Inventory Checklist for Purchase Question Your response Action required Purchasing Are you purchasing at t...
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Inventory Checklist for Purchase
Question | Your response | Action required |
Purchasing |
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Are you purchasing at the best possible price? |
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Are you purchasing in economical quantities? |
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Have you negotiated suitable terms of trade? |
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Have you arranged cost effective appropriate delivery? (Consider time, cost, reliability, safety) |
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Are you continually analysing sales figures and trends to ensure ideal stock levels (no overstocks or out of stocks)? The less stock held, while still meeting needs, the better. |
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Do you have an early warning system to alert you to over or under stocks? |
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Have you calculated the number of days stock on hand you carry? Have you compared this with the industry average?
Calculation: Stock on hand @ cost price x 365 days Annual cost of goods sold
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Have you calculated your stockturn rate to measure how quickly inventory is sold and replaced? Have you compared this with the industry average?
Calculation: Cost of goods sold Average stock value
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Some inventory terms
Vendor managed inventory: Where the manufacturer or supplier monitors electronically the distributor’s sales and stock levels, generates purchase orders, and is responsible for maintaining the distributor’s inventory levels.
Consignment inventory: The supplier provides inventory to the distributor or agent and retains ownership of the inventory. The distributor pays for inventory as it is sold. Commission agents are paid commission on the goods they sell. They do not buy the inventory.
Supply chain management: Managing the flow of goods, information and financial arrangements in the network of suppliers, transport and storage providers, distributors, retailers and customers.
