Priscila –part Inventory System Summary Introduction Many companies are using inventory systems for their success and growth. Inventory systems have a variety of functions purposes in businesses. Promoting the sales and shrinkage control are two main functions of inventory system. Promoting the sales function deals with availability of sufficient products for the customers where as shrink age control function deals with monitoring the occurrence of damage loss, or theft, etc. of the products.
Another very important function of inventory control systems is asset valuation; that establishing the value of the products on the shelf for tax purposes at the end of the tax year. According to the Small Business Administration, all inventory systems strive to strike a balance between managing costs and the business advantages of a broad selection of goods to offer to customers. All inventory systems, regardless of technology, require some element of visual inventory management. Point of sale, bar code, or stub control systems will all require manual verification periodically. Inventory Systems
Radio frequency identification inventory system is a system considered an IT tool that can meet the needs of both mobility and timeliness is radio frequency identification (RFID). Radio signals are used to tag a product with radio frequency identification and then place it in memory. This system can count the total amount of products and perform the required order, to supply the products of low stock before the stock will be empty. This technology helps to increase sales and streamline managing inventory by making sure the products are available in the correct place at correct time.
With the aid of technology, the manual orders can reduced and product delivery can be enhanced using radio frequency identification. In this system electronic product code (EPC) are used to store objects from a worldwide perspectives. Generation two tag has the capability to assign unique identifiers for the products produced all over the world. Along with many advantages, RFID has few disadvantages such as tag collision, reader collision, data or system security, consumer privacy, and signal disruption, etc.
Perpetual inventory is keeping book inventory continuously with the stock on hand in real time. Many times when perpetual inventory in a store it is often paired with point-of-sale scanning equipment which allows sales to be recorded immediately. It also updates the system when an item is returned by a customer. When these items are recorded it allows the store to the ability to see when it needs to order more inventory and the count of goods sold. When using this type of inventory there is no need to do a yearend inventory unless there is a discrepancy of the inventory and the records.
If this happens a journal entry is made debiting an inventory over and short account crediting the inventory but if the inventory shows more on hand then the inventory is debited over and short is credited. During perpetual inventory transactions the inventory will be accounted for in different ways. The perpetual system shows inventory purchases are debited to inventory during a given transaction. Freight, purchase discounts, allowances and returns are also debited to inventory transactions. The costs of goods are recorded by the real-time of each sale with a debit to cost of goods sold.
Physical inventory counts are done at least once a year to account for breakage, errors, theft, ect. There are several ways that a bar code can be read. Some of the ways are scanning by a hand held, scanner that is attached to a computer or cash register, or scanner in the counter top. By scanning the product it allows the company to keep track of inventory and ordering. Each company does have their own system of inventory that they do by scanning. Barcode scanning is in all companies throughout the United States and it helps to control inventory.
Not all companies know that by using barcode scanning it help the company grow to bigger sizes. All employees of a company do not like to use computers and they prefer to do things manual. Advantages and Disadvantages Advantages of just in time inventory management systems are as follows: – Monitors time waste – Track Inflated Inventories – Reduce unneeded man power and material movement – Eliminates unnecessary processes and cut cost – Provide management with data of non-value adding activities – Price reduction from suppliers due to bargaining power
Con of Just In Time Inventory System are as follows: – Employees reluctance with the new system – Implementation and Integration can be costly – Long-Term Commitment Advantages of perpetual inventory systems are as follows: -Simple calculations are used to maintain inventory -Easy record keeping. The only records needed are the total materials -purchased and the total goods sold. -Time. You only have to do additional work if the records do not match Disadvantages of perpetual inventory systems are as follows: -Cost. The cost is fading fast References: Brown F & Lin P,.
The CPA Journal. Retrieved August 18, 2010, Radio Frequency Identification and How to Capitalize on It. What CPAs Should Know About RFID Technology. :// www. nysscpa. org/cpajournal/2006/706/essentials/p34. htm Budding, J, Inventory Management, United States Small Business Administration, retrieved August 18, 2010, from http://www. sba. gov/idc/groups/public/documents/sba_homepage/pub_mp22. pdf http://www. bsu. edu/web/scfrazier2/jit/mainpage. htm http://www. academicmind. com/unpublishedpapers/business/operationsmanagement/2005-04-000aaf-just-in-time-inventory-management. html