What Does It Cost When You Lose Track of Your Inventory?
By Mike Dorris
What a strange question! However it is a question you really must consider if you do not have a solid centralized system that tracks all your valuable seed inventory through all of your business processes and warehouses. How easy it is to forget to record a broken bag during the conditioning and packaging process or worse yet lose a partial pallet of seed in the back of the warehouse because it was moved several times and not recorded.
Here’s an exercise – what is one percent of your yearly inventory worth? Divide that number by 12 to see that amount by month. What could you do with that amount of money every month if you had it? Here’s another question: how many inventory turns do you have per year? What if you lose one-half percent per turn? That adds up to even more money!
It is important to consider yearly inventory write-offs too. What if that one percent of missing inventory should have been written off this year? If you could be writing off another one percent of your inventory total and you don’t, shame on you. Obviously, your goal should be to minimize your write-offs and sell everything possible. But you are entitled to every write-off you can document and that’s better than just throwing that one percent out the window.
Managing your inventory is vital to the success of your business. Having a poor inventory management system means you really don’t know what you have or where it is, what you have available to sell and what is not salable. (I did not even touch on the fact that you also need to track the lab test results for each lot in your inventory and sell the oldest first before the germination tests cause the lot to fall below the allowable rate and become unsalable).
Eliminating or dramatically lowering inventory losses is one more way to justify the purchase of a centralized software program. Using software that provides tracking of all seed products by lot and inventory location means a great ROI and a quick payback of the initial purchase investment.