Companys approach to Inventory Health
February 12, 2025
Living for the Next Quarter Of late, many publicly listed companies have been living “quarter to quarter” or the practice of setting targets, tracking them for progress, and closing out sales and revenue generating items based on the next quarter which is a short term imperative rather than planning for the longer term. This has […]
The confidence interval is a central concept of hypothesis testing. Although understanding its mathematical and statistical meaning is beyond the scope of this module, one needs to have a fair idea of the concept. Hence, a brief introduction of the confidence interval that is essential for the Six Sigma project team to understand is as […]
The Transformation of Business Intelligence from Analysis to Prediction Business Intelligence which refers to the slicing and dicing of data to mine it for clues on everything from consumer behaviour to the business strategies of rivals and competitors has come a long way since the earliest days when it was used for market intelligence to […]
During the election campaign in 2016, Donald Trump repeatedly stated that he planned to run the government like a business. He would use this as a unique selling point. All the previous presidents, as well as all of his competitors, were professionals like lawyers, doctors and so on. Donald Trump argues that since he was […]
The 1970’s The story of China’s growth began in the 1970’s. Back then China was an extremely poor country with one of the lowest per capita income in the world. The population of the country was largely agrarian. The output of food grains was so small that starving to death was a possibility in China. […]
While inventory classification of raw materials for Inventory Management purposes follows ABC Classification, Finished Goods inventory is classified under additional categories based on various attributes including sales volumes/patterns, functional attributes and operational requirements.
Finished Goods at the very basic level is manufactured and stocked separately depending upon the Business Units as well as the Sales Channels.
Global companies normally have plants spread over all continents and manufacture different categories of products. In such cases a particular countries requirement of certain products may be sourced from overseas factories of the company.
Inventory for such imported and bought out items is maintained under separate bucket to be able to identify them easily. Their valuation and costing and profit margins may be different from those of in house manufactured goods.
Further imported Goods would have import duty and tax liabilities, which may be different from that of in house manufactured inventory.
Example: Computers and Desktops are manufactured by Global MNCs like Dell, HP & Lenovo. They have established manufacturing facilities in various countries catering to the local and international markets. Typically they produce few of the SKUS locally and the other products are sourced from overseas facilities. They also buy monitors, keyboard and accessories from OE Suppliers. These are considered bought out items in their inventory l listing.
When a particular SKU is no longer salable due to lack of demand and has become obsolete, it gets classified under obsolete stock and continues to be valued in the books of accounts.
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