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Category Archives: Inventory Management

Inventory Days on Hand: Why It Matters and How to Calculate It?

Inventory days on hand is one of the most important metrics that a business can track. It is used to measure the number of days it would take to sell all of the inventory currently on hand. This metric is used to help businesses manage their inventory levels and keep inventories lean. In this post, we will explain why it is important and how to calculate it.

Why Does Inventory Days on Hand Matter?

As mentioned, inventory days on hand is a measure of how long it would take a company to sell through all of its inventory given the current rate of sales. This metric is important for several reasons.

It provides insight into whether a company has too much or too little inventory on hand. Too much inventory ties up working capital and can lead to stock outs, while too little inventory can lead to lost sales.

In addition, it can be used to forecast future cash flow needs. If a company knows that it will need to replenish inventory in the near future, it can plan accordingly and make sure that it has the necessary funds available.

Inventory days on hand is also a good indicator of a company’s overall efficiency. A company that is able to turn over its inventory quickly is likely to be more efficient than one that takes longer to do so. As such, this metric can be used as a benchmark for comparing different companies.

How to Calculate Inventory Days on Hand?

To calculate inventory days on hand, divide the number of days in a year by the number of times inventory is sold (or used) in a year. For example, if you sell 10 units of inventory per day, you would have 36.5 days of inventory on hand (365 / 10 = 36.5).

The average company has about 20-30 days of inventory on hand. If your company has less than this, it may be an indication that you are not carrying enough inventory to meet customer demand. On the other hand, if your company has more than 30 days of inventory on hand, it may be an indication that you are carrying too much inventory and not selling it fast enough.

Companies typically track inventory days on hand for each individual product or SKU.

Benefits of Lowering Your Inventory Days on Hand

In today’s competitive marketplace, having the products customers want is essential to success. By lowering your inventory days on hand, you can help ensure that you always have the products your customers need. Below are a few benefits of lowering your inventory days on hand.

  • Lower Costs: Carrying less inventory frees up cash that can be used for other purposes, and it also reduces the risk of inventory being damaged or becoming obsolete.
  • Faster Profits: Lowering your inventory days on hand can lead to faster profits. With fewer products sitting in storage, you can turn over your inventory more quickly and generate more revenue.
  • Fewer Stockouts: If you have less inventory on hand, you’re less likely to run out of products when customer demand is high.

How APS Fulfillment, Inc. Can Help You with Inventory Management?

At APS Fulfillment, Inc., we offer full-service e-commerce fulfillment out of Miami that includes state-of-the-art warehouse management software (WMS). We make inventory management and goods tracking easy and simple.

Get in touch with us today and one of our consultants will tailor a fulfillment plan that will help grow your business. To book a consultation, call (954) 582-7450 or email [email protected].

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Tips to Improve Your Inventory Management in 2022

With production uncertain during this unprecedented global pandemic, one of the best things your e-commerce business can do is to improve its inventory management. By equipping yourself with a streamlined and improved inventory management system, you’ll be better suited to handle the uncertainties in production chains that now plague businesses of all types and sizes.

The good news is that you don’t need a ton of capital or resources to improve your real-time inventory management. With the addition of strong inventory management software and a few improvements made to your process, you can begin to see immediate benefits.

That in mind, let’s explore several tips that will help you improve your inventory management.

Setting a Minimum Stock Level

There’s no faster way to annoy a customer than by advertising a product only for them to go online and find that the product is out of stock. In addition, by not having the product in stock when the customer logs on, you’re actually losing out a on pretty easy sale.

Don’t let that revenue evaporate! Instead, ensure that you have minimum stock levels in place that will trigger when an item gets down to a certain quantity. Once that level is reached, a minimum stock level informs you that’s time to buy more of that product in order to meet demand.

This helps your business remain ready to fulfill orders while also avoiding tying up money in stock that just sits on the shelves, waiting to potentially be sold off.

Improving Your Process

One thing that nearly all these improvements have in common is that they rely on a process that is reliable, accurate, and delivers useful data that will help inform future actions.

In other words, by streamlining your process and collecting data that can then be used to power metrics, analytics, and key performance indicators, you’ll create a feedback loop where the process is continuously self-improving the more efficient it gets and data it acquires.

Understanding Your Supply Chain

Now more than ever it’s critical that you understand your supply chain.

With so many disruptions coming about as a result of the pandemic, if you understand where your supply chain is strongest and where it is most vulnerable, you can begin to make contingency plans that will account for supply chain interruptions.

Contact more reliable suppliers, use analytics to predict when stock demand will surge, and keep gathering information regarding potential threats to your supply chain (like pandemic news) in order to keep your ship running in optimal shape.

Allocating Inventory Resources Effectively to Match Demand

Use data and metrics to determine which products are set to become hot at which times, which can help you plan for seasonal rushes and similar recurring, predictable changes. This can be accomplished by having a keen understanding of your client and your products.

Be Ready for the Unexpected

By definition, you can’t plan for the unexpected. But that doesn’t mean you can’t strengthen your business so that it’s more readily able to meet unexpected circumstances. Having contingency plans for supply chains and even delivery methods is a great way to account for these unforeseen scenarios.

Get Industry-Leading Service from APS Fulfillment, Inc. for All Your Inventory Requirements

Real-time inventory management can be stressful. There’s a lot of moving parts—and a lot of money on the line.

Every misstep can mean a lost customer and lost revenue.

The tips above help, but if you really want to improve your inventory management, APS Fulfillment, Inc. is your inventory management expert. Our software allows you and your customers to place an order and track its progress quickly and effortlessly.

Get in touch with us and book a consultation by calling (954) 582-7450 or email [email protected].

Also Read: Inventory Days on Hand: Why It Matters and How to Calculate It?

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What Is Order Cycle Time and How Can You Improve It?

If you’re a business owner, then you know that time is money. The faster you can get orders through your system and delivered to your customers, the more money you’ll make. That’s why improving order cycle time is so important.

In this blog post, we will discuss the benefits associated with improving order cycle time and how you can go about doing so.

What Is Order Cycle Time?

Order cycle time (OCT) is the total time from when an order is placed to when it is received. In other words, it is the time it takes to manufacture a product and get it into the hands of the customer.  OCT can be further broken down into several sub-categories, including manufacturing cycle time, procurement cycle time, and delivery cycle time.

There are many factors that can affect order cycle time, including the number of SKUs involved, the complexity of the assembly process, and the lead time for each component. In addition, order cycle times can be affected by seasonal fluctuations and changes in customer demand. OCT is typically measured in days, and companies often strive to reduce their cycle time for each order in order to improve customer satisfaction and reduce inventory levels.

Order cycle time is important because it directly impacts customer satisfaction. If an organization takes too long to fill an order, the customer may become frustrated and cancel the order. On the other hand, if an organization is able to fill orders quickly and efficiently, it will build goodwill and repeat business.

You may also like: What is Inventory Days on Hand? Why does it matter?

How to Improve Order Cycle Time?

Reducing OCT is important for any business that holds inventory because it can lead to lower inventory levels and higher customer satisfaction. There are several ways to improve order cycle time. Below we look at a few options your business could try.

Improve Warehouse Flow

Warehouse flow refers to the movement of inventory through the warehouse, from receiving to shipping. By improving warehouse flow, businesses can ensure that orders are processed and shipped more quickly. Additionally, improving warehouse flow can help to reduce errors and improve accuracy. As a result, businesses that take steps to improve their warehouse flow are likely to see a corresponding improvement in their OCT.

Use Software to Maintain Steady Inventory

Order cycle time can be improved by using software to maintain steady inventory. This is because when a company has a lot of inventory, it takes longer to process an order and get it to the customer. By using software to keep track of inventory, companies can make sure they have just enough inventory on hand to fill orders quickly and efficiently. In turn, this can help to reduce order cycle time and improve customer satisfaction.

Keep Measuring Cycle Time

Keeping track of the cycle time for each order and identifying which tasks are taking the longest is vital to running a successful warehouse. Once you know which tasks are causing delays, you can work on streamlining them. For example, if orders are regularly getting held up in the packaging stage, you might want to invest in new packing materials or machinery that can speed up the process.

Outsource to a 3PL Provider

By outsourcing to a 3PL provider, businesses can focus on their core competencies and improve order cycle time. A 3PL provider can manage inventory, plan shipments, and track orders, as well as provide customer service and support. You can also improve your order cycle time by automating order processing and using a warehouse management system. This can help to reduce errors and improve accuracy, as well as optimize operations and improve productivity.

Hire APS Fulfillment, Inc. to Reduce Your Order Cycle Time

Reducing order cycle time is essential for any business that wants to stay competitive. If you are looking for ways to reduce your OCT, outsourcing to APS Fulfillment, Inc. is an excellent solution.

We offer full-service e-commerce fulfillment out of Miami that includes state-of-the-art warehouse management software (WMS), and we make inventory management and goods tracking easy. We’ll also support your business and automate the warehousing, prepping, shipping, picking, and packing of your orders!

Get in touch with us and one of our consultants will tailor a fulfillment plan designed to grow your business. Book a consultation by calling (954) 582-7450 or email [email protected].

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What are Inventory Risks and How to Avoid Them?

How to Avoid Inventory RisksBusinesses have a lot to worry about—from inventory management and sales goals to meeting customer demands. But one of the biggest concerns for business owners is inventory risk.

Inventory risks refer to various circumstances that might make a company unable to sell their products due to unexpected changes in demand or a loss in product value. This can lead to lost sales and a decline in customer satisfaction.

In this blog post, we will discuss some common inventory risks and how to avoid them. We will also talk about how a 3PL provider can help you resolve any inventory risks you may face.

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How to Reduce Inventory Write-Offs

reduce inventory write-offs

A dreaded term in the fulfillment industry is inventory write-off. It is the formal recognition that some of a company’s inventory no longer has value and cannot be sold. Sometimes inventory write-offs are necessary; sometimes items go out of style and need to be reworked or recycled for another purpose. Other times, a product gets damaged in the warehouse, either during storage or transportation, and has to be written-off. If write-offs happen here or there, it won’t cause a huge loss to your organization; however, if they are happening frequently, it indicates that your company has poor inventory management. Here are some important tips on how to prevent and reduce inventory write offs with a proper inventory management system in place.

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9 Steps to Solve Common Inventory Problems

Common Inventory Problems

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Any organization that stores items in its warehouse needs some sort of inventory management. Without a proper strategy in place, your organization will face multiple challenges that could cost you money, waste time, and lead to poor customer service. Since the marketplace is constantly changing, you need to be able to adjust your processes to adapt to unexpected shifts. If you work within the e-commerce realm, you already know how important inventory efficiency is to draw in more customers and meet their demands. If you want to have a positive brand reputation, you will need to provide exceptional service at top speeds—after all, this is what customers expect. Here how to solve common inventory problems to ensure better product availability, customer service, and efficiency across the board

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Why Your Business Needs Real-Time Inventory Management

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What is real-time inventory management and why does it matter? Real-time inventory management is the process of keeping track of inventory sales and purchases as soon as they occur by using software that gives the entire company a picture of what’s happening. It allows your organization to have the information it needs to react faster to specific needs in the supply chain. Real-time systems record every transaction immediately, to allow for greater accuracy than periodically updating the inventory at certain intervals. Here are the benefits of real-time inventory management and why you should implement it in your supply chain.

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How to Improve Stock Control

How to Improve Stock Control

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Inventory management is one of the most important aspects of a successful business. Understanding the need for effective stock control is only part of the solution. You should also know how to implement it and make the most of it. There are various reliable strategies for improving inventory control, such as characterization, integrated mobile technology, warehouse management systems, and supplier relationship management. These strategies and more provide a foundation to improve your inventory management. If you’re wondering how to improve stock control, here are some tips to consider.

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How to Identify Slow Moving Inventory

Slow Moving Inventory

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Slow-moving inventory is defined as stock that has had little customer demand over a certain period of time. But how do you identify slow-moving inventory? What qualifies as little customer demand? All of these questions are important to ask yourself when reviewing your inventory strategy. If your focus is on growing your business and staying ahead of your competitors, it’s important to dedicate time to improving your fast-moving inventory and managing the slow movers. Here’s why slow movers are a problem and how you can identify them to establish a strong growth strategy.

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Common Inventory Mistakes e-Commerce Startups Make

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If you’re new to the e-commerce industry, you may have some concerns regarding setting up an effective web site, finding your target customers, meeting your customers’ needs with your products or services, and providing quality customer service. Among these concerns, the most important aspect is solving inventory management challenges. Inventory management is so important because it affects every other area of your business. Managing inventory can be challenging for well-established businesses, so ensuring your startup is prepared to avoid inventory management mistakes is key to your success. Here are the most common inventory management mistakes by e-commerce startups and how you can get help to prevent these mistakes.

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