Essentials of Inventory Management

Overview

Timeless stock-keeping fundamentals meet up-to-the minute technologies to optimize efficiency and drive profits!
Inventory management is about more than counting what you've got. It's about understanding business realities and making decisions that balance current demand with future needs—while keeping overhead and operating costs to a minimum.

Now in its Second Edition, Essentials of Inventory Management gives inventory professionals the information they need to maximize productivity in key areas, from physical stock issues to problem identification and resolution to technologies like RFID and other automated inventory mechanisms. Perfect for novice and veteran managers alike, this ultra-practical book covers topics such as:

Forecasting and replenishment strategies • Differences between retail and manufacturing inventories • Materials requirements planning and just-in-time inventory systems • Simple formulas for calculating quantities and schedules • Management of inventory as a physical reality and a monetary value • Supply chain risk management

Complete with detailed examples, handy tools, and a revised and expanded chapter analyzing "Why Inventory Systems Fail and How to Fix Them,? this nontechnical yet thorough guide is perfect for both instructional and on-the-job use.

About the Author

MAX MULLER has been an executive for a wide range of product distributors. His seminars throughout the United States, Canada, and the United Kingdom have drawn more than 100,000 attendees. His books include The Manager's Guide to HR (978-0-8144-1076-9).

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Cover Copy

Inventory management involves a lot more than just counting what you've got. Now in a thoroughly updated and expanded second edition, Essentials of Inventory Management covers topics such as:

Forecasting and replenishment strategies • Differences between retail and manufacturing inventories • Materials requirements planning and just-in-time inventory systems • Simple formulas for calculating quantities and schedules • Management of inventory as a physical reality and a database object • Supply chain risk management.

Perfect for novice and veteran managers alike, this ultra-practical book provides you with the up-to-date and ready-to-use information you need to maximize productivity in key areas from physical control and layout to problem identification and resolution.

Complete with detailed examples, handy tools, and a revised and expanded chapter analyzing "Why Inventory Systems Fail and How to Fix Them,? the book familiarizes you with hard-core, timeless stock-keeping fundamentals that will allow you to keep your operation running smoothly and efficiently. Addressing all items both in their tangible form ("shelf count?) and intangible forms ("record count? and monetary worth), the book arms you with down-to-earth information on automated inventory identification systems, methods for analyzing and remedying dysfunctions, and the nature and scope of possible conflicts created by reducing "waste? within a supply chain.

Along with detailed explanations of multiple cycle counting methodologies and financial statement insights for the nonfinancial manager, the book provides and explains the basic formulas that will allow you to compute breakeven points, profit margins, markups and markdowns, as well as selling price and margin percentages. You'll learn how to employ basic problem-solving techniques toward issue resolution, control the physical location of inventory in a more efficient manner, select the cycle counting inventory method that is right for you, and appreciate the fundamental differences between finished goods inventories in the retail/distribution sectors and raw materials and work-in-process inventories found in the manufacturing environment.

Getting past the theory and into the daily, practical techniques and strategies that will enable you to do a better job managing your inventory, Essentials of Inventory Management remains the go-to guide for all inventory management professionals.

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Jacket Copy

The most thorough introduction available regarding inventory management—now thoroughly updated and expanded—Essentials of Inventory Management gives you the answers you need to every question you'll ever have about core inventory concepts, from a financial, physical, forecasting, and operational standpoint. Whether you're a seasoned inventory control professional, new to stockroom/ warehouse management, or a small business owner who needs to keep on top of everything, this essential guide provides you with timeless stock-keeping fundamentals for optimizing efficiency and driving profits.

Perfect for both instructional and on-the-job use, this nontechnical yet thorough guide helps you understand business realities and to make decisions that balance current demand with future needs while keeping overhead and operating costs to a minimum. Focusing on daily-use inventory concepts and enabling you to analyze and fix dysfunctions when they occur, the book provides the tools and practical guidance you need to:

• Forecast inventory levels and undertake stock replenishment so you have the right items, in the right quantities, at the right time, and in the right place.

• Apply simple formulas to compute breakeven points, profit margins, markups and markdowns, as well as selling price and margin percentages.

• Use financial ratios to improve the operation of your business.

• Manage inventory as both a physical and database object.

• Set up effective stock locator systems.

• Implement efficient item placement theories.

• Consider the differences between finished-goods (retail) inventories and raw materials or work-in-process (manufacturing) inventories.

• Decide when to dispose of dead stock.

• Choose the right cycle counting method for your organization and use it to head off long-range problems.

• Understand materials requirements planning (MRP) and just-in-time (JIT) inventory systems.

• Guard against supply chain risks.

From physical stock issues to problem identification and resolution to technologies like RFID and other automated inventory mechanisms, the second edition of Essentials of Inventory Management is a no-nonsense, how-to-get-it-done-right guide every inventory manager will turn to again and again.

MAX MULLER is an attorney who has been chief executive officer or chief operating officer for numerous companies distributing products ranging from food to ATMs to safety equipment. An authorized General Industry Outreach Trainer for the Occupational Safety and Health Administration (OSHA), U.S. Department of Labor, his seminars throughout the United States, Canada, and the United Kingdom have drawn more than 100,000 attendees. His books include The Manager's Guide to HR as well as the first edition of Essentials of Inventory Management.

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Excerpt

Introduction to the Second Edition

When I wrote the first edition of Essentials of Inventory Management

my objective was to present, in accessible language supported

by copious illustrations and examples, timeless inventory

management concepts and techniques. My purpose was to give the

reader a fundamental understanding of inventory as it exists in the

physical world (shelf count), and as an intangible item (record

count) existing in a computer database and/or on paper.

The basic principles covered in that edition are as relevant today,

even with the explosion of Internet-based e-commerce solutions to

many inventory and materials management issues, as when they

were first written.

I am pleased to note that the book was successful. It has been

translated into Spanish, with distribution in a number of Spanishspeaking

countries, and, an English-language soft cover edition is

being distributed in India, Pakistan, Sri Lanka, Nepal, and

Bangladesh. AMACOM Books and I have received excellent responses

to the first edition from individuals just beginning their careers

in fields related to inventory management, as well as from

experienced materials managers who reported that the book reminded

them of effective techniques they had known but had forgotten

over the years.

Over the past several years, as I have continued to lecture and

consult, it became apparent that the book could be enhanced by

adding chapters and sections on subjects such as cycle counting,

enterprise resource planning, and supply chain management. And

so, this second edition was born.

The second edition retains the timeless, essential inventory

management basics that are the hallmarks of the first edition, with

new and expanded information that includes:

Introduction to the second edition

FM-Essential Inventory Mgmt 12/6/10 12:55 PM Page xi

? An expansion of Chapter 2, "Inventory as Money,? to

include a section dealing with profit margins and

merchandising metrics and containing both examples

and formulae related to merchandising.

? A renamed Chapter 4, "Automated Inventory

Identification Systems,? with new material on Radio

Frequency Identification Systems (RFID) that discusses

the strengths and challenges associated with this

technology.

? New coverage in Chapter 5, "Planning and

Replenishment Concepts,? of the benefits of enterprise

resource planning (ERP), including the five main reasons

why an enterprise should consider incorporating this

concept into its organization.

? A revised and expanded Chapter 6, "Why Inventory

Systems Fail and How to Fix Them,? which includes new

material regarding how to distinguish A-B-C cycle

counting analysis using a single factor from approaches

combining multiple factors (e.g., dollar value and usage

rate). The chapter now explains in detail how to

undertake an A-B-C cycle counting analysis by

combining multiple factors.

? A new Chapter 7, "Basics of Supply Chain Risk

Management,? reveals how the very techniques that have

allowed American businesses to slash operating costs and

inventories by embracing just-in-time and lean

manufacturing techniques have made them vulnerable to

a number of serious supply chain risks. It offers

suggestions regarding steps organizations should take in

trying to balance the risks and rewards of SCM, and

xii Introduction to the second edition

FM-Essential Inventory Mgmt 12/6/10 12:55 PM Page xii

provides a starting point to any supply chain risk

management effort.

And, of course, as it has since the first edition, the book introduces

the new stockroom/warehouse manager, the nonfinancial

inventory control individual, and the small business owner to the

fundamental nature of inventory from financial, physical, forecasting,

and operational standpoints. In addition, it explains in easily

understandable terms the concepts underlying automated identification

of product through both bar coding and RFID.

The ultimate goal of this book is to present immediately usable

information in the areas of forecasting, physical control and layout,

problem recognition, and resolution, as well as how to begin to better

manage a supply chain.

Ultimately, Essentials of Inventory Management will enable you

to:

? Understand that modern practice discourages holding

large quantities of inventory and encourages only having

amounts on hand required for current needs.

? Grasp the signific ance of controlling actual, on-hand

inventory as both a physical object (shelf count) and as

an intangible object (record count and monetary worth).

? Appreciate the fundamental differences between finished

goods inventories in the retail/distribution sectors and

raw materials and work-in-process inventories found in

the manufacturing environment.

? Apply basic formulae to calculating inventory quantities.

? Utilize basic formulae to compute breakeven points,

profit margins, markups and markdowns, as well as

selling price and margin percentages.

Introduction to the second edition xiii

FM-Essential Inventory Mgmt 12/6/10 12:55 PM Page xiii

? Select the cycle counting inventory method that is right

for you.

? Undertake an A-B-C cycle counting analysis by

combining multiple factors.

? Recognize and analyze dysfunctions within your own

operation.

? Employ basic problem-solving techniques to issue

resolution.

? Control the physical location of inventory in a more

efficient manner.

? Analyze whether or not RFID is right for your

organization.

? Be aware of supply chain management risks and possible

solutions.

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Essentials of Inventory Management

Overview

About the Author

Cover Copy

Jacket Copy

Excerpt

Table of Contents

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