for Debt Financing:There was a time in... Read More

Business Meeting Etiquette

Business etiquette is essentially about building relationships with colleagues, clients... Read More

The Ten Best Kept Secrets For Protecting Your Business Property Against Theft

1. Locks and Padlocks ? Locks on all outside entrances... Read More

Management, Balance & Time - 10 Tips for Managing Overwhelm in your Business

How many of us have been in a position where... Read More

Top Seven Reasons to Publicize your Business with Articles

Do you want to be #1-10 on Google and other... Read More

Making Money over the Internet : 5 Cool Tips

The Internet is a fast growing medium, trancending the personal... Read More

Famous Business Strategies

Either simply a looker-on or a player in the world... Read More

Sales Marketing: 10 Tips On How To Promote Yourself And Generate Sales

A lot of people are insecure about buying something or... Read More

7 Tips On Getting Ready To Put Attraction Marketing Into Action

Attraction marketing is about making a customer for life not... Read More

7 Ways To Get One-way Links To Your Site

One way links will help you gain better rankings in... Read More

The Top Ten Ways to Attract Buyers, Not Just Visitors to your Web Site

Have you put a lot of effort, time, and money... Read More

7 Online Banking Success Stories

You have seen their ads and you may have wondered... Read More