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other systems such as accounting and sales to better control inventory levels. As Dennis
Eskow noted in PC Week, business executives are "increasingly integrating financial
data, such as accounts receivable, with sales information that includes customer
histories. The goal: to control inventory quarter to quarter, so it doesn't come back to
bite the bottom line. Key components of an integrated system ' are general ledger,
electronic data interchange, database connectivity, and connections to a range of
vertical business applications."
The Future of Inventory Control Systems
New technologies have greatly improved the tools used to manage inventories. Powerful
computer systems that are linked into networks are now able to receive information from
handheld devises. The wireless handheld devices scan bar codes on inventory items
and send data to a tracking database in real time. The increased efficiency of inventory
systems over the past 25 years made some things possible that would have been
impossible in earlier times, like the popular just-in-time manufacturing system.
The newest trend in the area of inventory control and management are vendor-managed
inventory (VMI) systems and agreements. In a VMI system distributors and/or
manufacturers agree to take over the inventory management for their customers. Based
on daily reports sent automatically from the customer to the distributor, the distributor
replenishes the customers stocks as needed. The distributor or manufacturer sees what
is selling and makes all necessary arrangements to send the customer new products or
parts automatically. No phone calls or paperwork are necessary allowing the supply
chain process to remain uninterrupted.
The benefits that can accrue to both parties in a VMI arrangement are noteworthy. Both
parties should experience a savings of time and labor. The customer is able to maintain
fewer items in stock and can rely upon a steady flow of products or parts. The vendor or
distributor benefits in two ways. First, a supplier is able to better anticipate production
requirements. Second, the supplier benefits from a strong relationship with the
customer, one that is more difficult to alter than would be a vendor-customer relationship
in which such automated systems did not exist.
As with all outsourcing arrangements, there are potential negatives to a VMI system.
The first is the partial loss of control experienced by the customer in managing his or her
own inventories. Second is the problem this type of system poses on a vendor in the
case of volatile sales periods. It is very difficult for a distributor or manufacturer to hold
large inventories for one customer on a VMI system who is experiencing a slowdown in
sales while having to ramp up for another customer who is experiencing rising demand.
Both parties to a VMI agreement must weigh the pros and cons of such a system
thoroughly and be sure to include in any VMI agreement prearranged methods for
dealing with periods of volatile sales patterns. The popularity of VMI suggests that there
are many applications in which these systems produce net benefits for both parties.
WAREHOUSE LAYOUT AND OPERATION
The trend toward automation in inventory management naturally has moved into the
warehouse as well. Citing various warehousing experts, Sarah Bergin contended in
Transportation and Distribution magazine that "the key to getting productivity gains
from inventory management ' is placing real-time intelligent information processing in
the warehouse. This empowers employees to take actions that achieve immediate
results. Real-time processing in the warehouse uses combinations of hardware
including material handling and data collection technologies. But according to these
executives, the intelligent part of the system is sophisticated software which automates
and controls all aspects of warehouse operations."
Another important component of good inventory management is creation and
maintenance of a sensible, effective warehousing design. A well-organized, user-friendly
warehouse layout can be of enormous benefit to small business owners, especially if
they are involved in processing large volumes of goods and materials. Conversely, an
inefficient warehouse system can cost businesses dearly in terms of efficiency, customer
service, and, ultimately, profitability.
Transportation and Distribution magazine cited several steps that businesses
utilizing warehouse storage systems can take to help ensure that they get the most out
of their facilities. It recommended that companies utilize the following tools:
Stock locator database"The stock locator database required for proactive decision
making will be an adjunct of the inventory file in a state-of-the-art space management
system. A running record will be maintained of the stock number, lot number, and
number of pallet loads in each storage location. Grid coordinates of the reserve area,
including individual rack tier positions, must therefore be established, and the pallet load
capacity of all storage locations must be incorporated into the database."
Grid coordinate numbering systemWarehouse numbering system should be
developed in conjunction with the storage layout, and should be user-friendly so that
workers can quickly locate currently stocked items and open storage spaces alike.
Communication systemsAgain, this can be a valuable investment if the business's
warehouse requirements are significant. Such facilities often utilize fork lift machinery
that can be used more effectively if their operators are not required to periodically return
to a central assignment area. Current technology, makes it possible for the warehouse
computer system to interact with terminal displays or other communications devices on
the fork lifts themselves. "Task assignment can then be made by visual display or
printout, and task completion can be confirmed by scanning, keyboard entry, or voice
recognition," observed Transportation and Distribution.
Maximization of storage capacityWarehouses that adhere to rigid "storage by
incoming lot size" storage arrangements do not always make the best use of their
space. Instead, businesses should settle on a strategy that eases traffic congestion and
best eases problems associated with ongoing turnover in inventory.
Some companies choose to outsource their warehouse functions. "This allows a
company that isn't as confident in running their own warehousing operations to
concentrate on their core business and let the experts worry about keeping track of their
inventory," wrote Bergin. Third-party inventory control operations can provide companies
with an array of valuable information, including analysis of products and spare parts,
evaluations of their time sensitivity, and information on vendors. Of course, businesses
weighing whether to outsource such a key component of their operation need to
consider the expense of such a course of action, as well as their feelings about
relinquishing that level of control.
What is a Payroll System?
A payroll system involves everything that has to do with the payment of employees and
the filing of employment taxes. This includes keeping track of hours,
calculating withholding taxes and other printing and delivering checks and paying
employment taxes to the government.
The payroll system starts when a company hires its first employee. In the United States,
every new employee must be reported to the state along with a completed W-4 tax
form. The W-4 determines how many allowances the employee qualifies for when
calculating the federal income tax that should be withheld from each check. Generally,
the more dependents you have, the less income tax you have to pay.
As an employer, the W-4 is the first of many forms that you must keep on file as part of
your payroll system. In fact, the W-4 needs to be kept on file up to four years after the
employee is fired or quits [source: You must also keep track of the employee's critical
personal information, like the address to which checks are sent, or in the case of direct
deposit, the information and account number where the money is wired. All of this
information is highly sensitive, meaning that a good payroll system should also be very
secure.
Withholding and paying taxes is one of the most important responsibilities of the payroll
system. In the United States, the following are the major withholdings required by the
government:
Workman's compensation
Vacation days
Employee loans