An established manufacturing and distribution company contacted The Arrache Group for assistance in monitoring its inventory. At the time of engagement, the Company did not have an adequate system in place for tracking its inventory. As such, the Company was risking misappropriation and inaccurate valuation of its inventory. As inventory was the material balance to this Company, this lack of control posed a significant risk that could be potentially fatal for the Company. This is due to the fact that, as the Company did not maintain accurate inventory records (under a perpetual inventory system) and did not perform regular inventory counts, the Company could potentially 1) fail to sell inventory it had on hand (but did not record), 2) sell inventory that did not exist (therefore damaging customer relationships by failing to deliver on Purchase Orders), or 3) unknowingly lose inventory to damage, theft, or general obsolescence. The Arrache Group developed a series of policies and procedures and quantified the variance in inventory (comparing books to actual). After the initial consulting project, The Arrache Group has continued to monitor the inventory process for the Company. As the Company continues to follow the procedures put into place by The Arrache Group, inventory errors have been virtually eliminated. This allows the Company to run a more effective sales and purchasing program, thereby improving their Gross Margin significantly.
Follow Us!