One of the most common concerns is knowing if your inventories are an expense or if they are truly an investment. Fortunately, there is a key indicator that allows you to easily evaluate the profitability of your inventories: the Gross Margin of Return on Inventory Investment or GMROI for its acronym in English or you can consult inventory management firms<\/a><\/strong><\/a> for your ease.<\/p>\n\n\n\n There are a\nlarge number of methods to improve your return on investment; one of the most\nimportant is undoubtedly reducing the costs associated with your inventories.\nNext, we will focus on these.<\/p>\n\n\n\n Freight cost<\/strong><\/p>\n\n\n\n How to take care\nof the costs of inventories of a company?<\/p>\n\n\n\n A common mistake\nis to believe that the total capital invested in your supplies and merchandise\nis the only cost of your inventories. However, they should consider the costs\nrelated to the management, maintenance, and storage. The latter becomes between\n20 and 30% of the available invested value.<\/p>\n\n\n\n We are already\nunderstanding why it is vitally important to take care of the costs of our\ninventories! Here are some of the main costs generated by the administration\nand storage of goods. These are classified into 3 categories:<\/p>\n\n\n\n Costs for placing an order<\/strong><\/p>\n\n\n\n These are the\ncosts generated by the activities related to the request for restocking. Then\nsome of the main ones.<\/p>\n\n\n\n Processing\ncosts: refers to the cost of all administrative activities to place the order.\nFor example billing, communication, and accounting. These types of costs are\nconsidered fixed.<\/p>\n\n\n\n Transportation\nand reception costs: are those related to the transport and receipt of\nmerchandise. This is a variable cost since the cost of transportation will\ndepend on the volume ordered. The same goes for a receipt when downloading and\ninspecting the merchandise.<\/p>\n\n\n\n Storage costs<\/strong><\/p>\n\n\n\n Each company defines the type of storage suitable for their business; this includes deciding whether their warehouses are rented or own. Additionally, there are costs for the management of inventory, equipment, maintenance of the establishment, services of the same – such as electricity and water – , insurance against theft etc. which is then looked out by the consulted inventory management company in India.<\/p>\n\n\n\n Breaking or lack of stock costs<\/strong><\/p>\n\n\n\n That’s right,\nnot having the necessary inventory to meet the demand at the time an order is\nissued generates costs and are usually the most problematic in business. These\nare not only possible lost sales, but include all costs related to additional\norders, supplier changes, loss of customer loyalty, and, in the worst case, the\ntotal loss of one of them.<\/p>\n\n\n\n Understanding\nthat all areas are part of great gear, as well as ensuring costs and effective\ninventory control is key to growing any business.<\/p>\n","protected":false},"excerpt":{"rendered":" Keeping an efficient control of your inventory will always be an investment for your company, not only because a significant percentage of the budget is directed to the area of \u200b\u200boperations, but because of the great benefits it brings in terms of the cash flow that is required to grow an SME. For small and…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[9,8,30,31,29],"class_list":["post-61","post","type-post","status-publish","format-standard","hentry","category-inventory-management","tag-inventory-management-best-practices","tag-inventory-management-companies","tag-inventory-management-solutions-india","tag-nventory-management-services","tag-online-inventory-management-system"],"_links":{"self":[{"href":"https:\/\/www.cac.net.in\/blog\/wp-json\/wp\/v2\/posts\/61","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.cac.net.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.cac.net.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.cac.net.in\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.cac.net.in\/blog\/wp-json\/wp\/v2\/comments?post=61"}],"version-history":[{"count":1,"href":"https:\/\/www.cac.net.in\/blog\/wp-json\/wp\/v2\/posts\/61\/revisions"}],"predecessor-version":[{"id":63,"href":"https:\/\/www.cac.net.in\/blog\/wp-json\/wp\/v2\/posts\/61\/revisions\/63"}],"wp:attachment":[{"href":"https:\/\/www.cac.net.in\/blog\/wp-json\/wp\/v2\/media?parent=61"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.cac.net.in\/blog\/wp-json\/wp\/v2\/categories?post=61"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.cac.net.in\/blog\/wp-json\/wp\/v2\/tags?post=61"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"](\"https:\/\/www.cac.net.in\/blog\/wp-content\/uploads\/2019\/11\/64294963_315026036105445_6055175211798495232_n.jpg\")
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