Test Your Knowledge On Inventory Management?

Appended below is a small checklist to assess the quality of your stock management.

The questions are outlined in different perspective/areas.

If you score yourself somewhere close to 100%, then rate yourself A+ class on managing your inventory.

Knowledge, Systems & Policy/Procedures:

1. Do you know the stock turn for all major items of inventory.?
2. Have you applied ABC methodology on stocks?
3. Do you really understand how the conversion cycle of raw material to finished goods?
4. Do you apply tight controls to the significant few items and simplify controls for the trivial many.
5. Review the effectiveness of existing purchasing and inventory systems.
6. Do you know how to compute Days Inventory Outstanding, understand its relevance in the Cash Conversion Cycle and how to use it?
7. Does your company have a clear-cut policy and procedures on inventory?
8. Do you have monthly aged inventory listing?
9. Who review the Aged inventory listing and how is turnaround time to handle slow moving and non-moving items?
10. Do you have good forecasting skills to ensure that what is require is purchase as raw materials?

Innovation:

1. If you understand the conversion cycle of raw material to finished goods, do you consider having part of your product outsourced to another manufacturer rather than make it yourself.
2. Can you manage to persuade your suppliers to keep stocks for your company?
3. Can you manage to persuade your suppliers to give you consignment stock only and bill you when you have actually “ used” your stocks?
4. Can you manage to persuade your suppliers to locate near to your factory to give you just in time stocks?

Proactiveness:

1. Do you constantly and consistently try to reduce inventory (stock) levels and improve control over Work in progress
2. Sell off or return obsolete/excess inventory.

Others:

1. Have you review your security procedures to ensure that no stock is going out the back door?
2. How good is your supply chain management to optimize stock level in each location/branch/country?