To liquidate the inventory and to reduce the working capital i.e. to improve cash generation from operations, strategy is as below Short term steps: 1)Sales order book to analyze to identify fast moving SKUs and slow-moving SKUs from FG liquidation purpose 2)For RM consumption, need to check production plan based on sales plan 3)To control further purchase of RM 4)Cash & carry business with customers and extended credit period from suppliers 5)Short term borrowing arrangement at minimum ROI Long term steps: 1)To check SNOP 2)Automated MRP system

Pour calculer la marge brute, vous pouvez utiliser la formule suivante : Marge brute = Prix de vente - Coût des marchandises vendues Ensuite, pour calculer la marge nette, utilisez la formule suivante : Marge nette = Marge brute - Frais d'exploitation Maintenant, si vous voulez offrir une réduction de 10% sur votre produit, vous pouvez calculer la réduction possible en multipliant le prix de vente par le pourcentage de réduction : Réduction = Prix de vente x Pourcentage de réduction En prenant cela en compte, vous pouvez ajuster votre marge brute et votre marge nette pour voir si vous pouvez vous permettre d'offrir cette réduction tout en maintenant votre rentabilité.

When stocks are piling up , first thing is to put a control on further procurement and procurement to be mapped with immediate requirement of materials for production / supply. Look at ageing of inventory and identify what products can be offered on discount which can generate the cash from non moving inventory to ease up the cash flow situation.

Inventory pile up happens due to various reasons like change in market conditions, erroneous planning, delay in delivery etc. While we need to reduce inventory levels and improve cash flow, steps to be taken would largely depend on the nature of the Inventory, like FG, RM or spares. We also need to deep dive and find out the reasons which contributed to the current situation and make systemic corrections to avoid same issues in future.

A few months ago, I found myself facing an overwhelming amount of inventory in my small business. It was a result of underestimating demand, and I could feel the strain on my cash flow. I knew I had to act fast. I started by assessing the slow-moving items and created special promotions to encourage sales. I reached out to my suppliers and negotiated longer payment terms, which provided some breathing room. Additionally, I utilized a more accurate forecasting method, allowing me to better plan future orders. Slowly, I started seeing the results—inventory turnover improved, and cash flow stabilized. It was a reminder of the importance of adaptability and proactive management.

Inventory and cash flow are like a see-saw—too much focus on one can tip the balance and impact the other. Good inventory management improves cash flow because you have the right amount of inventory in hand to meet the demand. There is no cash tied up in inventory as a non-cash item nor do you have less inventory that is unable to meet demand (causing missed sales).

Effective inventory and cash flow management requires a strategic approach. Analyzing sales data is crucial to identifying slow moving stock, enabling targeted promotions or discounts to clear excess inventory. Optimizing ordering processes by aligning purchase quantities with demand forecasts minimizes overstocking and storage costs. Additionally, negotiating favorable terms with suppliers such as extended payment periods or bulk discounts can significantly improve cash flow. These strategies not only help maintain a healthy cash flow but also streamline operations and maximize profitability.