July '19

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rv-pro.com July 2019 • RV PRO • 137 Listed alphabetically, the eight essential inventory performance factors are: Aging – which assigns inventory items into brackets based on their most recent sales trans- action date. These brackets are usually desig- nated by letters (A thru E are most common) with "A" being most recent (0-3 months) and "E" being oldest (12-plus months). Note: A word of caution here: Given that items are assigned by date of most recent sales transaction, it is possible to have an item having no sales demand in several years listed as an "A" part if one of that item has experi- enced a sales demand in the recent 0-3 month period. Therefore, it is important to review date last sold with date last received to catch these anomalies. Gross Turn – is a comparison of the total cost of sales for a 12-month period to the average inventory value (at cost) for the same 12-month period. This is a very valuable metric because it evaluates the purchasing and the selling of your parts and accessories. It can be calculated for your entire inventory, for categories of your inventory, or for indi- vidual part numbers. Level of Service – this can be a metric to determine what percentage of your cost of sales are generated by stocked items. In effect, it's a guide to determine if you are effectively anticipating the majority of your customers' needs and requests. Lost Sales – is an indicator of customer requests that were not met. It provides input to assist your parts manager when making decisions as to what to stock and in what quantity. My definition consisting of eight words – Demand, Not Filled From Stock And Not Ordered – is offered as a suggestion for deciding if a lost sale has occurred. Minus On-Hand – identifies items that seemingly have an incorrect on-hand quan- tity value. This reduces the value of the total inventory cost and indicates possible receiving and/or selling process problems. No Bin Location – is especially important for items that are included in the replenish- ment inventory because this situation could increase transaction processing times and pos- sibly create a lost sale situation if an item cannot be found. Non-Stock Status – is important because most dealership management systems (DMS) will not include non-stock items in a suggested order calculation, so it is important to ensure that a non-stock status has been appropriately assigned to part numbers that your parts man- ager does not want to automatically re-order. Zero Cost or Price – for items with a $0.00 cost, the overall inventory cost value of your parts and accessories inventories is being under-reported and could also create problems during a sales transaction for one of these $0.00 cost items. A $0.00 price item could impact the gross profit calcula- tion resulting from a sale and could create a barrier to processing the sale of an item with $0.00 price. Understanding why you might consider some or all of these eight inventory perfor- mance factors as metrics to use in evalu- ating your parts and accessories inventories represents one aspect of their use. It also is important that you have some guidelines as to reasonably achievable objectives for each of these eight inventory performance factors. Evaluating the Eight Essential Factors The guidelines suggested for these eight factors are based on my experiences as a parts manager/ director and as an inventory man- agement consultant. They are guides that In my experience, there are numerous inventory performance factors – and each of them is important. However, you should decide which ones are most important in your business. " "

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