10 Ways Inventory Management Can Make or Break You — Part IV
This week Part IV of 10 WAYS YOUR INVENTORY MANAGEMENT CAN MAKE OR BREAK YOU, we’ll take a look at what eye opening facts your profit margin reports can illuminate and to what level of detail. To review previous parts I-III of this white paper click here. Or read this white paper in its entirety.
Part IV: What is Your Profit Margin?
You may know the profit of your business but at what level of detail can you breakdown where this profit comes from? If your company bases profit largely against the cost of inventory, the ability to track and know the cost of your inventory becomes critical. In addition, it’s difficult for any business with more than a handful of inventory items flowing through their business or being used for raw materials to see where your profit margin comes from.
An effective sales profit report makes it possible to study your business from virtually any angle to see exactly where your profit is coming from and evaluate how profit margin percent translates to actual profit. For example, how much actual cash does an item with 40% profit margin bring in compared to another item currently making 20%.
In addition a report that allows you to break down profit by department, customer, customer type, product type, vendor, location, salesperson, and many other options, in whatever way you need to see it, is important. Having the ability to drill down to where your profit margin is coming from helps you to evaluate what areas to focus on and look for ways to improve profit or track how changes in your business are resulting in net profits.
Terri
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