Inventory Management

For companies which sell products to consumers, the bulk of a company's assets are generally allocated to inventory.  Effective measures of control are required to realize the maximum benefit and gain from the investments made in the stock a company keeps on hand to conduct business.  The designers and engineers at Liberation Software have had much experience in inventory control and analysis.

Turning a profit is not just about making sales at margin.  Profitability is a measure of the overall company.  Proportional to sales, the more resources a company has tied to inventory the less profit they can stand to make.  Inventory turns are a metric to gauge success by, not just on a dollar basis (as most financials show), but on an item by item basis.

Example #1: A retail store initially stocks 200 of a given item, at a cost of $8,000 ($40/unit).  Over the course of the year, they sell 150 (75%) units from inventory at 20% markup ($50.00), for a total of $7,500.   The owners have realized a loss on their $8,000 investment in this item to the amount of $500.00 (a loss of 6.25% overall).

Example #2: Same setup, but the location sells all 200 units, restocking to the original level as sales are made.  The total sales are $10,000, at a gross margin of $2,000.   The owners have made a 25% return on their investment - at this rate it'll take four years before they've recouped their investment and started drawing useful income (all expenses aside!)

Example #3: Same setup, but this time the store initially stocks only 10 of the item (at a cost of $400.00), restocking weekly.  Over the course of the year 200 items are sold, resulting in sales of $10,000 at a gross margin of $2,000.  However, since the owner's investment in this product never exceeded the level set by the initial $400.00, the owners have not only recouped their initial investment, they realized an additional 400% profit! 

The point is, software can be put in place to automate not just the tracking of these statistics, but the actual reordering process as well (new stock still requires human gut instinct).  Inventory Control is a vital aspect of any business which sells consumer products.  Contact us for inventory tracking, analysis, barcode/count systems, or any other inventory management task your company may have a need for.