mattsaga
05-13-2010, 07:55 PM
I have a question and some comments that I would really appreciate some insight on - from any industry standard perspective. Specifically related to the Manufacturing Industry.
Inventory Management. In Manufacturing, when a product line changes or is revised in some way affecting inventory, the object of an inventory management group is to manage to zero or as close to zero - all inventory risk in terms of Obsolete and Slow Moving Inventory
From a Sarbanes Oxley perspective - I have seen the standard at a 1% to 2% of total inventory as acceptable for an audit.
What is realistic? What should Finance/Accounting be using for an Accrual and Reserve baseline?
What is acceptable? Is it simply up to a financial controller or operations leadership team or supply chain leadership team to decided? It is definitely subjective based on a supplier's lead-time and PO Terms, but shouldn't dictate the end result.
Obviously the goal is ZERO dollars obsolete, but in reality - it isn't realistic, so what would we agree on is acceptable?
If there is $10,000M in inventory, 1% would be $100K. If there is $50K in inventory, this would equate to $500.
Insight appreciated.
Matt, CPIM
Inventory Management. In Manufacturing, when a product line changes or is revised in some way affecting inventory, the object of an inventory management group is to manage to zero or as close to zero - all inventory risk in terms of Obsolete and Slow Moving Inventory
From a Sarbanes Oxley perspective - I have seen the standard at a 1% to 2% of total inventory as acceptable for an audit.
What is realistic? What should Finance/Accounting be using for an Accrual and Reserve baseline?
What is acceptable? Is it simply up to a financial controller or operations leadership team or supply chain leadership team to decided? It is definitely subjective based on a supplier's lead-time and PO Terms, but shouldn't dictate the end result.
Obviously the goal is ZERO dollars obsolete, but in reality - it isn't realistic, so what would we agree on is acceptable?
If there is $10,000M in inventory, 1% would be $100K. If there is $50K in inventory, this would equate to $500.
Insight appreciated.
Matt, CPIM