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44 Inventory Management Key Terminologies

44 Inventory Management Key Terminologies

Inventory management can be pretty intimidating especially if you’re new in this role.  We have come up with 44 commonly used inventory terms that you can familiarize yourself with. Committing these inventory terms to memory and understanding them may help you sound intelligent when discussing inventory management.

 

3PL = Third-party logistics – is a third-party company that your business hires to manage product transportation, warehouse, customer order fulfilment, or all three. 

ABC Analysis – Is an approach for classifying items by dividing them up in three categories.  

AIDC = Automatic identification and data collection – is a range of technologies that are used to identify, record, communicate, and verify products, examples are barcodes, QR codes, RFID tags, etc. 

B2B – (business-to-business) where businesses make deals with another business

B2C – (business-to-customer) where a customer buys a good from a business 

Backorder – A scenario where the product gets all sold out even in the warehouse, making the customer having to wait until it comes back into stock. 

Break Bulk – the operation in which an item is broken down into smaller amounts before delivery to customers.

Business Strategy – the strategic concepts ideas, and decision that are made and executed that affect a business as a whole

Carrying Cost – refers to the expenses that come with storing inventory. 

Causal Forecast – is an approach that is used to measure the relationship between dependent and independent variables

Consumables – are a group of materials used to affiliate the order through but is not in the final product. 

CRM = Customer Relationship Management – is a software that helps manage and maintains current and potential customers. 

Cross-Docking – likes delivery from one semi-truck to the next, this system is like a relay with no storage in-between. 

Demand – the amount of goods wanted by customers

Destock – reduce by removing the amount of stock held

DSD = Direct-to-store delivery – Companies that use DSD do not wish to use a warehouse or distribution center to house their inventory. Instead products are being shipped straight from supplier to retailer. 

 

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EOQ = Economic Order Quantity – is the order size a company should purchase to minimize the storage costs

Electronic Data Interchange – a process of transferring data directly between remote computers

FIFO = First-in-first out – is when the oldest inventory good is shipped out first

Forecast – a future estimation that could happen

Forecast Value – the difference between actual value and forecast value

Holding Cost – the amount it costs to keep units of inventory in stock

Information System – An organizations system that is responsible for the control of information that flows through it 

Inventory – good that are in stock

Item Coding – is a way of identifying every single item in inventory

Lead Time – the difference between the time of the initial order and the time of delivery

LIFO = Last-in-last-out – is when the newest inventory good is shipped out last

Lost Sales – when customers do not proceed to checkout because they find a better deal else where 

Mass Customization – an operation that requires a mass collection of customized goods

Master Schedule – the detailed schedule of each commodity such as production, inventory, staffing, etc. 

Material Requirements Planning (MRP) – is a computer-based software that keeps track/manages the process of planning, production, and storing inventory

Mean Error – the difference between the true value and the measured value

Noise – not normal time series variations

Outsourcing – utilizing a third-party organizations or freelancer to complete external activities

Pipeline Stock – items that are currently in transit from being moved from one place to another

Price – the amount the seller is charging for a product

Replenishment – restocking of units in replacing goods that have been shipped out

Replenishment Rate – the rate material is being added to stock

Seasonal Stock – stocks that stay in operation for a season at a time

Shortage – happens when the demands of the consumer cannot be met because short of stock

Unit – the standard size of an item/good

Unitization – combining different goods into a singular load to ease the shipment

Warehouse – a large location where items/products/goods are held/stored

Work in Process – the goods currently being worked on

5 Ways to Grow Your Business During COVID-19

5 Ways to Grow Your Business During COVID-19

As we have seen, this pandemic has been detrimental to many businesses around the world. A lot of things are out of our control right now but one thing we can control is our ability to learn and grow. Your businesses response to a crisis such as COVID-19 is critical in maintaining and bettering your brand’s reputation. So here are 5 things your business, small or large, can start doing right now to protect and build your company during this pandemic. 

 

  • DON’T QUIT, KEEP GOING

 

To withdrawal during a crisis is a natural reaction. However, I can assure to you that right now is not the time to make hasty business decisions to back out. 

Everyone has revenue goals they wanted to hit this year and still can! Instead of retreating, reach out for a life line. Reach out to your partners, your customers, your employees. Let them know you’re facing the same challenges they are faces and that you’re with them for the long haul. We are all human and this pandemic affected everyone in very similar ways, one being we all had to stay home! Which is a great opportunity to leverage this crisis to relate to those you want to connect with. Many businesses will be sorry they retreated because they couldn’t see the opportunities through the noise of fear.

 

  • BE PROACTIVE

 

Although the world seemed to shut down, that does not mean you and your business have to! Now is a time where you have to grind in the dark to get rewarded in the light when we come out of this crisis. It’s not a time to sit and sulk but a time to be proactive and promote. One way to grow each day is to ask yourself, “What can I do today that will add value to someone?”

For example, if you’re a family owned business, it is time for you to spice it up and bring something different to the table. Something you can do is share one of your secret family recipes to keep your customers happy and engaged.

COVID-19 has impacted our world in ways we never saw coming or could even have imagined.   

 

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  •  LEVERAGE YOUR SOCIAL MEDIA

 

Launching a new product or brand right now may not be the best idea. However, consumers want to know how businesses are managing employees in regard to health and safety. 

Right now, is a great time to take advantage of social media by sharing some attention grabbing pictures of your employees with their coffee mugs and pets working remotely. This shows consumers that you care for their health and safely as well as bring a sense of humility to the situation. Now as people are beginning to head back to work, sharing pictures of your employees with face masks on is a way to ease the fear of your customers. 

 

  • SPREAD LOVE AND POSITIVITY

 

One thing to keep in mind is that this WILL pass. This is NOT permanent, let’s continue to lift one another up around us by spreading positivity and encouragement. There is so much fear rolling across the world, we need to see love and happiness more than ever before. By positioning your brand as a place where people can find happiness and not fear will give your business the upper hand. 

Motivation Monday, move your body Monday, Throwback Thursday, Freaky Friday, Hump Day, etc. are all great ways to use social media to bring light to your audiences feed. 

 

  • BE READY

 

It is always good to prepare for the worst in case it happens. What will you do if someone on your team gets diagnosed? How will you respond? What are the procedures you will implement for the rest of your team who has been exposed? These are good questions to ask to ensure the safety and safety of your team and customers. 

The PWC’s guidelines, Considering the Potential Business Impacts of the COVID-19 Outbreak, lists some strategic considerations businesses should follow:

  • Establish a cross-functional steering committee, led by a C-suite member. Ensure senior representation from business divisions plus specialist leadership such as HR, Legal, IT, Operations, Risk, Communications, Finance, Health and Safety, Procurement, Sales and Crisis and Business Continuity.
  • Establish and agree process for decision making and agree critical milestones.
  • Determine reasonable worst case scenarios to inform planning assumptions. Consider likely trigger points for decision-making. Review and refresh Crisis, Continuity and specialist plans (e.g. pandemic/COVID-19). Stress test assumptions and exercise plans
  • Prepare your core Incident Management Team (IMT) to coordinate response and containment efforts.
  • Appoint functional workstreams and owners, and align activity with response objectives.
  • Ensure alignment with organization reputation, purpose and values (e.g. supporting the wider community response).

Visit the PWC’s guidelines and more information on when Considering The Potential Business Impacts Of The COVID-19 Outbreak.

 

5 Things Entrepreneurs Should NEVER Do!

5 Things Entrepreneurs Should NEVER Do!

 

  • NEVER hold onto weak employees.

 

Most of the time entrepreneurs start out with a close team that works together to achieve the vision they created together. If overtime you see one of them underperforming and make it a normal habit to come into work with a bad attitude, you’ve got to let them go. They have become a liability for you and your company to waste time and money. 

 

  • NEVER say “yes” or “no” impulsively

 

When asked to do something, whether it’s a favor, a sense of obligation, a business deal, etc., it’s VERY important for entrepreneurs to ask themselves questions before impulsively saying “yes”. Some of these questions could be, “does this fit in my vision, am I doing this out of guilt, will this keep me on track, etc.” Saying yes to something too quickly can cause some major problems down the road. 

In addition, do not be so quick to say “no” either, whether it’s a business investment, favor, or any opportunity at that. It’s good to keep boundaries but it’s also necessary to take risks. If someone presents an investment opportunity to you do not be quick to say no to play it safe. However, great entrepreneurs spend some time calculating the risk before jumping into it. Take some time, think it through and then you can say yes or no, it will make you look wiser as well.  

 

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  • NEVER Procrastinate 

 

This might be an obvious point, but procrastination can also mean taking a longer time on one task which puts off doing another. It’s extremely important for entrepreneurs to be efficient, speed is extremely important especially at the beginning of your career. The faster you get things done the more opportunities present themselves to you. Time management goes hand-in-hand with procrastination. When someone has proficient time management skills they show little to no evidence of procrastinating. Whereas, someone who does not have good time management skills procrastinates immensely and suffers the consequences that comes with it. 

According to PMC’s article, The Relationship Between Procrastination, Learning Strategies and Statistics Anxiety Among Iranian College Students: A Canonical Correlation Analysis, authors Shahrum Vahedi and three others claim, “…that in a sample of graduate students enrolled in an introductory level educational research course, academic procrastination was related to a fear of failure and task aversiveness” (Vahedi, 2012). This study shows that one of the components to why people procrastination is fear, and this does not only pertain to college students. We see this in business as well, when we are trying something new and are not too confident about what we are doing it may seem intimidating at first, so our natural instinct is to put it off or try to find a way out of it. However, when you’re an entrepreneur you have to face things every single day that you’ve never done before. This is how you learn and become good at what you do.  

 

  • NEVER change strategies too often

 

A lot of people are quick to jump ship when things are not going as they expected right off the bat. It’s easy to let doubt slip into your mind but just remember great things take time, success does not happen overnight. You need to give your strategy some time to show its actual results before giving up. Let’s take blog writing for instance, you will see little to no traffic on your blogs, but you must continue to push out content. I would give this strategy 3-6 months before seeing any hard results. Usually at the 6 months mark you will have somewhat of a gauge on weather this strategy will work or not. Consistency and content go hand-in-hand when launching something new. Staying up-to-date with what people need/want and pushing content regularly will help you in measuring your strategy accurately.   

 

  • NEVER discount outsourcing

 

Entrepreneurs have to wear a lot of hats, especially in the beginning of launching their business. A lot of the time they figure that they should take advantage of their knowledge on marketing and sales for example by not hiring help. This is a wrong because as an entrepreneur you need to be focused on steering your businesses vision and growth, not so much the little detailed tasks. According to a survey on Statista, freelancers have increased by 4 million people from 2014-2019. Hiring freelancers by the hour allows you to focus on the big picture priorities your business needs to grow at the rate you need it to. Investing in people will benefit you, your business, and the other people, it’s hard to get a business up and running off the ground without help. In the end it will save you time and money!