How To Borrow Money Against A Shared Inheritance




An heir may have to wait months and even years in order to get their inheritance distributions. This is because of the length of the legal process involved. So, an heir is allowed, by means of cash advances or loans, to receive funds in a matter of days. It has no effect on the other heirs of the estate. A portion of the estate is assigned by the cash advance company, in exchange for the loan. Here is how you can get an advance on your inheritance.

• You need to first determine whether you have the eligibility for an inheritance cash advance or not. Advances are only typically received by the heirs from probate assets. Probate assets are bank accounts, insurance policies, real estate, company interests and other assets that were only owned by the decedent. Non-probate assets include trust, retirement accounts or any accounts that are jointly held with another person.

• You need to first determine what amount of money you want to lend from your shared inheritance. The usual range of inheritance loans and advances are from $5000 to $250000. Select an amount of loan that is less than the inheritance you expect. The amount of the loan is capped by some lenders at a certain percentage of your total expected inheritance.

• Contact a company that has a specialization in inheritance advances. Money can only be borrowed by the inheritors from their inheritance after the beginning of the probate process by the inheritors. Do not forget to ask the inheritance company that for an inheritance advances what fees will they charge. The fees vary depending on companies. Fees usually depend on the amount of the advance, the complexity of the estate and the amount of time until the estate closes.

• A cash advance has to be arranged by you from the lender. Funds can generally be distributed by the companies from advances and loans within a few days of business of the transaction. If sufficient funds are not present to pay the loan, ask the company about its consequences. The heir usually does not have personal liability for insufficient estate funds because the heir is assigned an interest to the company.

• Return the money back to the inheritance cash advance company as early as possible. When the estate closes, executor automatically pays the money to the inheritance cash advance companies as part of the transaction. However, discounts and rebates are offered by some companies for heirs that pay back the loan early.





Immobilienmakler Heidelberg

Makler Heidelberg

Source by Rajesh B Sanghvi

Uses of Cash Books in Accounting




So what are cashbooks used for? Cash books in accounting are used to record both cash transactions received by the business and cash paid out by the business.A cash book has two sides; The debit side and the credit side. Each side of the cash book in accounting has columns for; -Date
-Particular; where you record the products.
-Bank; This is where you record payments made by cheques and receipt of cheques.
-Cash; This is the column where you should record cash received and cash paid out.

Debit side; This is used to record any cash received after which it is posted in the cash column in the cash book. For example if you made sales on a cash basis of goods worth 80,000$, then this will be recorded on the debit side on the cash book. The debit side is also used to record cheques received by the business i.e if a customer pays for goods by cheque worth 120,000$, then this is
recorded on the debit side on the bank column.

Credit side; The credit side is used to record cash and cheques paid for by the business. For example if your fuel costs about 100$ and is used up in a day, then it will be credited or written on the credit side of the cash book.However if the supplies are paid for using a cheque worth 200,000$ then it is recorded on the Bank column of the credit side of the cash book. So what is the importance of a cashbook in accounting anyway? You may ask. Well, a cash book;
1. A cash book helps the business in capturing all the payment and receipt for a particular month or duration.
2. A cash book is used to reconcile Bank statements.
3. A cash book can be used as a reference in accounting during auditing hence it gives evidence that goes a long way in directing the auditors while they are going through your books of account.

Empower yourself with information to make yourself rich on the Internet by reading more of his articles at
http://accountingfordummiez.blogspot.com/





Immobilienmakler Heidelberg

Makler Heidelberg

Source by Babji Isaac

Stop Bad Financial Habits And Choose A Fresh Start




People are often influenced to give unsolicited advice to others about the easiest way to manage finances. Even though of the will make sense, the majority of these are very generic in general. You must exercise caution when you assemble a monetary strategy out from this information, though it’s important to create a precise and consistent plan.

Nevertheless, you happen to be still left together with the unanswered question. How would you prevent the decline of funds on stuff that are of no use, and yet approach managing your individual finances?

The Situation: A lot of people, including you, don’t fully understand how important it is to save cash with regard to their future. Figure out how to save first then spend, not the other way around. While this is superior to no savings in any way, it is definitely not the correct way to build an excellent savings plan.

Steps To Managing Your Individual Finances Well.

Listed here are some important tips that you can consider if you wish to reduce costs for the future. These techniques have helped a lot of people be successful at taking better proper care of their finances.

Put 20% Of The Earnings Into Savings

In case you are to be successful in the foreseeable future, carry out the opposite of just what the average person does. As opposed to saving whatever remains, save first and spend afterward. Even if you are expecting a reduced check than normal, be sure to save 20% out from each and every single check that you receive. Make sure to deposit this money once you receive money. You will have learned a vital lesson, and saving the amount of money than enables you to work your way down taking good care of everything, bills first.

Saving money assists you to create a healthy financial habit that will help you to budget your money efficiently for the rest of your way of life. You could possibly feel much less stressed about finances when you know that you have an urgent situation fund available.

Don’t Complicate Matters

It is obvious the iPhone 7 is great. Your buddies and colleagues have purchased it,but the iPhone 6 plus is one that you simply bought a few time ago. While many of these new gadgets are fun and exciting to have, you undoubtedly don’t need a new phone unless your old phone is dying. You must never buy it unless you really want an iPhone 7.

Can that new phone do something that your particular old model can’t do? It is essential to sometimes treat yourself with luxuries, just make sure this really is something great rather than some of those undesirable habits one does repeatedly. Additional money is the best money to pay, not the 20% you will be saving.

Cash Over Credit

Maybe you are from the opinion the charge cards in your wallet should be used, not hidden away. Often we start off with good intentions buying only small things likely to pay them off at the conclusion of every month. $50 here or $25 there can’t hurt, and you can always pay it off following the month. That brand of thinking gets people in trouble quickly, plus they rack up a pile of debt.

Using cash whenever you can will help you to curb this tendency. Don’t make use of credit card unless it’s a crisis situation. Alternatively, it is possible to change it out having a debit card, and that is a significantly better option!

Keep in mind that becoming a rock star at personal finance doesn’t have to be hard. It requires breaking undesirable habits and creating new, healthier ones.





Immobilienmakler Heidelberg

Makler Heidelberg

Source by Donna Gain

Use Lotus Notes Recovery Software when no other methods like compaction works for you




Compacting is needed when your database is exceeding its set size limitation. Basically, compacting means to remove the space that is allocated but unused. After compacting your database, you will find that your database is working more efficiently. Compacting a database, will make the unused space useful for you. When you perform deletion of the documents and attachments, the space that is left behind after compacting the database becomes useful. But many times, compacting the database does not help you sort out the issue. To overcome issues related to Lotus Notes application, you have to opt for a third party Lotus Notes Recovery tool to Recover Lotus Notes.

To illustrate the above issue, suppose you make an attempt to open a database locally with the help of a Lotus Notes application, the following error message appears on the screen that looks as given below:

„Database (.nsf) has grown too large; use File New Replica to recreate your file with larger capacity.“

Above error message bothers you every time you try to open a database and make an attempt to make a new copy or a new replica of the database.

Cause:

The main cause for the occurrence of the above error message is that your Notes database has reached its size limit.

Resolution:

To resolve above error message, and to perform Lotus Notes Recovery, you need to compact the database. Compacting the database will help you to a great extent in solving the issue. For compacting the database, you have to right click on it, select a database, choose properties. In its second tab, select the option to compact.

If the above mentioned steps help you to sort out the issue, then it is fine. Otherwise, you will need to make use of a third party Lotus Notes Repair softwares. These tools Recover Lotus Notes database and all the data of the Lotus Notes mail components, such as contacts, attachments, appointments, To-do lists, calendar-entries, and more. There are many softwares available in the market which perform NSF File Recovery with great ease. Stellar Phoenix Lotus Notes Recovery v2.0 is one software.

Stellar Phoenix Lotus Notes Recovery v2.0 is a proficient tool that is used to repair & recover Lotus Notes database and other mail objects. The tool performs recovery of attachments, Java applets, OLE objects, and more. The repaired NSF file is stored in a location that can be easily detected by the host operating system. The tool is compatible with Windows 7, Vista, Server 2003, XP, 2000, and NT (SP6).





Immobilienmakler Heidelberg

Makler Heidelberg

Source by MOHIT MATHUR

Flux Family Secrets: The Ripple Effect Game Review




Flux Family Secrets: The Ripple Effect is a hidden object game that experiments a little with the genre. In this game, you will find hidden objects, puzzles, adventure and even a few history lessons! In Flux Family Secrets, you play the role of someone who does not know their past and are actively seeking it out. A mysterious family contacts you and sends you on an adventure of a lifetime. Using a time travel device, you get to go back in time and solve historical puzzles.

The story begins with the mysterious Flux family welcoming you into their home and presenting you with a few puzzles to prove your worth. You then discover that the family has a time travel device that they use to repair damage caused by time Ripples. You then get involved helping them realign history, going back in time and solving puzzles and obtaining artifacts in the various categories such as art, music and flight.

The gameplay in Flux Family Secrets is refreshing as well. Rather than searching each scene for a shopping list of hidden objects, everything you search for in this game has a purpose. You are required to find parts of items that have been broken up into a few pieces. Once the items are assembled, you will need to either place them back into the scene where they belong, or get them to interact with some other object in the scene to progress or activate a puzzle.

The puzzles in the game are plentiful and well spread-out throughout the game so that you don’t get bored with constantly looking for hidden objects. The puzzles aren’t too complex, but there are many of them and they are pretty well thought out. You get to solve cryptex puzzles, safe-cracking, arrangement puzzles and even a couple of arcade-style minigames.

When you get to the time travel bits of the game, you will find that the hidden objects and puzzles aren’t very straight-forward at all. In every „category“ that you go back to fix (such as Art or Music), you will be presented with 3 scenes featuring 3 masters in their craft. The objects and puzzles in the 3 scenes are interconnected. You will need to solve puzzles in one scene in order to unlock puzzles and objects in a different scene. This adds a new dimension to the game, requiring you to keep hopping between scenes.

The game also adds a nice „history lesson“ angle that makes it educational as well. The game will give you a brief description of Da Vinci and the Mona Lisa when you encounter them in the Art scenario. Similarly, you will learn more about the origin of flight and the Wright brothers when you encounter that scene in the Flight scenario.

The graphics and music are above average in this game. The art style and soundtrack are different for each scene and reflect the styles prevalent in those historical periods. In all, Flux Family Secrets is a game that tries to blend in features from the hidden object, puzzle, adventure and mystery genres and succeeds at doing so.

Rating: 4.0/5.0

You can read more about Flux Family Secrets: The Ripple Effect at http://www.hidden-puzzles.com/flux-family-secrets.html





Immobilienmakler Heidelberg

Makler Heidelberg

Source by Steven H. Ng

How to Earn an Online Income




It is fairly well known that internet commerce has exploded in the last five years. There are many work at home opportunities for stay at home moms and college students to earn an online income. However, not many web sites or books discuss ways that you can earn an online income on your own, without joining any programs or work at home opportunities that may or may not pan out. Here are some great ways to earn an online income working on your own.

1. Earn an online income as a virtual assistant. Virtual assistants are basically administrative assistants that work from home instead of in an office. They provide services such as data entry, typing, word processing, and classified ad posting. Anyone with a good knowledge of computers, office software, and typing skills can easily earn online income as a virtual assistant.

2. Earn an online income as a copy writer. Did you know that almost everything on the web that you read was written by someone other than the person who owns the web site? Copy writers are in high demand, and good copy writers earn some of the highest online income of any other internet commerce professional.

3. Earn an online income as a web designer. This one can be a little trickier to get into, but is well worth the time and effort. There are many short term educational programs, both on and off of the internet, that allow you to learn about web design in nine months to a year. Once you are finished with your schooling, you can easily earn online income as a web designer. Be warned, however, that the need for web site designers is waning with the advent of numerous software and online site builders.

4. Earn an online income as a graphic designer. Most small businesses do not have an in house advertising department. In addition, most advertising agencies charge insane amounts of money for the creation of brochures and other marketing materials. If you have great designing skills, creativity, and an expert knowledge of desktop publishing software, you can earn a great online income by creating brochures, advertisements, web sites, banner ads, and all manner of advertising material for small businesses.

5. Earn an online income through retail. You can sell just about anything online. Go to garage sales, estate sales, and thrift stores to see what you can find. Often you can sell knickknacks, books, and other items online. You can also use the products of your hobbies such as quilting, sewing, or crafts to earn on online income through your own e-commerce store. Online stores are easy to set up and run, and generate tons of online income for people across the globe.





Immobilienmakler Heidelberg

Makler Heidelberg

Source by Mario G. Churchill

4 Simple Tips on How to Earn Consistent Profits at Forex




There are many tips out there that „show“ you how to win at Forex, but not all of them can make you succeed online. First things first, let us start at the premise no material or „guru“ can guarantee you achieve financial success consistently at Forex, the only person who can do that is you. The materials and forex education programs are developed to help you plan your trade and develop within you the discipline and tap the side of you who wants to win at Forex.

You do not want to win in Forex, you want to earn big CONSISTENTLY. There are wins out there and there are losses, and your fear of losing cannot be fixed by any medicine, but the only way to eradicate this fear is by understanding. And by understanding foreign exchange, there is knowledge and success.

Here are four simple steps in eliminating fear and achieving financial success at Forex.

1. Get Currency Education. The basis of all understanding is opening your mind to ideas and methods you may or may not have encountered before. Getting Educated with a credible Forex Course is the starting point of achieving the results you want.

The tricky part is there are a lot of information sources out there, choose wisely in whatever course you may go into. Free courses are great, but paid courses have credible persons behind it, such as Forex mentor. Education in Forex is like school or a university, private investment in education is an investment here that can pay you back tenfold.

2. Finding the best trading method. How will you know if it is „best“ for you? Here is a simple tip, no matter how complex or simple a forex method is for you, you cannot succeed if you cannot understand and apply it.

There are methods out there that may seem complex, and one may find a complex method „more effective“ in one way or another. The truth is that a complex method is just a combination of some simple ones used in an awkward manner. Find a method that you can easily understand and apply.

3. Discipline and Sacrifice. Sacrifice may mean negative to some of us, but technically, sacrifice is one’s giving up of a lesser thing to gain a bigger thing. In Forex, some losses may be the „lesser thing“ I was talking about, and the bigger thing you may get is education and experience. Adding it with time, and the bigger thing may not be only the education and experience, it is certain that so is your profits!

Discipline is another way to put the word consistency. If you cannot be consistent at Forex, there is no learning, and when there is no learning, there is no consistent profits. Taking time to study and discover new methods and approaches and sticking to it is what makes winners.

4. Be simple. Forex doesn’t have to be that hard on you! Over analyzing things, especially in Forex may just cause stress and occasional headaches. When analyzing trends and methods, look at the bigger picture in you mind, this will become clear and open you ideas you may not have seen or heard before.

If you know how to trade in the end of day basis, you will discover that you can be financially successful and rich with Forex. It requires less time, less stress, more patience and a different Forex trading method /rules than Day Trading.

Forex Trading is truly an option to create wealth and time freedom at the same time. Even successful traders experience loss, but following the four simple steps above can remove the side within you that has the fear, and lets out in you a side that wants to win.





Immobilienmakler Heidelberg

Makler Heidelberg

Source by ryan ferrer

Buy Gold Coins as Bullion Gold Coins Gain Favor





In today’s world of global uncertainty, one thing remains certain: gold coins. Gold bullion coins continue to outperform traditional vehicles the same way gold coins and bars outperformed everything under the sun during the 1970’s. By holding gold coins in one’s portfolio, you dramatically reduce the overall risk of your portfolio. Just by having some gold coins as part of your strategy, you also allow the price of gold, as it increases, to bring up the value of your portfolio.

It is much easier to buy gold today than it was 30 years ago. Gold bullion coins are easily bought and sold with the click of a mouse. Not only is it easier to buy gold, but gold investments are exploding onto the investment scene like never before. In fact, gold coin sales by the U.S. mint in recent months have outpaced the gold coin sales of the prosperous-for-gold 1970’s. Despite this recent fact, the gold price is just beginning its increase.

As gold coins become more scarce, quite naturally, investors covet the yellow shiny metal at an ever increasing rate. The type of gold coins sought after by investors who follow the price of gold are American Gold Eagles, Canadian Gold Maple Leafs, South African Gold Kruggerands, Australian Gold Kangaroos, Chinese Gold Pandas, and Austrian Gold Philharmonics. These are the most popular gold coins available to investors who want profit potential and protection. The benefit to owning these gold bullion coins is four-fold.
1. You get immediate liquidity. This means you can sell your gold bullion coins at or near the gold price at any time, anywhere in the world.
2. You are in control. A strong gold investment is an investment in certainty. Knowing you have gold coins in your possession that you can rely on makes a world of difference to one’s sense of financial well-being.
3. There is tremendous profit potential with gold bullion coins, more so than just about every other vehicle out there. It matters not whether you hold American Eagles, Canadian Maple Leafs, South African Kruugerands, or any other type of these gold bullion coins, they will provide a well positioned investment portfolio an increased probability of profitability.
4. Last but not least, gold bullion coins provide economic safety and stability in a world increasingly plagued with uncertainty and dangers.
Those are some of the „pros“ of owning gold bullion coins. There is more that a first-time purchaser of gold coins should be aware of; the „other side of the coin,“ so to speak. If you own American Eagles, Canadian maple leafs, South African Kruugerands, Austrian Philharmonics, Chinese Pandas, or Australian Kangaroos, they are subject to confiscation by the federal government. In 1933 Franklin Roosevelt issued an executive order which required U.S. citizens to turn in all gold bullion coins produced by the U.S. mint, as well as any gold coins and bars produced by foreign governments. Our country, in that period was in the peak of a crisis: the dollar was in trouble, smart investors were getting out of stocks and bonds, and unemployment was on the rise. This period was the great depression. The consequence of not turning in your gold bullion coins or gold bullion bars was a huge fine and jail. If you buy gold bullion coins today, like the American Eagle, the U.S. mint prints a $50 denomination on the back of the coin. Why? Because if the government were to confiscate gold bullion coins like they did in the 1930’s, you would only receive the $50 denomination value, despite the current price of gold in the market, whether that price be $500, $1000, or even $2000. The chance of such Federal government confiscation is universally deemed as unlikely.

Also gold bullion transactions are reportable to the IRS. We will also cover in detail the type of gold transactions that are not reportable, private gold, momentarily.

Also important to recognize is that as the price of gold fluctuates, so does the value of gold bullion coins.

Nevertheless, despite these contingencies, asset managers all over the country are recommending allocating at least some portion of an investment portfolio to gold. Prices are on the rise, in what analysts have termed a long-running bull market which is just in its beginning stages
PRIVATE AND NON-CONFISCATEABLE GOLD COINS

Investors naturally gravitate to gold investment vehicles where they can expect the greatest return with the smallest amount of risk. In the physical gold market certified gold coins reign supreme. Certified gold coins are the gold coins minted by the US Mint befor the year 1933. $20 Saint Gaudens, $20 Liberty, $10 Indian, $10 Liberty, $5 Indian, $5 Liberty and $2.5 Liberty gold coins are all examples of the most profitable gold coins an investor can acquire for several reasons.
1. Certified gold coins have a limited mintage. The government can not go back and mint any more of these gold coins. You want to own gold coins that continue to go up because of this fact year after year regardless of what the gold price does. Because of their limited availability these gold coins can surpass the gains seen by gold bullion 2 to 5 times.
2. Certified gold coins are also one of the last legally private assets the government allows you to acquire. World Financial and goldcoinsgain.com are not required to ask for a social security number when you buy gold coins or when you sell gold coins.
3. Non-confiscatable. Certified gold coins are exempt from confiscation. Certified gold coins are exempt from confiscation if the government decided to confiscate gold like they did in between 1933 and the early 1970s. You were in a world of hurt during those almost 40 years of you were holding the wrong kind of gold coins. So you can rest assured your certified gold will do what its supposed to do under the most strenuous conditions — protect your money.
4. Immediate liquidity. World Financial is a major market maker in certified gold coins and will assist in converting your gold coins back into cash on a moments notice.
In addition to the advantages listed above, certified gold coins are also more stable than bullion gold coins. The value of a certified coin is not solely determined by what the spot price of gold does. In fact, certified gold provides more stability than the stock market, bond market, or just leaving your money in cash. So if you are tired of having to worry about the current economic environment you may want to consider diversifying out of riskier vehicles into an asset that has stood the test of time.

Portability is also something you should keep in mind when selecting which type of gold coins are right for you. To put things in perspective, you could carry one million dollars worth of certified gold coins in an attaché case. This should give you a sense of comfort knowing that you have acquired an asset that is completely portable and discreetly portable.
IRA AND 401’s BACKED BY GOLD COINS

Gold Coins backing your IRA or 401k rollover makes the perfect diversification asset in today’s uncertain economic environment. Gold coins can be added to your retirement strategy in just a few easy steps.

Step 1. Determine what portion of your retirement account you would like to convert over into gold coins.

Step 2. Print out the one page Gold Coin IRA Setup Form and fill out to the best of your ability. Fax the form into our retirement account department at (818) 506-6597.

Step 3. A Gold Coin Customer Service representative will contact you in a very short amount of time to confirm and guarantee the availability of your gold coins. We then work with your existing custodian to get the appropriate funds transferred over into your new self-directed IRA, backed by physical gold coins.

American eagle bullion gold coins are one of the most popular gold coins allowed by the IRS for your precious metal IRA. American eagle bullion gold coins come in 1 ounce, 1/2 ounce, 1/4 ounce, and 1/10 ounce denominations. These gold bullion coins are guaranteed by the US Mint for purity, weight and size. The Gold American Eagle bears the „W“ mint mark reflecting the gold coin was struck at the US Mint at West Point. The obverse of the American eagle bullion gold coin features Augustus Saint-Gaudens‘ full-length figure of Liberty with flowing hair, holding a torch in her hand and an olive branch in her other hand. On the other side of the gold coin a male eagle carries an olive branch as he flies above a nest containing a female eagle and her eaglets. Each gold coin is encapsulated in plastic and comes with a custom designated Certificate of Authenticity.

American Eagle Proof gold coins are also available. The proof gold coins are more desired because each year they are produced by the US Mint in a limited quantity. Each proof gold coin is struck several times with a special die to create a more lustrous finish. Because of the limited quantity, investors will typically prefer these gold coins for their retirement accounts. Weather we are talking about gold coins or widgets whenever there is a limited amount naturally prices increase faster and become more valuable. The American Eagle Proof gold coins are also exempt from confiscation. A lot of investors like knowing they have the type of gold coins backing their retirement account that are not subject to confiscation by the Federal government.





Immobilienmakler Heidelberg

Makler Heidelberg

Source by Richard Goldstein

What Does NSF Stand For? An FAQ on Overdraft Fees




You have probably heard the term „NSF“ or „NSF fee.“ This is a term that, once you understand how it can affect you each month, will probably make you a little bit angry. However, it is a good idea to educate yourself about what NSF stands for. Once you do, you can take steps to avoid NSF fees.

What Does NSF Stand For?

NSF stands for non-sufficient funds. This is a fee that is typically levied by a bank against any customer who writes a bad check or tries to use their debit or credit card when the checking account balance is too low to support the charge.

Another word for NSF fee is overdraft fee. NSF, or overdraft, fees can easily run up to $30 or $35 per instance. This means that, over the course of just a day or two, just three overdraft fee charges can cost you a $100 in bank fees alone.

And this is not an uncommon occurrence. That is because most debit cards are linked to overdraft protection programs. This means that the bank will allow your debit card purchase to go through, even if the checking account balance to which the card is linked is too low. The result is that on the very same day, you could unknowingly make 2, 3 or more purchases on your debit card without even being notified by the bank that your balance is too low.

An FAQ on Overdraft Fees

Here are 5 frequently-asked questions about overdraft (NSF) fees:

1. Most banks charge overdraft (NSF) fees: The vast majority of banks and credit unions charge some form of overdraft fee. This is simply a normal way of doing business for banks – and a very lucrative one for them.

2. Overdraft fees are a way of protecting the bank: In theory, the fee is justified because it protects the bank’s profits. The bank has to incur a small interest cost when it covers your overdraft for a day or more until you replenish your account’s funds. However, the fees they charge far outweigh the costs they incur, making them grossly unfair in the eyes of many consumer advocates.

3. They are also a profit center for banks: Given the large amount of revenues banks realize from these fees, they are a true profit center. Meaning: banks rely upon these fees as part of their income source.

4. You can avoid overdraft fees by taking careful measures: By checking your balance religiously or by always keeping a padding of money in your account, you can avoid these fees. However, many people find this impractical.

5. Or, you can switch to a bank that will never charge you overdraft fees: Some banks will never charge you an overdraft fee, even if you overdraw your account. If you switch to such a bank, you will never pay overdraft fees again.

The answers to these FAQs can help you save money by not paying NSF, or overdraft, fees.





Immobilienmakler Heidelberg

Makler Heidelberg

Source by Susan Willis

INVENTORY MANAGEMENT





INVENTORY MANAGEMENT

1. INTRODUCTION

DEFINATION AND MEANING

Inventory is a list of goods and materials, or those goods and materials themselves, held available in stock by a business. Inventory are held in order to manage and hide from the customer the fact that manufacture/supply delay is longer than delivery delay, and also to ease the effect of imperfections in the manufacturing process that lower production efficiencies if production capacity stands idle for lack of materials.

The reasons for keeping stock

All these stock reasons can apply to any owner or product stage.

Buffer stock is held in individual workstations against the possibility that the upstream workstation may be a little delayed in providing the next item for processing. Whilst some processes carry very large buffer stocks, Toyota moved to one (or a few items) and has now moved to eliminate this stock type.

Safety stock is held against process or machine failure in the hope/belief that the failure can be repaired before the stock runs out. This type of stock can be eliminated by programmes like Total Productive Maintenance

Overproduction is held because the forecast and the actual sales did not match. Making to order and JIT eliminates this stock type.

Lot delay stock is held because a part of the process is designed to work on a batch basis whilst only processing items individually. Therefore each item of the lot must wait for the whole lot to be processed before moving to the next workstation. This can be eliminated by single piece working or a lot size of one.

Demand fluctuation stock is held where production capacity is unable to flex with demand. Therefore a stock is built in times of lower utilisation to be supplied to customers when demand exceeds production capacity. This can be eliminated by increasing the flexibility and capacity of a production line or reduced by moving to item level load balancing.
Line balance stock is held because different sub-processes in a line work at different rates. Therefore stock will accumulate after a fast sub-process or before a large lot size sub-process. Line balancing will eliminate this stock type.


Changeover stock
is held after a sub-process that has a long setup or change-over time. This stock is then used while that change-over is happening. This stock can be eliminated by tools like SMED.

Where these stocks contain the same or similar items it is often the work practice to hold all these stocks mixed together before or after the sub-process to which they relate. This ‚reduces‘ costs. Because they are mixed-up together there is no visual reminder to operators of the adjacent sub-processes or line management of the stock which is due to a particular cause and should be a particular individual’s responsibility with inevitable consequences. Some plants have centralized stock holding across sub-processes which makes the situation even more acute.

The basis of Inventory accounting

Inventory needs to be accounted where it is held across accounting period boundaries since generally expenses should be matched against the results of that expense within the same period. When processes were simple and short then inventories were small but with more complex processes then inventories became larger and significant valued items on the balance sheet. This need to value unsold and incomplete goods has driven many new behaviours into management practise. Perhaps most significant of these are the complexities of fixed cost recovery, transfer pricing, and the separation of direct from indirect costs. This, supposedly, precluded „anticipating income“ or „declaring dividends out of capital“. It is one of the intangible benefits of Lean and the TPS that process times shorten and stock levels decline to the point where the importance of this activity is hugely reduced and therefore effort, especially managerial, to achieve it can be minimised.

LIFO V/S FIFO

When a dealer sells goods from inventory, the value of the inventory reduces by the cost of goods sold(CoG sold). This is simple where the CoG has not varied across those held in stock but where it has then an agreed method must be derived. For commodity items that one cannot track individually, accountants must choose a method that fits the nature of the sale. Two popular methods exist: FIFO and LIFO accounting (first in – first out, last in – first out). FIFO regards the first unit that arrived in inventory the first one sold. LIFO considers the last unit arriving in inventory as the first one sold. Which method an accountant selects can have a significant effect on net income and book value and, in turn, on taxation. Using LIFO accounting for inventory, a company generally reports lower net income and lower book value due to the effects of inflation. This generally results in lower taxation. Due to LIFO’s potential to skew inventory value, UK GAAP and IAS have effectively banned LIFO inventory accounting.

SUPPLY CHAIN MANAGEMENT

A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers. Supply chains exist in both service and manufacturing organizations, although the complexity of the chain may vary greatly from industry to industry and firm to firm.

Supply chain management is typically viewed to lie between fully vertically integrated firms, where the entire material flow is owned by a single firm and those where each channel member operates independently. Therefore coordination between the various players in the chain is key in its effective management. Cooper and Ellram [1993] compare supply chain management to a well-balanced and well-practiced relay team. Such a team is more competitive when each player knows how to be positioned for the hand-off. The relationships are the strongest between players who directly pass the baton (stick), but the entire team needs to make a coordinated effort to win the race.

Below is an example of a very simple supply chain for a single product, where raw material is procured from vendors, transformed into finished goods in a single step, and then transported to distribution centers, and ultimately, customers. Realistic supply chains have multiple end products with shared components, facilities and capacities. The flow of materials is not always along an arborescent network, various modes of transportation may be considered, and the bill of materials for the end items may be both deep and large.

To simplify the concept, supply chain management can be defined as a loop: it starts with the customer and ends with the customer. All materials, finished products, information, and even all transactions flow through the loop. However, supply chain management can be a very difficult task because in the reality, the supply chain is a complex and dynamic network of facilities and organizations with different, conflicting objectives.

Supply chains exist in both service and manufacturing organizations, although the complexity of the chain may vary greatly from industry to industry and firm to firm.

Unlike commercial manufacturing supplies, services such as clinical supplies planning are very dynamic and can often have last minute changes. Availability of patient kit when patient arrives at investigator site is very important for clinical trial success. This results in overproduction of drug products to take care of last minute change in demand. R&D manufacturing is very expensive and overproduction of patient kits adds significant cost to the total cost of clinical trials. An integrated supply chain can reduce the overproduction of drug products by efficient demand management, planning, and inventory management.

Traditionally, marketing, distribution, planning, manufacturing, and the purchasing organizations along the supply chain operated independently. These organizations have their own objectives and these are often conflicting. Marketing’s objective of high customer service and maximum sales dollars conflict with manufacturing and distribution goals. Many manufacturing operations are designed to maximize throughput and lower costs with little consideration for the impact on inventory levels and distribution capabilities. Purchasing contracts are often negotiated with very little information beyond historical buying patterns. The result of these factors is that there is not a single, integrated plan for the organization—there were as many plans as businesses. Clearly, there is a need for a mechanism through which these different functions can be integrated together. Supply chain management is a strategy through which such integration can be achieved.

Supply Chain Management (SCM) is the process of planning, implementing, and controlling the operations of the supply chain with the purpose to satisfy customer requirements as efficiently as possible. Supply chain management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point-of-origin to point-of-consumption.

According to the Council of Supply Chain Management Professionals (CSCMP),

A professional association that developed a definition in 2004, Supply Chain Management „encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities“. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, Supply Chain Management integrates supply and demand management within and across companies.

According to Cohen & Lee (1988)

Supply Chain Management is „The network of organizations that are having linkages, both upstream and downstream, in different processes and activities that produces and delivers the value in form of products and services in the hands of ultimate consumer.“ Thus a shirt manufacturer is a part of supply chain that extends up stream through the weaves of fabrics to the spinners and the manufacturers of fibers, and down stream through distributions and retailers to the final consumer. Though each of these organizations are dependent on each other yet traditionally do not closely cooperate with each other. An integrated supply chain management streamlines processes and increases profitability by delivering the right product to the right place, at the right time, and at the lowest possible cost.

According to Ganeshan & Harrison (2001)

Supply Chain Management is a „systems approach to managing the entire flow of information, materials, and services from raw materials suppliers through factories and warehouses to the end customer.“

Supply chain event management (abbreviated as SCEM) is a consideration of all possible occurring events and factors that can cause a disruption in a supply chain. With SCEM possible scenarios can be created and solutions can be planned.

Some experts distinguish supply chain management and logistics management, while others consider the terms to be interchangeable. From the point of view of an enterprise, the scope of supply chain management is usually bounded on the supply side by your supplier’s suppliers and on the customer side by your customer’s customers.

Supply chain management is also a category of software products.

2. SIEMENS

SIEMENS is one of the world’s largest companies and Europe’s largest engineering firm. Siemens has six major business divisions: Communication and Information; Automation and Control; Power; Transportation; Medical; and Lighting. Siemens‘ international headquarters are located in Berlin and Munich, Germany. Siemens AG is listed on the Frankfurt Stock Exchange, and has been listed on the New York Stock Exchange since March 12, 2001. Worldwide, Siemens and its subsidiaries employ 480,000 people in 190 countries and reported global sales of €87.325 billion in fiscal year 2006

HISTORY

Siemens was founded by Werner von Siemens on October 1, 1847, based on the telegraph he had invented that used a needle to point to the sequence of letters, instead of using Morse code. The company – then called Telegraphen-Bauanstalt von Siemens & Halske – opened its first workshop on October 12.

In 1848, the company built the first long-distance telegraph line in Europe; 500 km from Berlin to Frankfurt am Main. In 1850 the founder’s younger brother, Sir William Siemens (born Carl Wilhelm Siemens), started to represent the company in London. In the 1850s, the company was involved in building long distance telegraph networks in Russia. In 1855, a company branch headed by another brother, Carl von Siemens, opened in St Petersburg. In 1867, Siemens completed the monumental Indo-European (Calcutta to London) telegraph line.

In 1881, a Siemens AC Alternator driven by a watermill was used to power the world’s first electric street lighting in the town of Godalming, United Kingdom. The company continued to grow and diversified into electric trains and light bulbs. In 1890, the founder retired and left the company to his brother Carl and sons Arnold and Wilhelm. Siemens & Halske (S&H) was incorporated in 1897.

In 1919, S&H and two other companies jointly formed the Osram lightbulb company. A Japanese subsidiary was established in 1923.

During the 1920s and 1930s, S&H started to manufacture radios, television sets, and electron microscopes.

Before World War II Siemens was involved in the secret rearmament of Germany. During the Second World War, like most big companies in Germany at the time, Siemens supported the Hitler regime, contributed to the war effort and participated in the „Nazification“ of the economy. Siemens had many factories in and around famous extermination camps such as Auschwitz and used slave labor from concentration camps to build electric switches for military uses. In one example, almost 100,000 men and women from Auschwitz worked in a Siemens factory inside the extermination camp, supplying the electricity to the camp.

In the 1950s and from their new base in Bavaria, S&H started to manufacture computers, semiconductor devices, laundry machines, and pacemakers. Siemens AG was incorporated in 1966. The company’s first digital telephone exchange was produced in 1980. In 1988 Siemens and GEC acquired the UK defense and technology company Plessey. Plessey’s holdings were split, and Siemens took over the avionics, radar and traffic control businesses — as Siemens Plessey.

In 1991, Siemens acquired Nixdorf Computer AG and renamed it Siemens Nixdorf Informationssysteme AG. In 1997 Siemens introduced the first GSM cellular phone with colour display. Also in 1997 Siemens agreed to sell the defence arm of Siemens Plessey to British Aerospace (BAe) and a UK government agency, the Defence Analytical Services Agency (DASA). BAe and DASA acquired the British and German divisions of the operation respectively.

In 1999, Siemens‘ semiconductor operations were spun off into a new company known as Infineon Technologies. Also, Siemens Nixdorf Informationssysteme AG formed part of Fujitsu Siemens Computers AG in that year. The retail banking technology group became Wincor Nixdorf.

In February 2003, Siemens reopened its office in Kabul.[3]
In 2004, Siemens took over the mantle of official Formula One timekeeper, replacing TAG Heuer.

In November, 2005, Siemens signed a 12 year agreement with the Walt Disney Company to sponsor attractions in its Florida and California parks.

In 2006, Siemens announced the purchase of Bayer Diagnostics, which was incorporated into the Medical Solutions Diagnostics division officially on 1 January 2007.

In March 2007 a Siemens board member was temporarily arrested and accused of illegally financing a business-friendly labour association which competes against the union IG Metall. He has been released on bail. Offices of the labour union and of Siemens have been searched. Siemens denies any wrongdoing.

In April 2007, the Fixed Networks, Mobile Networks and Carrier Services divisions of Siemens merged with Nokia’s Network Business Group in a 50/50 joint venture, creating a fixed and mobile network company called Nokia Siemens Networks. Nokia delayed the merger due to bribery investigations against Siemens.

Through an American sub-organisation known as the Siemens Foundation, Siemens also devotes funds to rewarding students and AP teachers. One of its main programs is the Siemens Westinghouse Competition in maths, science, and technology, which annually grants scholarships up to US$100,000 to both individual and team entrants. According to the foundation website, Siemens awards a total of nearly US$2 million in scholarship money every year.

MAJOR CLIENTS OF SIEMENS

-KCR
-Novartis
-Edmonton Transit System
-Calgary Transit
-Deutsche Bahn AG ( German rail transport company)
-METRORail (Houston, Texas)
-Sacramento Regional Transit District
-Regional Transportation District TheRide (Denver, Colorado)
-LACMTA (Los Angeles County, California)
-Pittsburgh Light Rail
-San Diego Trolley
-MAX Light Rail (Portland, Oregon)
-Nederlandse Spoorwegen (the Dutch railways) (The Netherlands)
-Port of Rotterdam (Rotterdam, The Netherlands)
-Balkim Muh. Elk. Ltd. Sti.
-BBC
-Indian Railways
-Airtel
-Powergrid Corporation of India

Products

-Industrial Instrumentation (Sensors and Controls)
-Telecommunication Service Platform, the TSP 7000
-Combino, ULF, and Avanto trams
-Siemens-Duwag U2 LRV
-ER20 locomotive – MTR
-LHB/Siemens M1/M2/M3 Metro Mar. Pair
-Siemens-Adtranz LRV
-Duewag/Siemens 1435 mm Combino Low Flr LRV
-MX3000 Metro car for Oslo (SGP Wien works)
-S4000 metro
-Schindler/Siemens ABB Be 4/8 Low Floor LRV
-Metro 5001
-SWBSiemensr NGT 6D LRV
-Eurosprinter locomotive
-Desiro, ICE, and Transrapid trains
-Gigaset, Home entertainment products, including Gigaset M740 AV, a set-top box to receive -TDT and integrate it in a domestic network (using WLAN or cable), i.e. for home streaming media.
-Hicom Trading E
-Hicom 300
-HiPath
-HiQ 8000 Softswitch
-MSR32R
-EWSD telephone exchanges
-SPX 2000 small digital telephone exchange (rural)
-Siemens Gigaset cordless telephones
-Siemens Mobile Phones – divested to BenQ in 2005
-Siemens SPPA-T2000 Control System (formerly Teleperm XP)
-Siemens SPPA-T3000 Control System (For Electrical Power Generation Control)
-SIMATIC PCS 7 Process Automation System for Process and Hybrid industries
-Radio and core products for 2G and 3G Mobile Networks (GSM, UMTS, …)
-Gas & Steam Turbines
-Industrial programmable controls (including Simatic PLC, and Logo! microcontrollers)
-The Siemens Servo life support ventilator line
-MAGNETOM(TM) Espree
-SOMATOM(R) Definition CT
-SOMATOM(R) Sensation CT
-SOMATOM(R) Emotion CT
-AXIOM Artis
-AXIOM Sensis
-E.Cam Signature Series Gamma Camera
-Symbia TruePoint SPECT-CT
-Biograph TruePoint PET.CT
-Magnetom C!, a low field open MRI
-Magnetom Avanto, a Tim system MRI
-Magnetom Espree, a Tim system, open bore MRI
-Magnetom Trio, A Tim System, ultra high field MRI
-Windturbines, 1.3 MW, 2.3 MW, 3.6 MW
-Sinorix(TM)
-Sistore(TM)

Main competitors of Siemens are:

-ABB
-Alcatel-Lucent
-Alstom
-Automated Logic
-Bombardier
-Cisco Systems
-Computrols
-Eaton
-Ericsson
-General Electric
-Honeywell
-Johnson Controls
-Lantronix
-Nortel
-Philips
-Reliable Controls
-Rockwell Automation
-Samsung
-Schneider Electric

3. OBJECTIVES AND NEED OF SUPPLY CHAIN MANAGEMENT

Traditionally, marketing, distribution, planning, manufacturing, and the purchasing organizations along the supply chain operated independently. These organizations have their own objectives and these are often conflicting.

Marketing’s objective of high customer service and maximum sales dollars conflict with manufacturing and distribution goals. Many manufacturing operations are designed to maximize throughput and lower costs with little consideration for the impact on inventory levels and distribution capabilities. Purchasing contracts are often negotiated with very little information beyond historical buying patterns.

The result of these factors is that there is not a single, integrated plan for the organization—there were as many plans as businesses. Clearly, there is a need for a mechanism through which these different functions can be integrated together. Supply chain management is a strategy through which such integration can be achieved.

Moreover, shortened product life cycles, increased competition, and heightened expectations of customers have forced many leading edge companies to move from physical logistic management towards more advanced supply chain management. Additionally, in recent years it has become clear that many companies have reduced their manufacturing costs as much as it is practically possible. Therefore, in many cases, the only possible way to further reduce costs and lead times is with effective supply chain management.

In addition to cost reduction, the supply chain management approach also facilitates customer service improvements. It enables the management of:

– inventories,
– transportation systems and
– whole distribution networks

so that organizations are able to meet or even exceed their customers‘ expectations.

The major objective of supply chain management is to reduce or eliminate the buffers of inventory that exists between originations in chain through the sharing of information on demand and current stock levels.

Broadly, an organization needs an efficient and proper supply chain management system so that the following strategic and competitive areas can be used to their full advantage if a supply chain management system is properly implemented.

1. Fulfillment of raw materials:

Ensuring the right quantity of parts for production or products for sale arrive at the right time. This is enabled through efficient communication, ensuring that orders are placed with the appropriate amount of time available to be filled. The supply chain management system also allows a company to constantly see what is on stock and making sure that the right quantities are ordered to replace stock.

2. Logistics:

The cost of transporting materials as low as possible consistent with safe and reliable delivery. Here the supply chain management system enables a company to have constant contact with its distribution team, which could consist of trucks, trains, or any other mode of transportation. The system can allow the company to track where the required materials are at all times. As well, it may be cost effective to share transportation costs with a partner company if shipments are not large enough to fill a whole truck and this again, allows the company to make this decision.

3. Smooth Production:

Ensuring production lines function smoothly because high-quality parts are available when needed. Production can run smoothly as a result of fulfillment and logistics being implemented correctly. If the correct quantity is not ordered and delivered at the requested time, production will be halted, but having an effective supply chain management system in place will ensure that production can always run smoothly without delays due to ordering and transportation.

4. Increase in Revenue & profit:

Ensuring no sales is lost because shelves are empty. Managing the supply chain improves a company flexibility to respond to unforeseen changes in demand and supply. Because of this, a company has the ability to produce goods at lower prices and distribute them to consumers quicker then companies without supply chain management thus increasing the overall profit.

5. Reduction in Costs:

Keeping the cost of purchased parts and products at acceptable levels. Supply chain management reduces costs by increasing inventory turnover on the shop floor and in the warehouse controlling the quality of goods thus reducing internal and external failure costs and working with suppliers to produce the most cost efficient means of manufacturing a product.

6. Mutual Success:

Among supply chain partners ensures mutual success. Collaborative planning, forecasting and replenishment (CPFR) is a longer-term commitment, joint work on quality, and support by the buyer of the supplier’s managerial, technological, and capacity development. This relationship allows a company to have access to current, reliable information, obtain lower inventory levels, cut lead times, enhance product quality, improve forecasting accuracy and ultimately improve customer service and overall profits. The suppliers also benefit from the cooperative relationship through increased buyer input from suggestions on improving the quality and costs and though shared savings. Consumers can benefit as well through higher quality goods provided at a lower cost.

4. ACTIVITIES/FUNCTIONS OF SCM IN SIEMENS

Supply chain management is a cross-functional approach to managing the movement of raw materials into an organization and the movement of finished goods out of the organization toward the end-consumer. As corporations strive to focus on core competencies and become more flexible, they have reduced their ownership of raw materials sources and distribution channels. These functions are increasingly being outsourced to other corporations that can perform the activities better or more cost effectively. The effect has been to increase the number of companies involved in satisfying consumer demand, while reducing management control of daily logistics operations. Less control and more supply chain partners led to the creation of supply chain management concepts. The purpose of supply chain management is to improve trust and collaboration among supply chain partners, thus improving inventory visibility and improving inventory velocity.

Several models have been proposed for understanding the activities required managing material movements across organizational and functional boundaries. SCOR is a supply chain management model promoted by the Supply-Chain Council. Another model is the SCM Model proposed by the Global Supply Chain Forum (GSCF). Supply chain activities can be grouped into strategic, tactical, and operational levels of activities.

(a) Strategic:-

-Strategic network optimization, including the number, location, and size of warehouses, distribution centers and facilities.

-Strategic partnership with suppliers, distributors, and customers, creating communication channels for critical information and operational improvements such as cross docking, direct shipping, and third-party logistics.

-Products design coordination, so that new and existing products can be optimally integrated into the supply chain.

-Information Technology infrastructure, to support supply chain operations.

-Where to make and what to make or buy decisions.

(b) Tactical:-

-Sourcing contracts and other purchasing decisions.

-Production decisions, including contracting, locations, scheduling, and planning process definition.

-Inventory decisions, including quantity, location, and quality of inventory. Transportation strategy, including frequency, routes, and contracting.

-Benchmarking of all operations against competitors and implementation of best practices throughout the enterprise.

(c) Operational:-

-Daily production and distribution planning, including all nodes in the supply chain.

-Production scheduling for each manufacturing facility in the supply chain (minute by minute).

-Demand planning and forecasting, coordinating the demand forecast of all customers and sharing the forecast with all suppliers.

-Sourcing planning, including current inventory and forecast demand, in collaboration with all suppliers. Inbound operations, including transportation from suppliers and receiving inventory.

-Production operations, including the consumption of materials and flow of finished goods.

-Outbound operations, including all fulfillment activities and transportation to customers.

-Order promising, accounting for all constraints in the supply chain, including all suppliers, manufacturing facilities, distribution centers, and other customers. Performance tracking of all activities.

INTEGRATED SUPPLY CHAIN MANAGEMENT

An integrated supply chain management streamlines processes and increases profitability by delivering the right product to the right place, at the right time, and at the lowest possible cost. Unlike commercial manufacturing supplies, clinical supplies planning is very dynamic and can often have last minute changes. Availability of patient kit when patient arrives at investigator site is very important for clinical trial success.

This results in overproduction of drug products to take care of last minute change in demand. R&D manufacturing is very expensive and overproduction of patient kits adds significant cost to the total cost of clinical trials.

An integrated supply chain can reduce the overproduction of drug products by efficient demand management, planning, and inventory management. Implementation of ERP system (such as SAP) in R&D can have major ROI by an efficient supply and inventory management system and also by reducing overproduction.

-How Integration Is Achieved In Supply Chain?

Stage 1:

Complete functional independence where each business function such as production or purchasing does its own thing in complete isolation from other business function. For instance, production function seeking to optimize its unit cost of manufacture by long production runs with out regard for build up of finished goods inventory and advance impact it will have on the warehousing as well as working capital.

Stage 2:

Companies recognize the need of limited integration between adjacent functions such as distribution and inventory management or purchasing and material control.

Stage 3:

A natural extension of stage two, leading to establishment and implementation of end- to-end integration. A concept of linkage and coordination is achieved.

STAGE 4:


The linkage achieved in stage three is extended upstream to suppliers and down stream to customers. It represents true supply chain integration. This concept is also called ‘co-managed inventory’ (CMI).

Force of supply chain management is on trust and cooperation and the recognition that is properly managed ‘the whole cane be greater then the sum of its part’.

Inventory Decisions:

These refer to means by which inventories are managed. Inventories exist at every stage of the supply chain as either raw material, semi-finished or finished goods. They can also be in-process between locations. Their primary purpose to buffer against any uncertainty that might exist in the supply chain. Since holding of inventories can cost anywhere between 20 to 40 percent of their value, their efficient management is critical in supply chain operations. It is long term in the sense that top management sets goals. However, most researchers have approached the management of inventory from short term perspective. These include deployment strategies (push versus pull), control policies — the determination of the optimal levels of order quantities and reorder points, and setting safety stock levels, at each stocking location. These levels are critical, since they are primary determinants of customer service levels.

5. INVENTORY CONTROL MANAGEMENT

Inventory database

An important component of inventory planning involves access to an inventory database. It is a structured framework that contains the information needed to effectively manage all items of inventory, from raw materials to finished goods. This information includes the classification and amount of inventories, demand for the items, cost to the firm for each item, ordering costs, carrying costs and other data.

The task of inventory planning can be highly complex. At the same time it rests on fundamental principles. In doing so we must understand and determine the optimal lot size that has to be ordered. The EOQ (economic order quantity) refers to the optimal order size that will result in the lowest total of order and carrying costs and ordering costs. By calculating the economic order quantity the firm attempts to determine the order size that will minimize the total inventory costs. In examination of the two curves reveals that the carrying cost curve is linear i.e. more the inventory held in any period, greater will be the cost of holding it. Ordering cost curve on the other hand is different. The ordering costs decrease with an increase in order sizes. The point where the holding cost curve i.e. the carrying cost curve and the ordering cost curve meet, represent the least total cost which is incidentally the economic order quantity or optimum quantity.

PRODUCTIVITY

In the industries there will be a competitor who will be a low cost producer and will have greater sales volume in that sector. This is partly due to economies of scale, which enable fixed costs to spread over a greater volume but more particularly to the impact of the experience curve.

It is possible to identify and predict improvements in the rate of output of workers as they become more skilled in the processes and tasks on which they work. Bruce Henderson extended this concept by demonstrating that all costs, not just production costs, would decline at a given rate as volume increased. This cost decline applies only to value added, i.e. costs other than bought in supplies. Traditionally it has been suggested that the main route to cost reduction was by gaining greater sales volume and there can be no doubt about the close linkage between relative market share and relative costs. However it must also be recognized that logistics management can provide a multitude of ways to increase efficiency and productivity and hence contribute significantly to reduced unit costs.
In today’s more turbulent environment there is no longer any possibility of manufacturing and marketing acting independently of each other. It is now generally accepted that the need to understand and meet customer requirements is a prerequisite for survival. At the same time, in the search for improved cost competitiveness, manufacturing management has been the subject of massive renaissance. The last decade has seen the rapid introduction of flexible manufacturing systems, of new approaches to inventory based on materials requirement planning (MRP) and just in time (JIT) methods, a sustained emphasis on quality.
Equally there has been a growing recognition of the critical role that procurement plays in creating and sustaining competitive advantage as part of an integrated logistics process.

In this scheme of things, logistics is therefore essentially an integrative concept that seeks to develop a system wide view of the firm. It is fundamentally a planning concept that seeks to create a framework through which the needs of the manufacturing strategy and plan, which in turn link into a strategy and plan for procurement.

Inventory Flow:

The management of logistics is concerned with the movement and storage of materials and finished products. Logistical operations start with the initial shipment of a material or component part from a supplier and are finalized when a manufactured or processed product is delivered to a customer. From the initial purchase of a material or component, the logistical process adds value. By moving inventory when and where needed. Thus the material gains value at each step. For a large manufacturer, logistical operations may consist of thousands of movements, which ultimately culminate in the delivery of the product to an industrial user, wholesaler, dealer or customer. Similarly for a retailer, logistical operations may commence with the procurement of products for resale and may terminate with consumer pickup or delivery.

The significant point is that regardless of the size or type of the enterprise, logistics is useful and requires continuous management attention.

INVENTORY- related costs

Inventory carrying cost (ICC):

-Tax
-Storage
-Capital
-Insurance
-Obsolescence
-Ordering:
-Communication
-Processing, including material
-handling and packaging
-Update activities, including
-receiving and date-processing

Basic Inventory Decisions

There are two basic decisions that must be made for every item that is maintained in inventory. These decisions have to do with the timing of orders for the item and the size of orders for the item.

RELEVANT INVENTORY COSTS

Item Costs, Holding Costs, Ordering Costs, Shortage Costs,
Direct cost for getting an item. Purchase cost for outside orders, manufacturing cost for internal orders. Costs associated with carrying items in inventory. Storage and other related costs. Fixed costs associated with placing an order (either a purchase cost for outside orders, or a setup cost for internal orders). Costs associated with not having enough inventory to meet demand.

EOQ:

The EOQ can be calculated with the help of a mathematical formula. Following assumptions are implied in the calculation:
1. Constant or uniform demand- although the EOQ model assumes constant demand, demand may vary from day to day. If demand is not known in advance- the model must be modified through the inclusion of safe stock.
2. Constant unit price- the EOQ model assumes that the purchase price per unit of material will remain unaltered irrespective of the order offered by the suppliers to include variable costs resulting from quantity discounts, the total costs in the EOQ model can be redefined.
3. Constant carrying costs- unit carrying costs may very substantially as the size of the inventory rises, perhaps decreasing because of economies of scale or storage efficiency or increasing as storage space runs out and new warehouses have to be rented.
4. Constant ordering cost- this assumption is generally valid. However any violation in this respect can be accommodated by modifying the EOQ model in a manner similar to the one used for variable unit price.
5. Instantaneous delivery- if delivery is not instantaneous, which is generally the case; the original EOQ model must be modified through the inclusion of a safe stock.
6. Independent orders- if multiple orders result in cost saving by reducing paper work and the transportation cost, the original EOQ model must be further modified. While this modification is somewhat complicated, special EOQ models have been developed to deal with it.
These assumptions have been pointed out to illustrate the limitations of the basic EOQ model and the ways in which it can be easily modified to compensate for them.

The formula for the EOQ model is:

2 M Co
S Cc

Where M = is the annual demand
Co is the cost of ordering
Cc is the inventory carrying cost
S = is the unit price of an item.
Limitations of the EOQ formula-
1. Erratic changes usages- the formula presumes the usage of materials is both predictable and evenly distributed. When this is not the case, the formula becomes useless.
2. Faulty basic information- order cost varies from commodity to commodity and the carrying cost can vary with the company’s opportunity cost of capital. Thus the assumption that the ordering cost and the carrying cost remains constant is faulty and hence EOQ calculations are not correct.
3. Costly calculations: the calculation required to find out EOQ is extremely time consuming. More elaborate formulae are even more expensive. In many cases, the cost of estimating the cost of possession and acquisition and calculating EOQ exceeds the savings made by buying that quantity.
4. No formula is a substitute for common sense- sometimes the EOQ may suggest that we order a particular commodity every week (six-year supply) based on the assumption that we need it at the same rate for the next six years. However we have to order it in the quantities according to our judgment. Some items can be ordered every week; some can be ordered monthly, depends on how feasible it is for the firm.
5. EOQ ordering must be tempered with judgment- Sometimes guidelines provide a conflict in ordering. Where an order strategy conflicts with an operational goal, order strategy restrictions should be developed to permit honoring the goal.

Quantity discounts: In the EOQ analysis, it has been assumed that material prices and transportation costs were constant factors for the range of order quantities considered. In practice, some situations occur in which the delivered unit cost of a material decreases significantly if a slightly larger quantity than the originally computed EOQ is purchased. Quantity discounts, freight rate schedules and price increases may create such situations. These additional variables can also be included in the formula.

Cost of carrying inventory:

Carrying material in inventory is expensive. A number of studies indicated that the annual cost of carrying a production inventory averaged approximately 25% of the value of the inventory. The escalating and volatile cost of money has escalated the annual inventory carrying cost to a figure between 25% – 35% of the value of the inventory. The following five elements make up this cost:
1) Opportunity cost (12% -20%)
2) Insurance cost (2% – 4%)
3) Property taxes (1% – 3%)
4) Storage costs (1%- 3%)
5) Obsolescence and deterioration (4% – 10%)
Total carrying cost (20% – 40%)

Let us briefly look into these costs:


Opportunity cost of invested funds

When a firm uses money to buy production material and keeps it in the inventory, it simply has this much less cash to spend for other purposes. Money invested in external securities or in productive equipment earns a return for the company. Thus it is logical to charge all money invested in inventory an amount equal to that it could earn elsewhere in the company. This is the opportunity cost associated with inventory investment.

Insurance cost

Most firms insure the assets against possible losses from fire and other forms of damage.

Property taxes

This is levied on the assessed value of a firm’s assets, the greater the inventory value, the greater the asset value and consequently the higher the firm’s tax bill.

Storage costs

The warehouse is depreciated every year over the length of its life. This cost can be charged against the inventory occupying the space.

Obsolescence and deterioration

In most inventory operations, a certain percentage of the stock spoils, is damaged, is pilfered, or eventually becomes obsolete. A certain number always takes place even if they are handled with utmost care.

Generally speaking, this group of carrying costs rises and falls nearly proportionately to the rise and fall of the inventory level.

The ABC Classification:

Indicators that classifies a material as an A,B or C part according to its consumption value .The classification process is known as the ABC analysis.
The three indictors have the following meanings:
A-important part , high consumption value
B-less important , medium consumption value
C-relatively unimportant part , low consumption value

The ABC classification system is to grouping items according to annual sales volume, in an attempt to identify the small number of items that will account for most of the sales volume and that are the most important ones to control for effective inventory management.

Reorder Point: The inventory level R in which an order is placed where R = D.L, D = demand rate (demand rate period (day, week, etc), and L = lead time.

Safety Stock: Remaining inventory between the times that an order is placed and when new stock is received. If there are not enough inventories then a shortage may occur.
Safety stock is a hedge against running out of inventory. It is an extra inventory to take care on unexpected events. It is often called buffer stock. The absence of inventory is called a shortage.

ABC Inventory Classification

The ABC classification process is an analysis of a range of items, such as finished products or customers into three categories: A – outstandingly important; B – of average importance; C – relatively unimportant as a basis for a control scheme. Each category can and sometimes should be handled in a different way, with more attention being devoted to category A, less to B, and less to C.

Inventory Control Application: The ABC classification system is to grouping items according to annual sales volume, in an attempt to identify the small number of items that will account for most of the sales volume and that are the most important ones to control for effective inventory management.

Break-even analysis depends on the following variables:
1. Selling Price per Unit: The amount of money charged to the customer for each unit of a product or service.
2. Total Fixed Costs: The sum of all costs required to produce the first unit of a product. This amount does not vary as production increases or decreases, until new capital expenditures are needed.
3. Variable Unit Cost: Costs that vary directly with the production of one additional unit.
Total Variable Cost The product of expected unit sales and variable unit cost, i.e., expected unit sales times the variable unit cost.
4. Forecasted Net Profit: Total revenue minus total cost. Enter Zero (0) if you wish to find out the number of units that must be sold in order to produce a profit of zero (but will recover all associated costs)

Break-Even Point in siemens: Number of units that must be sold in order to produce a profit of zero (but will recover all associated costs). In other words, the break-even point is the point at which your product stops costing you money to produce and sell, and starts to generate a profit for your company.
where:
Q = Break-even Point, i.e., Units of production (Q),
FC = Fixed Costs,
VC = Variable Costs per Unit
UP = Unit Price
Therefore,
Break-Even Point Q = Fixed Cost / (Unit Price – Variable Unit Cost)

Stock control and inventory

Stock control, otherwise known as inventory control, is used to show how much stock you have at any one time, and how you keep track of it.
It applies to every item you use to produce a product or service, from raw materials to finished goods. It covers stock at every stage of the production process, from purchase and delivery to using and re-ordering the stock.

Efficient stock control allows you to have the right amount of stock in the right place at the right time. It ensures that capital is not tied up unnecessarily, and protects production if problems arise with the supply chain.

Supply chain vendor management inventory:

Allows supply chain partners to share critical order, demand and inventory information in real-time and uses both integrated and web based applications to reduce administration costs, shortening cycle times and help lower inventory levels. Our unique, managed supply hub requires little upfront investment, yet quickly starts delivering high performance in real time

Inventory Control Overview

Normal Inventory

As it sounds, this type of inventory item will be used for the majority of your parts. It will correctly track the inventory received and sold on a first in first out basis, will handle cost of sales, and will warn you when you’re out of stock.

Non-Inventory Type

This is used for selling things that are not really inventory items. For example, you could be selling warranty, but because you don’t have warranty in a box to sell, and you’ll never run out of stock, you won’t need to keep inventory control on it. As well, there is no cost of sale adjustments with non-stock items. The system will not calculate how much you paid for the item, and therefore will not try to remove that value from inventory in the general ledger. If you are selling something that does cost you money, you will have to handle these details manually.

Labor Parts

You (probably) don’t have technicians hanging from hooks in your back room, so like non-inventory items, the system will not try to remove them from inventory when you sell a labor item. The two differences between Non-Inventory items an Labor items are that you can optionally have the system ask you for the technician code that did the work so that you can print reports showing who did what work. As well, the system will optionally ask for a comment to explain what was done so that the description of the service work can be printed on the invoice.

Note too that you can optionally keep track of how much time was spent and how much time was billed for on a per job basis. At the end of the month, you can then print technician productivity reports to compare total time spent compared to billable hours. In the automotive industry, some mechanics can do the work faster than is what is billed because the billing is based on industry standards.

Consignment Items

Consignments can be used to keep track of inventory that you don’t own, but at the time you sell it, you must pay for it. You’ll be able to generate several reports, including a list of inventory that is on consignment but not sold and a list of inventory sold on consignment, but not yet paid for.

Floor Plan Inventory

Floor planning is very similar to consignment, except that you take possession and own the inventory when you receive it, but you don’t have to pay for it until it’s sold, or until it’s been in the store for a negotiated period of time. However, you do own the inventory and do have to pay for it sometime.

Some floor planning companies want the ability to check the inventory serial number by serial number for the larger items, and others may just want to count the number of each model number on hand. Regardless, Windward System Five can handle it.

On the accounts payable side, you will be able to keep track of who you owe the money too (Floor Planning Company) and who you actually bought the inventory from (Supplier) and generate proper histories of each.

Tire Inventory

Windward System Five has the ability to sort and categorize tires by their size, aspect ratio and rim size. In addition, you will also be able to search for the tires by just entering in some of the search criteria and having the system bring up a window of all matches.

When the list brings up a list of tires that can all fit the vehicle, the system can sort the list to show the items with the highest quantity in stock at the top of the list and the items that are out of stock at the bottom of the list. This will help you sell what you actually have to sell instead of creating special orders.

Product Inventory

Products are items such as vehicles that you might service or repair after selling them to the customer. That is, they are an item in the database that can be sold, and when sold, are automatically added to the customer’s list of products that can be worked on.

Examples are vehicles, trucks, recreational vehicles, fridges, air conditioners, and chainsaws. The system will let you keep additional information on these products, such as make, model, year, and other comments, and will also be able to list all the work or repairs performed between two dates.

Windward System Five can also track whole goods such as recreational vehicles by keeping track of the cost of the item before the sale, add ones and pre-delivery inspection items. In addition, the system can generate a „wash out“ report one level deep to show the costs and income associated with the trade in.

Serialized Inventory

Those items that need to be tracked by their serial numbers can be marked as serialized inventory. For example, fridges, stoves, computers, and chainsaws might all be serialized. Note that if you plan on servicing these items in the future and keeping track of all work you do on them, they should be entered as products instead of serial numbers.

TYPES OF INVENTORY

Several different types of inventories are conducted, depending upon the type of materiel involved and type of information needed. Bulkhead-to-Bulkhead Inventory

A bulkhead-to-bulkhead inventory is a physical count of all stock materiel within the ship or within a specific storeroom.A bulkhead-to-bulkhead inventory of a specific storeroom is taken when a random sampling inventory of that storeroom fails to meet the inventory accuracy rate of 90 percent when directed as a result of a supply management inspection (SMI). It is also taken when directed by the commanding officer or when circumstances clearly indicate that it is essential to effective inventory control.

Specific Commodity Inventory

The specific commodity inventory is a physical count of all items under the same cognizance symbol, FSC, or that support the same operational function, such as- boat spares, electron tubes, boiler tubes, or fire brick. This inventory is taken under the same conditions as a bulkhead- to-bulkhead inventory; however, prior knowledge of specific stock numbers and item location is required to conduct a specific commodity inventory

Special Materiel Inventory

A special materiel inventory requires the physical count of all items that, because of their physical characteristics, costs, mission essentiality, and criticality, are specifically designated for separate identification and inventory control. Special materiel inventories include, but are not limited to, stocked items designated as classified or hazardous. Special materiel inventories also include controlled equipage and presentation silver

Advantage Inventory Contr
ol

The Inventory Control gives you the ability to handle your inventory your way. As one of the most flexible and comprehensive modules in the Advantage, you can choose the level of control that best suits your specific business needs. Your inventory can be valued on a LIFO, FIFO or Average cost basis. You can choose to use parts explosions, serialized inventory, parts allocations, vendors, warehouses and an audit trail. The system can also track the quantity sold for each item for the last 12 months and, using this data, provides a sales analysis report to help you better manage your stock. Financing is aided by the serialized aged report that shows which serialized items have been in your inventory the longest and how much you have outstanding. Pricing can be standardized by rounding to a given factor or by being set to a specific suffix. With the Below Minimum report, reordering stock is automatic and accurate. Inventory Control is a stand–alone module that can also be integrated with Purchase Orders, Point of Sale, Billing/Order Entry, Job Cost, Time Billing and Quick Sale.
21–character alphanumeric item number field
Lookup on item number, item description (21 characters) and group (15 character) fields
Tracks serialized items
Allows for superseded, preceded and substitute items
Unlimited additional descriptions can be added to items
Handles markup and gross profit cost basis
Can automatically update item pricing and discounts
Handles core pricing
Produces a re–order report based on minimum stock quantities
Tracks unlimited vendors per item and recommends a ‘best’ vendor
Tracks allocations including explosion allocations
Up to 254 discounts per item, including quantity break discounts
Unit conversions can be defined for each item for both buying and selling quantities
Allows for warehouse transfers and other quantity adjustments
Set up special sale dates for item discounting

Produces physical inventory forms
Imports physical inventory and received quantities from data collected with hand-held computers
Provides up to 255 levels of parts explosion to allow you to identify all components of your assembled stock
Automatically updates cost and price on explosion items based on subassembly changes
• Reports the best and worst selling items in each of eight different categories
• Tracks items by location or quantity in multiple warehouses
• Can automatically generate items based on a template item
• Utilizes Rapid Entry to facilitate entry of item data

Disadvantages:

• conveyor needs to be slightly declined for carton movement (one way);

• may require addition of powered booster units in some applications;

• cannot be used for inter-floor movement except for down travel;

• goods need to be manually pushed when horizontal;

• no positive control over moving carton;

• produces line pressure when accumulating.
• Require efficiency of land

We propose a method for valuing new, recoverable, and recovered assemblies (products, components, parts, etc.) in production systems with reverse logistics. Values of assemblies influence their opportunity holding cost rates and are hence essential for comparing inventory strategies in average cost models. We argue that the proposed method is ‚correct‘ from a discounted cash flow (DCF) point of view. We refer to some previous results on valuing assemblies in systems without disassembly of returned products that seem to confirm this. Furthermore, we test the method for a specific example with disassembly of returned products. The simulation results indicate that the method indeed leads to (nearly) DCF optimal inventory strategies.

Packaging

In siemens, with its large product volumes, low margins and fierce competition, is constantly seeking efficiency improvements in its supply chain. The grocery retail industry uses an immense amount of packaging and is directly affected by packaging logistics activities. There is, therefore, a potential for efficiency improvements in the grocery retail supply chain through the integration and development of new systems of packaging and logistics. Packaging handling is identified as one of the main activities that has a strong impact on the overall logistical cost of chain. This research article investigates packaging handling evaluation methods and discusses how these are employed to benefit the industry from the industry, have been used to evaluate packaging and logistics activities. This work, together with a literature review, was used to identify the need for evaluative methods and the present availability of such methods. The results indicated a lack of sufficient and usable packaging handling evaluation methods in today’s grocery and packaging industry especially from a logistical point of view. The paper also highlights the lack of systematization among the few methods used and discusses how these can be used to build a systematic and multifunctional evaluation model in order to utilize the information from different studies to build a knowledge base for the future

Vendor-Managed Inventory

Siemens is a leading global manufacturer, focused on delivering operational services to high-tech companies, needed to take advantage of vendor-managed inventory (VMI) postponement and optimal fulfillment solutions to stay competitive in its low-margin manufacturing marketplace. Its objective was to find ways to reduce inventory redundancy, improve customer responsiveness by reduced cycle times and simplify supplier management and procurement administration. The manufacturer also needed to augment existing infrastructure, while reducing investments in additional personnel, facilities and systems

Vendor Managed Inventory (VMI)

Vendor Managed Inventory supports the efficient flow of materials into the market. Working closely with you and your suppliers, we automate the forecast management process with Web-based software that enables the flow of supply to more accurately mirror store – and even shelf-level – demand.
Move your inventory in and out of our distribution centers and manage demand planning. We can store and stage product for replenishment at our often freeing or limited store rooms. We provide forecast visibility, comparing actual demand against DC-on-hand, store-on-hand and in-transit inventory. When store or inventory falls below pre-determined levels, auto alerts are sent to you and your supplier to prompt replenishment.

Advanced Shipping Notices (ASNs) provide detail on in-transit inventory from suppliers so you have visibility to inventory deeper into the supply chain. This allows for confident commitment to orders based on this inbound flow.
Postpone inventory ownership until shipment to your site. Once your inventory is moved to the we work with your suppliers to transition inventory ownership until demand occurs.
Perform value-added services, allowing you to more efficiently manage the flow of goods into manufacturing or directly to market.

Vendor Managed Inventory (VMI)

Vendor Managed Inventory by Kuehne + Nagel supports the efficient flow of materials into the market. Working closely with you and your suppliers, we automate the forecast management process with Web-based software that enables the flow of supply to more accurately mirror store – and even shelf-level – demand.
Move your inventory in and out of our distribution centers and manage demand planning with Web-based applications. We can store and stage prod




Immobilienmakler Heidelberg

Makler Heidelberg

Source by Neha Ashani

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