The control and good management of the deposit of a company are key factors for the success of organisations.

Good management, good control of the deposit and a correct valuation of stocks are key factors for the success of companies with a large number of products. On the contrary, a poor control can lead to losses, obsolescence, expiration, theft and other situations that will harm the company’s numbers.

In an increasingly demanding and dynamic market, companies with inventories are forced to reinvent themselves, improve all logistics management and optimize their purchasing processes. In addition, the maintenance of an optimal stock, which is sufficient to meet the demand, but without falling into an overstock, is no longer a competitive advantage, but an essential requirement to survive in the short term.

Logistic management and digitalisation are some of the keys to the success of companies that are revolutionizing distribution, such as Amazon and Alibaba, companies that add new challenges to the logistics of other businesses, having to supply these giants with inventories that have to keep according to your strict demands.

Keep in mind that here at SAM Technology you will find what you need in order to take operations to a whole new level and increase productivity.

Mastering the following nine keys and practical tips can put online the correct management of deposits and their good control:

1. Physical count

To know exactly the levels of the inventories, companies that have not carried out periodic checks of their stocks usually make a physical count of their products for the closing of the accounting year. In this way, these data contrast with the quantities that are reflected in the management solutions, with the possibility of taking some unpleasant surprises, such as important shortages and / or damage to them.

2. Stock variation

Companies have to calculate the consumption of stocks, for which purchases made must subtract the stocks not consumed, although it may also be the case that in an exercise more stocks are consumed than those that were purchased, this benefit must be reflected also through the stock variation account.

With the realization of the stock changes, in a first accounting note the initial stocks of the year are written off. The final stocks are then reflected in another entry, which will be transferred to the balance sheet. In addition, the difference between inventory variation accounts will transfer to profit or loss only the cost of the goods or products sold, since the inventory variation account functions as a corrective account for the expense account.

3. Composition of inventories

The inventory or stock of a company is constituted by raw materials, in-process or semi-finished products, finished products, by-products, waste and recovered materials, other supplies and merchandise. The stocks of these goods are necessary for the manufacture of the products marketed by the company, in the case of production companies and the stocks of merchandise are necessary for companies engaged in the distribution of products.

4. Avoid excessive inventories

The excess of stock is a problem that companies can face, for different reasons:

• The offer exceeds demand, due to changes in customer purchase patterns, greater competition or due to the deterioration of the economic conditions of potential buyers, among other reasons.
• Errors in the purchasing department when purchasing excess products without the necessary demand for their quick sale, or at a cost that does not allow them to be put on the market at a competitive price.
• Errors in sales forecasts, since purchases are made based on them. An excess of optimism may mean that stocks rotate at a slow pace and generate excess stock.

5. Obsolescence and expiration

Companies cannot sell expired items and obsolete items are difficult to sell. An example would be the old fashioned garments, which have to be offered to the market with significant discounts. The storage of obsolete products is an error that many companies face, which forces them to incur additional expenses to eliminate excess inventory such as those derived from destruction, transportation, etc.

6. Inventory valuation

The valuation of inventories is contemplated in the General Accounting Plan, in its second part, within the rules of registration and valuation, where it is determined that the valuation of goods and services will be carried out at their cost, whether the purchase price or the cost of production. The lowest value should be used between the market value and the cost value.

7. Calculation of production cost

The products in progress, semi-finished products, by-products, waste, recovered materials and finished products will be valued at their production cost. The same will be determined by adding to the purchase price of raw materials and other consumables the expenses directly attributable to the product. The part that reasonably corresponds to the costs indirectly attributable to the products in question must also be added, insofar as such values ​​correspond to the period of manufacture, processing or construction, in which they were incurred when they were placed for sale and are based on the level of utilization of the normal working capacity of the means of production.

8. Inventory conservation and valuation

The company must keep the documentary support of the inventory carried out, which is used for the realization of the change of stock entry, since this accounting adjustment has an impact on the result and, therefore, on the Corporation Tax.

9. Expenses to include in stocks

All additional expenses that occur until the company can use them, that is, until the goods are placed for sale, such as transportation, customs duties, insurance and others directly attributable to the acquisition of the goods, will be added to the stock. the existences. If they need a period of time exceeding one year to be able to be sold, financial expenses will also be included in the purchase price or production cost.

To perform a good management and control of the deposit, it is important to have a good inventory management software that facilitates the control of all the points listed above. In addition, a good warehouse management control software will reduce work times, facilitate all kinds of reports and help decision making. Without it, we can have very good intentions and purposes, but the deposit can become chaotic.

If you want to take your operations to another level and increase productivity here at SAM Technology you will find what you need. Contact us now.