We call the inventory turnover rate to calculate how many times the goods in the business turn into money in a year.
Can we say that as the goods in the warehouse increase, the return on equity decreases?
Of course we can.
Can we consider businesses that have large quantities of products to be sold in their stocks as strong?
Of course it is possible.
Do you think there is a contradiction in what is written?
What could be the root cause of the contradiction?
Although stocks seem to be hunched in financial terms, companies with strong financial investments can make serious gains with stock cost studies when the supply, storage and transportation processes are analyzed correctly. According to a study, if the site is not immediately reached for shopping on the Internet, the shopping rate from that site drops by 20%, and consider the return cancellations because they cannot be delivered on time, how much the costs increase.
Companies that dominate their stocks will gain in the future, it doesn’t matter whether you have products in your stocks or not, it matters what products you have or not in stock, we call this stock management, that is, the most critical process in which we can measure the power and capability of companies.
The world has been shaken by the Corona virus, businesses that have protective masks in their stocks have earned 400% exorbitant prices, of course, this process is unethical and cannot be shown as an example.
We will not be able to reach many products produced in China very soon, manufacturers will look for new production sites in order to manage the existing sales organization, countries with stocks and workforce will greatly increase their share of this cake, here is an example that tells you how important stocks are.
When stocks are meticulously followed in businesses, warehouses will contribute to the business that will play an active role in the profitability of the business, otherwise many outdated and outdated products waiting to be sold will reduce the profitability of the companies and cause them to stumble or even go bankrupt.
Although businesses seem similar to each other, they actually have very different aspects from each other, so if you copy and paste the written rules and try to apply them in your business, you may not be successful.
Imagine that you have a bad football team, if you bring the most popular coach in the world, what can he add to your team?
Imagine that you own a profitable E-Commerce site, you are buying and selling many products whose internal dynamics you do not know, you have set up your error system so that you manage the organization with zero stock, one day you try to establish a factory for a few products whose internal dynamics you do not know, do you think your knowledge and experience is sufficient for this job? Will it contribute to your business?
You should analyze first and then be ready for change. If you have made your decision, you will be successful when you set up the system in accordance with your corporate culture.
Someone needs to explain to the ‘management’ that purchasing is not the cheapest one. Does the product arrive at the desired time, in accordance with the norms, with the standards determined?
I brought it to the company, no matter how the warehouse takes it, today’s problem that has turned into cancer, unless companies in our country determine and implement their own Key Performance indicators, a man snaps his finger to close his mistake/ mistakes and the problem is thought to be solved.
What if the top management systematically knew that the processes that they could not question and did not know what they were affecting could be measured by the stock turnover rate?
How and by whom should inventory turnover be analyzed in companies?
Since stocks can be melted through sales, all processes from purchasing cost to stocking cost and even the procurement stage should be analyzed by the relevant people and the application should be made in this direction. When the procurement process is calculated as 6 months, you will incur great losses for your business.
Low turnover rate does not mean the same thing for every company, your company can produce milk or swimwear, so do not copy and paste the systems. Stay up-to-date with a knowledgeable manager and a team that knows their job so that your business can be passed on from generation to generation.
Contrary to what is known, high turnover rate is not a concept that every business wants to have, although it is thought that the products in the stocks are sold quickly and the product turnover is ensured, the high speed indicates that due to insufficient stocks, there is a shortage of stocks and the balance in the market may change, as in the case of China. it could be.
When considering how many companies know and implement these, how the management determines the personnel who will direct these works, and what KPI affects, the internal dynamics of the companies emerge, I leave the answer to the question of what would have happened if the external audit companies had audited the publicly traded companies on the stock exchange at the right rate.
Let’s continue with an example, you need 10 cakes on March 1, the supplier sent you 12 pieces of the product on February 28, what would you do?
The warehouse receives that product under all circumstances, let’s say it didn’t, think about the problems that might arise, let’s say it did what it shouldn’t have done and got it, what will happen now, the return rate is almost impossible.
What will happen now, your finance will have to bear the cost of 1 month for the product that arrives 1 day before the due date, it will bear the tax cost paid prematurely due to VAT calculation, what will be the inventory cost for those 2 extra products that affect the inventory turnover rate, and most importantly, who will be responsible for this KPI? to be written
A purchase that doesn’t make a sound because its product arrived ahead of time?
To the warehouse, which is “forced to take” the product that should not be bought before the desired amount before the day?
Keep as much stock as you want in your warehouses according to ABC analysis, try to copy the KPI from somewhere and adapt it to your company.
Exactly in this context, your personnel turnover rate, which is as important as stock turnover, comes into play, collect the entry dates of all your employees and divide it by the time from the company’s establishment year to today, let’s see how many personnel changes you make per year, analyze how important is the merit, that is, the investment in people, from where the mistake is. .