Quantity- On-Hand

The Quantity-on-Hand QuickGuide

A brief word about motivationEvery business management system worth considering is designed to keep track of inventory. It is, after all, your largest asset, and your largest capital investment.

Yes, your system does other things—notably, POS, purchasing, receiving, and lots of reporting. It may also help you manage the financial side of your business.

But at the heart of every one of these systems is inventory. Accurate inventory numbers drive virtually every other function these systems are designed to perform.

Q: Which business keeps their business management systems’ inventory quantity-on-hand (QOH) current, up-to-date, accurate?

A: That one’s easy. It’s the business that wants maximum sales, customer loyalty, margins and profits.

You do want those things, don’t you?

We thought so.

One very important preliminary step is to take a physical inventory. You have to get those counts into your system. After all, you have to start somewhere.

Whether you close down, and call an all-hands-on-deck on the best weekend of the year, or install a process to Cycle Count your inventory, it has to be done. If you don’t have an accurate count, you can’t accurately determine what to order. You also can’t generate an accurate Financial Statement for your business.

You will feel a lot better about the investment you’ve made in your business management system when you give it a chance to help you run your business more efficiently.

Now that you have counted, let’s keep that number up-to-date with:

• Good people• Key policies• Routine monitoring activities• Control processes

The good news is, you can start with a basic set of each of these, then build as you go.

Step 1: Physical Inventory

Step 2: Get Good People

You probably already have good people. You may have, well, other people, too—but you have some good people. It won’t hurt to get more. And we’ll leave that to you.

Meanwhile, as you put your inventory processes together, think about where the good people should go.

It might be that your very best thinkers and doers are also the best you have at working the counter. And that may give you pause when you’re deciding who should take the lead in receiving—a key role in inventory.

You may not want to take your best counterman away from your customers, even for two hours a day. So, you can have them come in early or stay late to do cycle counting. But it might be worth more to your bottom line.

In all likelihood, however, you’ll know which people to put where, and everyone will benefit, including your customers.

People! Put your good ones on keeping track of inventory.

Step 3: Set Some Policies

In at least one way we can think of, keeping inventory working well is like keeping order on the highways and byways.

Things work better when everyone follows a basic set of rules.

You’ll need to set some clear policies and encourage everyone in your workplace to follow them. The specifics will vary depending on your business’ size, market, inventory breadth, and other factors. But some things are nearly universal—such as:

1. Every item to be stocked and/or sold has a unique part number. Some exceptions may exist, and EVERY effort must be made to limit these exceptions to the base minimum.

2. Except where completely impractical, every item has a barcode.

3. Barcodes affixed to stock—or stock locations—must be accurate. Always.

4. Your policy on returns, refunds and exchanges must be clear and consistent, and should address defective items, validation procedures and other pertinent issues. You need to post this policy for all Customers, and Employees must be well versed in the policy.

These are just examples, but... see where we’re going here?

Here’s a policy for setting policies:

If an activity, event, stakeholder or other factor of any kind affects items or the way they’re counted, received, sold, or returned, rules may be in order.

Don’t be afraid to set rules, nor to stress the value and importance of following those rules for every employee. Maintaining an accurate inventory is every employee’s responsibility. Anyone who touches product anyplace during the business cycle has the ability to affect the accuracy of an inventory.

Finally, know that there will be more rules to come—most of them specific to certain situations or activities. You’ll get to those, when you need to.

For now, just set up the basics, and follow them. And understand that they’re very, very important.

Step 4: Pay Attention!

(or... all about monitoring)Monitoring information is important for inventory mastery and means using your business management system.

Where to look in your system? Whatever gives you access to transactions—all the transactions that affect inventory. Think purchasing, receiving, POS, transfers, returns, write-offs, etc.

In the Epicor® Eagle® system, we call this the Inventory Transaction Register or ITR. It’s an invaluable tool for tracking and understanding changes to QOH.

NOTE: ITR is part of the System Audit & Reporting Tools package (SART). SART is a purchase option that includes multiple viewers and archives to track changes made to Customers, Vendors, Part Numbers, Quantities, etc…. For details and pricing, please contact an Epicor representative.

Eagle also includes a selection of viewers that make tracking inventory fluctuations easier.

Monitoring on the go. If you’re like most, you’re not sitting (or standing) in front of a computer all day. You’re on the floor, or visiting important customer sites, or your other store/warehouse location(s), and checking out the competition.

Monitoring shouldn’t—really, must not—stop just because you’re away from your desk. What’s selling today and what isn’t? Where do you have extra quantities of a hot item? Which stores or inventory classes are lagging and leading?

Use a mobile app of some kind (like Epicor Eagle Mobile Manager) to get access to this kind of intelligence, where and when you need it. Having this kind of visibility at a glance gives you the power to respond quickly to issues and opportunities.

Other things to watch for every day:

• Low inventory: which items are at risk of stock outs?

• Review Quantity-on-Hand for your Popular items. If your QOH is less than your Order Point, you are at risk of running out. You can use an analytics tool to get this information.

• Excess inventory: where do you have capital needlessly tied up?

• Review Quantity-on-Hand vs. Order Points. If your QOH is greater than the Order Point, then you are likely sitting on excess product and dollars, particularly if the items’ Popularity Code is a C, D, or X. Build a query in your analytics tool to get this information.

• Inventory value by location and by vendor

• Run reports nightly to get the information and better understand where your inventory is. Use these reports to get the values.

• Top sellers (and bottom-dwellers, sales-wise)

• It’s all about checking the popularity of parts you stock. Run a report at least weekly to analyze your items by their popularity.

• If items are not selling, come up with a plan to reduce or eliminate them.

• Create promotions to attract buyers to non-selling items.

• Utilize an online marketplace to expand your customer base and sell those slow moving parts and dead stock.

Step 5: Take Control

...by using controls.Think of a control as a procedure, technique or tool for keeping QOH accurate. Controls have lots of other benefits too, but we’ll stay focused on inventory. Here are some widely used examples:

• Set and use reorder points

• Set your reorder calculations in your business management system. It may calculate when you need to reorder and do it automatically for you.

• Tools for systematic cycle counting (continuous physical inventory done in cycles according to physical location, category, or other attribute)

• Use your RF gun running Eagle Mobile Inventory to capture your counts.

• When your counts are captured, they can be reviewed and allow you to check your QOH variances AND assign Shrinkage Type Codes to provide better tracking of shrinkage. If you can identify a business process that is generating shrinkage, you can take the steps to correct it.

• Use tools for creating and using forecasting models to predict demand and drive replenishment

• Accurately predicting product demand allows you to make the best possible demand predictions based on past sales history.

• Tools for balancing stock across multiple stores / locations

• Reduce the amount of time it takes you to balance inventory levels across stores by utilizing tools to transfer stock. This allows you to make product movement decisions. Some tools will allow the business management system to auto-generate transfers to reduce the amount of time it takes you to manage a multi-store inventory.

Epicor Eagle for the Aftermarket provides a wealth of inventory control points and tools, found in both the core system and in inventory-focused solutions

Contact Epicor today for more information. 888.463.4700 | automotive.marketing@epicor.com

4120 Dublin Boulevard, Suite 300, Dublin, CA 94568 USA

Toll Free: +1.888.448.2636 Direct: +1.925.361.9900 Fax: +1.925.361.9999 www.epicor.com

© The contents of this document are for informational purposes only and are subject to change without notice. Epicor Software Corporation makes no guarantee, representations or warranties with regard to the enclosed information and specifically disclaims, to the full extent of the law, any applicable implied warranties, such as fitness for a particular purpose, merchantability, satisfactory quality or reasonable skill and care. This document and its contents, including the viewpoints, dates and functional content expressed herein are believed to be accurate as of its date of publication, July 2013. The usage of any Epicor software shall be pursuant to the applicable end user license agreement and the performance of any consulting services by Epicor personnel shall be pursuant to applicable standard services terms and conditions. Usage of the solution(s) described in this document with other Epicor software or third party products may require the purchase of licenses for such other products. Epicor and the Epicor logo are trademarks of Epicor Software Corporation in the United States and other countries. All other trademarks mentioned are the property of their respective owners. ©2013 Epicor Software Corporation. All rights reserved.

There are no limits to what you can do. Talk to an Epicor Representative today and learn how you can effectively manage your Quantity-on-Hand today.

888.463.4700 | automotive.marketing@epicor.com