Included this particular metric in our database because it was convenient and may be useful toįor most wholesalers and distributors, inventory and the space to store it is the largest This particular study focused on inventory rather than productivity. Productivity measures are very approximate and sales-per-employee is no exception. When comparing across firms, even within the same industry group, most Sales per Employee is one of many metrics for benchmarking More detailed information on 4, 5 and 6 digit industry groups is available in the spreadsheet. The chart below shows how inventory is distributed, on average, within major industry groups. Causes of the disconnect might be batching, long setups, long throughput times or erratic demand. Examples of causes might be poor workflow, functional layouts, scheduling or quality problems.Ībnormally high Finished Goods inventories can indicate a disconnect between manufacturing output and customer's needs. Higher than normal proportions in WIP indicates problems on the manufacturing floor. Causes may include long lead times, transportation, quantity discounts, supplier selection, poor scheduling or poor inventory accuracy. Higher than normal proportions in Raw Materials indicates supply chain opportunities. The proportions of inventory in Raw Materials, work-In-Process (WIP) and finished Goods can indicate problems to be addressed in various areas. Census Bureau's 2007 Economic Census Report. We offer a much more detailed spreadsheet with over 750 categories and sub-categories for only $8.00.Ĭlick Here to purchase. The subcategories also appear in this example. Turnover ranges from a low of 6.2 (Leather, 316) to a high of 16.7 (Petroleum, 324). Important to find and rectify the source of high inventory.īenchmark averages for major industry groups are shown below on the sample worksheet. However, such circumstances can often be overcome. There MAY be special circumstances that dictate an average or below average turnover. Targeting the industryĪverage turnover is setting up mediocrity as a goal. The best firms may have turnovers that are 200%-900% of the industry average. There are wide variations in turnover even within an industry or industry sub-group. When benchmarking with industry averages there It is also useful for benchmarking against similar firms. Turnover can monitor trends or changes from previous periods. In their calculation of COG and this makes comparison between companies less accurate. However, This information may be unavailable. But an accurate average value may be unavailable.īoth sales and inventory value for the period should, ideally, use Cost of Goods (COG). Monthly or even weekly calculations may be useful.Īverage inventory value over the period is more accurate than end-of-period value especially if there is seasonality. There are many variations of this calculation, for example: It is also know as the Sales/Inventory Ratio. This calculation uses actual sales dollars from the P&L Statement and period-end inventory This metric is simple, intuitive and easy to calculate. Turnover measures the efficiency of inventory usage and compensates for differences in One metric for evaluating the amount of your inventory is Inventory Turnover. Measure of overall efficacy since most manufacturing problems increase inventory. It often requires more capital than the facilities and equipment. For most manufacturers inventory is one of the top two items on the balance sheet.
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