Importance of Inventory Value in Supply Chain

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Why inventory value is important?

Inventory bounds a lot of money. By the end of every financial year, inventory count in imperative and its value is added in financial statement. The calculation of inventory value at the beginning or end of every financial year is usually done in order to figure out cost of sales. The auditors may check inventory value randomly. Nevertheless inventory value has impact on the profit.

How inventory is valued?

It's not easy to determine the inventory value especially when you are purchasing a particular item continually at different rates. But companies use one of the following methods for inventory valuation.

First in First out (FIFO)

In this method the first item purchased is assumed to be sold first. In other words inventory on hand is supposed to be used first either purchasing the new one.

Average Cost

In this method the average cost of good purchased at the start of the year is considered for calculation

Last in First out (LIFO)

In this method the last item purchased is sold first.

In the remaining article we will discuss why inventory value is important in supply chain

You need inventory optimization

Do you know how much inventory you need to hold, where and for how much time? Today difficult economic conditions, competitive market due to technology involvement, short product life cycle and unpredictability in demand make it more exigent to design your supply chain policies. Even it’s challenging to make decision that how much time you should stock an item especially in the face of demand and variation in lead time of your whole supply chain. Oracle inventory optimization empowers you to make more balanced and effective revenue. It enables you to provide higher service levels to your customers at significantly lower cost by applying inventory postponement recommendations. Some of its key features are :

●     Demand, supply, and lead time variability

●     Account for seasonality trends and product life cycle characteristics

●     Model varying constraints over time

●     Postponement optimization

●     Min and max, quantity and days of supply

You have to consider all sorts of variability in your supply chain. Promotions, seasonal changes and introducing new products are the causes to variation in demand. Supply variability occurs due to lead-time uncertainties and supplier performance issues such as product quality and unreliable delivery. Keeping a close eye over variations in demand and supply, enables you to figure out accurate inventory investment, which is required to reach your goals of profitability at minimum possible cost while maintaining your position within inventory budget.

Deploy Prudence to accelerate planning alignment across your organization to unlock the rapid growing demands

Supply chain is a network made by manufacturer and its suppliers to complete a product. The chain means actually the links between multiple suppliers to provide the parts or elements of the
product. Later the product is distributed to warehouses or distribution centers after completion.
Finally the product is sent to stores where a user can buy the product. In short supply chain is a network of companies or departments in an organization.

Each node (manufacturer, supplier, distributor, retailer) have specific position in the chain. The link between nodes is made in a particular order. The product cannot reach to a node without passing from the previous node. The link between nodes add time and cost. Every company can have more than one supply chains for different products. The supply chain is not only just a supporter. But it has become a core component of every existing and new business. A good, fast and efficient supply chain can grow the business.

Today supply chain executives are looking for strategies that can help them to develop an efficient and cost saving supply chain. Those strategies must be flexible and scalable supported by digital technologies. With such strategies, the supply chain could not only grow but enable penetration to new geographic areas and have the ability to meet ever-changing user requirements or expectations.

To transform this into reality. We need to restructure our supply chain network with digital technologies. NAVfarm ERP solutions powered by Microsoft Dynamics NAV can take your supply network to new level of excellence.

Below we discuss some important points that how can we grow our supply chain network with unlimited number of users using NAVfarm ERP solutions.

Centralized Information
The objective of the supply chain is efficiency. A real-time and meticulous information play a vital role in it. Imagine every department such as procurement, sales, customer relation, production and shipping are sharing their respective information in real-time, the productivity level will definitely grow. Dynamics NAV provide a centralized information feature where each department can access the information any time and at any place. It means your working team can rapidly access reliable information to fulfil promises and deliver the order expeditiously.

Inventory Management and Transparency
Human error and deception are the indefinite issues with the supply chain. Another problem with inventory management is to match the physical numbers with number in the software. There are always some things which are forgotten or hidden somewhere. Dynamics NAV brings transparency in the whole supply chain network by providing real-time access to inventory details, order details, receipts and delivery status.

Automatic Ordering System
Generation of automatic order is one of best features of ERP systems. This feature is very important when you have countless number of users and you are required to meet their supply demands without any delay. Dynamics NAV has the ability to automate the whole process from purchase, sale and warehouse. The system automatically generates a new order when inventory level goes below a threshold value.

Just enter data one time and then focus on other things of higher values.

Livestock Management In Real Time

Technology is a flourishing entity. It is continuously impacting or changing the ways we adopted  before  in  order  to  manage  our routine works. Technology has penetrated in almost every aspect of our today’s life. For example we use technology in food industry, aviation, agriculture, business, shopping etc. With every passing day it is pushing the world to a whole new level where we can accomplish our tasks with more efficient and faster techniques.

After  the  innovation  of  internet  technology, today we have become able to control or manage  many  things  in  real  time.  In  other words internet is converting into real-time technology  usually  named  as  internet  of  things  (IoT).  Real-time  management  is  a process  of  continuously  analyzing  and  evaluating  the  data.  One  advantage  of  it,  an administrator  can  detect  an  uninviting  activity  as  soon  as it happens and can stop it before any further damage.

Livestock  industry  is  one  of  beneficiaries  of  IoT  for  real time management solutions. Farmers are taking advantages of internet to administer various parameters of livestock in real-time. Mostly a wireless sensor network system is used to collect data of various parameters such as hatchery temperature, information about feed, animal health, light intensity  in  poultry  etc.  Administrators  of  the  farms  can  use  mobile  phones  or  other gadgets to access the database of main controlling unit from some remote location. This activity  not  only  increases  the  productivity  but  saves  cost  too.  Hence  it  is  more profitable.

Below  we  highlight  some  of  prime  benefits  of  IoT  that  help  farmers  to  manage aforementioned parameters

Health Management :
IoT sensors can be used to monitor the health of the livestock. Usually the wearables are used which monitor heart rate, blood pressure and respiratory rate. This data is sent to farmer’s device to get an alert in case of any unusual variation or sign of sickness. So farmer can take appropriate action about particular animal.


Another  location  based  tracking  sensors  help  farmers  to  locate  sick  animals.  It  is especially  helpful  when  animals  are  raised  in  pastures.  Wearable  IoT  sensors  send real-time location of an animal who leaves the herd or not moving due to sickness.