Risk Associated with Inventory
1. Theft
2. Damage
3. Expiry
4. End of the life-cycle of the product
Internal Control for Inventory
1. Periodical Physical Verification
2. Reviewing Age Analysis of Inventory
3. Registers of Inventory
4. ABC Analysis of Inventory
5. Audit of Documentation of Inventory
Advantages of Inventory Management System
Inventory KPIs
1. Stock Turnover Ratio – How many times stock has been sold and replaced in a given time period.
2. Average Inventory – Amount of stock your company has on hand during a particular time period.
3. Holding Costs – cost to maintain/store the unsold stock.
4. Stock-out – Number of times demand for a particular item was not fulfilled.
5. Rate of Returns – How many times stock was returned for various reasons.
Inventory Cost Control
1. Never fall for Minimum order quantity even if they are very attractive deals
2. Have a close watch on reorder point of inventory
3. Always clear out obsolete stock
4. Maintain inventory with help of good software
5. Have a strong Just in time system
6. Monitor Inventory KPIs