Poor Inventory Management = Unsatisfied Customers

Inventory management is an integral part of a company’s ongoing internal activities. It allows a business to keep track of spending on inventory and also providing an accurate account of inventory or stock on hand. Although, most of us see this concept as something that we might not encounter often, it in fact affects us on a daily basis.

Last class we learned about this vital business concept. This made me think about my experience as a consumer dealing with poor inventory management. It all started last week when I went to a store to purchase a new flat screen TV. Prior to doing so, I had went on the company’s website to look up the price of this item and to see if they had it in stock at the store location nearest to my job. According to them, they did. However, when I was there I could not find the product on display or on the shelf. Fortunately, I printed the item information in advance and proceeded to ask for assistance. The customer service representative looked up the item and found that there were 3 remaining. Although it appeared to have been in stock, we look all around the electronic department and we had no luck finding the particular flat screen TV I wanted. Perhaps, it was misplaced or lost in the huge store? Regardless of where it went, the fact of the matter is I left the store with nothing. As a result, this cost the business money and a potential customer.

This experience along with what I learned in class made me realize the importance of inventory management. Not only can managing inventory help a company run things smoothly, but it can also provide customer satisfaction. By having an accurate account of products in stock and be easy to locate, items can be identified and given to the customer. Although inventory management software is important to have, it is also crucial to be able to know how to use it in order to be effective and efficient. Has anyone experience this situation before? If so, was it at a large or small store?

Forecasting with a side of Accounting

The components of conducting business are continuously changing. So most, if not every, business uses the forecasting tool to assist in formulating the future result of countless business decisions. Therefore, by making accurate decisions based on important information helps companies prevent losses.

Last class we learned about forecasting. It dawned on me how the company I currently intern for actually uses this instrument. As an accounting intern, I assisted a CFO/CPA in preparing a forecasting budget for this year. The company I currently intern owns dozens of bars across the U.S. Our goal was to get an idea of what the company might expect to earn in the fiscal year. So what we did was take last year expenses, have them remain constant, and then include any new expenses that we might expect to occur. Furthermore, increase sales by 5% from food and liquor plus projected growth, and then subtract the expenses. As a result, we were able to come up with a projected revenue. This tool proved very useful because it allowed our general managers to accurately modify operations in order to secure the greatest profits. We also created a projected cash budget to ensure that the company is able to meet future obligations such as expanding to new locations. Thus, providing us precise figures on how much money will the company need to borrow and how the borrowed funds will be repaid.

Now that I think about it more, I’ve noticed how often and important forecasting is used at my job. For example, every time a new product or service was being considered to be incorporated at our bars, we needed to determine whether it would be successful or not. We would look into certain things such as developing, manufacturing and marketing. From my personal experience interning here, most products/services were rejected. This is why forecasting is so beneficial because it can prevent the company from spending time and money if the product/service were to fail.

I’ve also implemented forecasting in my own personal life outside from work.  As a college student, being broke seems to be a problem for most us attending school. Therefore, it almost seems obligatory to look for a job in order to make ends meet.  Although I do work, I happen to be very good at managing my money. In fact, I created a projected budget of my own in order to see if I can somehow be able to buy a car. This projected budget I made concluded that it was very well possible for me to get one. But at that very moment, the same question I asked my boss, I began asking myself. Now I would like to as my classmates. How much of any information of a forecast can you reliably depend on?