MANAGING YOUR STOCK DURING THE PANDEMIC.

The Coronavirus (Covid-19) pandemic has abruptly thrown the entire world into a new normal. We cannot at the moment ascertain when we shall return to normalcy, as new variants of the virus are being discovered around the world. Even, the much awaited vaccines, after its introduction is faced with vaccine apartheid, as richer nations have pre-purchased most.

As postulated by great Economists and citadels of learning of our time, the global consequences of the pandemic was the unbalanced balance sheets experienced by nations of the world in 2020. Thus, with dire consequences, nations of the world, no matter the class, whether developed, developing or under-developed could not continue with the total lockdowns. Necessitating the ease in lockdown, as businesses must continue!

We cannot but imagine the quantum of financial losses incurred during the tight global lockdown, from Aviation, tourism, international and domestic trades etc. And to our major concern of perishable goods in our local markets.

Mallam Musa, who is a green-grocer sells potatoes at the popular food market (Mile 12 market) in Lagos (a south-western state in Nigeria). He was expecting two Lorries of potatoes from Sokoto (a north-western state), when the Governor of Lagos state declared a lockdown on all intra-city movements with limited exemptions for inter-city movements.

Luckily, Mallam Musa had his potatoes delivered to the popular market, but the consumers were on lockdown, with only limited hours (i.e. four hours per day) to get their basic supplies from their nearest food markets. As movements were so much restricted.

It may also be pathetic to know that the same Mallam Musa was equally expecting two other Lorries of potatoes the following week, having fully paid for these re-orders!

Mrs. Teramoluwa is a grocer who sells canned foods only unlike Mallam Musa above. For her, the lockdown was an unpalatable experience considering the expiry dates on her products. Some of the items have barely less than four weeks to their expiry dates while a few, like yoghurts have just fraction of days to their expiration.

Clearly, from above, there is the urgent need to adopt methods of inventory management in the circumstances above. The suggested method for the later (Mrs. Teramoluwa) is First Expired, First Out (FEFO). To effect this, she needs to place products with the soonest expiry date in front, and constantly rotate stock on the shelves in that manner. This would no doubt reduce spoilage and obsolete stocks.

For Mallam Musa, as assumed, he should continue with the First- in, First- out (FIFO) method of inventory management which is peculiar to such perishable items, but with the introduction of despatch riders ( as Dispatch riders are considered as essential service providers during pandemic).

However, in both scenarios, they (the sellers) can do better by embracing online marketing stores/ platforms to reach their customers.

When Your Stock Becomes A Liability

When Your Stock Becomes A Liability.

Over the years, I have seen Entrepreneurs who are seemingly inventory rich and cash poor. Obviously from the Accounting point of view, Inventory is an asset but the challenges of too much inventory could make it become a liability!

With the appreciable technological advancement being experience globally, most markets are becoming more active in the e-world. So, for instance, a Publishing company sitting on large volumes of hardcopies may be sitting on a gun power! Because of the introduction of e-books and e- libraries and an increasing numbers of “Smart users/Customers”.

Furthermore, with the advent of Tower fans that have remote controls and could be synchronised with the User’s smart phone, it will be unwise to stock your warehouse with the traditional oscillating fans collecting dust, knowing fully well that one of the factors that causes a change in demand, is changes in taste and fashion.

In fact, sometimes in my working experience, because of the large volumes of stocks we had, we moved from one small warehouse to a bigger one and we were later confronted with a decision to move on to a much bigger warehouse or build a giant and purposeful warehouse at an enormous cost. All of these, because of the increasing volume of our stocks and the need to satisfy our customers’ demand but the top management was unwilling because of its cost implications.

At that point, it was disturbing to observe that sometimes holding cost of slow moving inventories could be higher than their prevailing market price and thus become a liability to the Enterprise!

Therefore, for the following reasons inventory could become a liability:

1.       When it reduces the liquidity of the enterprise. The more you stock up your inventory, the less liquid is the enterprise. The cash of the enterprise are trapped in stock and the company begins to have challenges in meeting its daily financial obligations.

2.       When it consumes either or both the physical and administrative resources of the enterprise. As the volume of stock increases, the top management may be compelled to secure a bigger warehouse and engage more security personnel to prevent frauds, pilferages or outright theft and this would have a direct consequent on the firm’s physical and administrative resources.

3.       When its value decreases as long as it stays in the warehouse. There are some items of stock whose value diminishes as they continue to sit in the warehouse, particularly the perishable items of stock. More so, inflation and other economic indices could also cause an unanticipated decrease in the value of stock idly sitting on the shelves in the warehouse.

For more on Inventory management call: 07088862700 & 09020002930.

BAR-CODES: MORE THAN THICK BLACK LINES

Osinachi, "did you know that it was with a total disbelieve that I left the new mega shopping mall down the road ? The Mall's manger declined to accept my well packaged chin-chin on the ground that they do not have bar codes and consequently cannot be accepted into their store. Please! tell me what business has a blind man with the moon? For God-sake, in what way are they going to support the SMEs?"

Smith, "I've severally warned you on why you need to do things differently and in compliance with modern trends. Regardless of the size of your business, it is imperative to do things in the most acceptable way!"

According to Wikipedia, a bar-code is an optical, machine-readable representation of data; the data usually describes something about the object that carries the bar-code.

The bar-code helps to identify a product and its price as well as other useful information when placed under a scanner. In-fact, the encoded information can only be read with the use of a scanner.

In the opening scenario,it is most likely that the mall operates a point-of-sales management, where the items in the Shopper's cart are scanned to identify their respective prices, in an attempt to generate an invoice/receipt by the sales attendant. Thus, it is practically impossible for the sales attendants to know all the prices of the hundreds of items in the mall. Therefore, bar-coding the items/products is absolutely necessary!

Other importance of bar coding are; 

1. It helps to track inventory- For example, it assists in placing a re-order. Most consumer goods are fast moving items and there is the need to replenish the stock as soon as possible to avoid stock-out.The bar code system helps to automatically identify low-level stocks and request for a reorder. 

2. Reduces alterations-when there is a price increase or decrease, this could be done without any form of alteration on the product or shelf.

3.It equally saves time and reduces error- bar code is of tremendous assistance when it comes to stock-taking. For instance, instead of engaging 10 inventory staff for stock-taking in a medium sized mall , with the aid of bar codes this could be reduced to 2 or 3 inventory staff.
Also, with bar codes the level of human error is reduced to the barest minimum.The bar codes are likely to have captured the opening stock and diminish same at every sale. Thus, have a greater tendency of accuracy.

4.It helps regulatory authorities- Sometimes, the regulatory authorities makes it mandatory for bar codes to be printed on products, particularly consumables and drugs as in the case of NAFDAC in Nigeria. This helps consumers to check some necessary details about the product and to combat counterfeits.


For more on Inventory Management & Consultancy,
Please call; 07088862700 or 09020002930

e-mail; definititudeconcept@gmail.com

STAGNANT INVENTORY: AN ITEM FOR SALES PROMOTION

Mr. Wazobia a seemingly successful Publisher, was recently seen complaining bitterly to his friend, "I have over ten thousand copies of a certain book title in my warehouse for almost half a decade and no single copy had been sold in the last three (3) years. The books are occupying a reasonable portion of my Warehouse and I'm ultimately worried about loosing my entire investment on this particular book".

Millions of people globally are in such predicament created by either over-stocking or stagnant inventory. Excess or stagnant Inventory is always a tricky thing to handle and if it is not well managed,the consequences can drastically affect the perpetual existence of the business.There is always that urge to wait and see it the items will sell to justify the initial investment.But chances are that is not going to happen. Each day that old inventory sits on the shelves, you are loosing money.

Whether you are selling these items for a profit, at cost or even at a loss, it is now time to clear that stagnant Inventory ! Embark on Sales Promotion.