Making Money with Inventory Management by Ben Vollmer

A Special Thanks to All
Our Sponsors
Effective Inventory
Management
Presenters:
Ben Vollmer
businessWORX
Marcel Newell
AVIDWORX Productions Inc.
Philosophy of Numbers
“You’ve got to know
your numbers. If you
don’t know your
numbers, you don’t
know your business.”
-Marcus Lemonis
THE PROFIT
Session Outline
Inside the Numbers
• Philosophy of Numbers (What is the meaning)
• Key Inventory Numbers
Philosophy of Numbers
When do you need
to look at your
numbers?
Philosophy of Numbers
Philosophy of Numbers
Daily numbers to look at
• Sales Numbers
• Marketing Numbers
• Staff Numbers
Philosophy of Numbers
Monthly numbers to look at
• Inventory
• Financial
• Sales
• Marketing
Philosophy of Numbers
Philosophy of Numbers
Philosophy of Numbers
Actions
• Time Out
• Change Play
• Change Players
• Inspire
When the team is behind, what does the coach do?
Philosophy of Numbers
• There are numbers that you already know in your business…
•12.6
•13.8 – 14.4
•1728
•54
Philosophy of Numbers
Do you know the numbers that drive your business?
•20.22
Source: BizMiner
Inventory Numbers
LIFO / FIFO
Last In First Out
First In First Out
Who do you wanna be?
80
70
60
50
40
30
20
10
0
3M
Abercombie Borders
& Fitch
Dell
Home
Depot
MedTronic
Parker
Hamflin
Proctor and Tiffany & Co Wal-Mart
Gamble
Inventory Turn Comparison
http://webuser.bus.umich.edu/dwwright/SamplePages_files/Inventory%20Turnover.pdf
Key Terms
• Inventory Turns
• How many times a year
does your business turn
over inventory?
• Day Sales in Inventory
• How many in stock divided
by 360
• (Excel WORKDAYS)
Inventory Numbers
What are your Top 3 inventory numbers?
Inventory Numbers
1. Total $$$ on hand
2. Day of inventory left?
3. What do I NEED to buy?
Inventory Numbers
Total Inventory on hand?
Truth About Inventory…
1. Have too much!
2. You don’t know what you have?
3. You are buying on opportunities!
Inventory Numbers
Total Inventory on hand?
Truth About Inventory…
Have may too much!
• Looks at how many days of inventory that you have.
• Look at your sales for next two months.
• Look at your sales by category.
• Buy only what you need.
Inventory Numbers
Total Inventory on hand?
Truth About Inventory…
You may not know what you have?
• It must be tracked electronically
• Use purchase orders religiously for all purchases
• Reconcile inventory every quarter
• This will help you buy better
Inventory Numbers
Total Inventory on hand?
The opportunity buy
• It’s a good deal!
• I can save so much
• I need a vacation
Inventory Numbers
Total Inventory on hand?
The opportunity buy
• It depreciates
• It has a shelf life
• Your cash is better in the bank
• Know your depletion rate
• More inventory will not grow revenue
• Marketing, training, showroom environment will
Inventory Numbers
2. Days left of product
businessWORX inventory report
Where do I Start?
Know Your Numbers
SKU Rationalization – Head Units
Average Selling Price for 498 = 130
Average Selling Price for 598 = 145
Cost Difference = 80 bucks
Profit Difference = 70 bucks * 12 = 840 bucks * 5
Products = 1%
Model
Number
Sheet
Cost
MAP
Retail
KDC – X 498
94.00
130.00 170.00
KDC – X 598
98.00
150.00 210.00
Fifty Units a Month = 1%
SKU Rationalization - Speakers
• Also Available in
4”, 6x9, 5x7, etc.
• Sell a Single Size
Speaker by
Default!
• I don’t care about
your Chrysler /
Jeep Excuse. So
what!
Vendor Discounts
• Where do you make
the most margin?
• At the of the day,
you still generally
get margin from
your clients!
• BEFORE you do this,
do this next step
• Head Unit
• Dash / Wiring Kit
• Installation
Who runs your business?
Purchase Orders
Month
Price
January
$6.24
February
$8.74
March
$12.61
May
$9.78
• Same Dash Kit
• Sales Person Calls and Orders
with NO PO
With PO’s Price was $6.24
100 Dash Kits a Year
$600 dollar difference
Sunk Costs
Sunk costs are unrecoverable
past expenditures. These
should not normally be taken
into account when determining
whether to continue a project
or abandon it, because they
cannot be recovered either
way. It is a common instinct to
count them, however.
How many of you have these?
• Eclipse ECD 415
• USD 15” Subwoofers
• McIntosh CD Player
• Orion MBT
• Phoenix Gold TiDD10
Where do I Start?
Look At Your Numbers
Block Time Units
Get Software
Where do I Start?
Fix your inventory (Qty, Models, Description, Pricing)
Record Sales Transactions in real time (end of day latest)
Use Purchase Orders (why let your vendor run your business)
Develop a process to move this practice in slowly
Monthly Counts
Text 404-840-5698 for location
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$270/month (four-year, leaseto-own)
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Factory
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