Reduction in Inventory as % of Sales

Excessive and obsolete stocks can place a heavy burden on the cash resources of the business. Insufficient stock can result in lost sales, delay of customers etc. The key is to know how quickly your overall stock is moving or how long each item of stock sits on the shelves before being sold.

Improvement Areas Actions Results
i. Reduction in Inventory Control over the ordering process Higher control over inventory
ii. Better inventory management processes Stocking levels, safety stocks, reducing overstocking etc Reduced inventory in the system
iii. Liquidation of old, aged, obsolete inventory Accurate, forecasting processes Scrap and obsolescence reduction
Inventory classifications Better inventory space utilization
Bill of Material accuracy
Timely recording of materials movement
Reporting of obsolete stock
Improvement in inventory replenishment cycle
Standardized vendor terms and processes
Regular inventory verification processes