KCSI is now HIRING! 2 Positions Available…

kcsi_hiring

KCSI is now hiring!

We currently are offering two positions with the KCSI Team:

Software Developer
http://www.simmssoftware.com/inventory-software/software-developer.aspx

Software Sales
http://www.simmssoftware.com/inventory-software/software-sales.aspx

To learn more, visit the following URL:
http://www.simmssoftware.com/inventory-software/KCSI-is-Hiring.aspx

You can send your resume and cover letter by clicking here

We look forward to hearing from an interested individual with a goal of excellence and a plan to succeed!

2013: The Centenary of Malcolm McLean

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2013 marks the 100th anniversary of the birth of Malcolm Purcell McLean, an entrepreneur from North Carolina who came up with an idea that completely transformed the world.

In 1937 McLean was in Hoboken, New Jersey, to drop off a load of wool bales from his truck. Having waited most of the day to unload, he had watched the stevedores putting bales into slings then hoisting them one-by-one onto the ships. He concluded that a lot of time and money was being wasted in the current process. His sudden epiphany was that it would be much simpler to take off the rear of his truck and put that on the ship.

He subsequently founded Sea-Land, a company that became the world’s first container shipping line. Employing this new concept, ships could be loaded and unloaded within hours rather than days or weeks. A future concept was to drop off empty containers in countries such as Japan, where they could be filled with exportable items for distribution to wholesale and retail markets around the world.

In 2013, we have seen the advent of ships — 20 of them — commissioned by Denmark’s Maersk Line that are capable of carrying 18,000 containers each, doubling the capacities of the largest ships active only a decade before. McLean could not have foreseen the scope that his idea would acquire, but its influence has truly laid the pattern for all commerce and supply chain ideas that have followed since.

The SIMMS Hosted Solution

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Many businesses have switched to Hosted Inventory Systems (cloud computing). Hosting provides access to what otherwise would be expensive software and even more expensive hardware expenses required to host the software locally. With SIMMS Online, y\what would normally be additional overhead will suddenly

The advantages of SIMMS Hosted are:

Data Security
IT systems need to be maintained and updated constantly. If this is not done, your data security can suffer. Software to manage your security is costly and requires expensive upgrades of its own.

SIMMS Online uses Citrix because of its inherent and trustworthy security and its maximization of bandwidth (making your connection more stable). When you connect to our servers, your data is perfectly secure.

Flexibility
If a sudden up-turn in your business occurs, you will probably need new hardware, additional (and more dedicated) internet connections and possibly a cast of IT professionals to implement and manage it all for you. Besides the costs, expansion will consume another valuable commodity: time.

With SIMMS Online all you have to do is increase your user count. You can add new users instantly.

Reduction of IT Costs
Hardware, server software and networking will continue to be tedious and complicated as new protocols and processes become standardized every year. As businesses grow they all hit a juncture where their IT infrastructure costs begin to soar.

With the Hosted option, if a server blows up then it is our problem. We take care of backups, service packs and upgrades, thus eliminating your need for in-house IT personnel.

Saving Money
Hosted services allow small and mid-size companies to have access to an IT infrastructure that they normally could not afford. Hardware, bandwidth and networking are hidden costs that all mount up.

Our Hosted services give you access to high caliber hardware and software that is usually out of the price range for smaller companies. As your users access our hosted system there is no need to purchase an expensive server and server software. You can use your existing hardware as workstations and your existing internet connections to connect.

Versatility of Platform
While SIMMS runs on Windows with Citrix, your MAC computers work perfectly to connect to our Hosted service. As SIMMS continues to evolve, it will incorporate more capability of connection with other machines using more platforms.

The Hosted version of SIMMS can benefit you for the reasons listed above and many more. Visit www.simmssoftware.com or email sales@kcsi.ca for more information.

Effects of Incorrect Stock Counts

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Effects on the Income Statement:
A wrong inventory balance creates an error in the calculation of Cost of Goods Sold and, thus, an error in the calculations of Net Income and Gross Profit. If it is left wrong, the error has the opposite effect on Cost of Goods Sold, Gross Profit, and Net Income in the subsequent accounting period because the first period’s Ending Inventory is the second period’s Starting Inventory.

The total Cost of Goods Sold, Gross Profit, and Net Income for the two periods will be accurate, but the allocation of these amounts between periods will be wrong. Because users of financial statements rely on accurate statements, an accurate Ending Inventory must be made.

The effects of errors in the following chart pinpoints the effects that wrong inventory balances have on the Income Statement:

 

Impact of Error(s) on:

Error in Inventory

Cost of Goods Sold

Gross Profit

Net Income

Ending Inventory

 

Understated

Overstated

Understated

Understated

Overstated

Understated

Overstated

Overstated

Starting Inventory

 

Understated

Understated

Overstated

Overstated

Overstated

Overstated

Understated

Understated

Errors on the Balance Sheet
A wrong stock balance makes the owner’s equity and asset values on the balance sheet incorrect. This error will not affect the balance sheet in the subsequent accounting period, expecting that the company accurately determines the stock balance for that period.

 

Impact of error(s) on:

Error in Inventory

Assets =

Liabilities +

Owner’s Equity

Understated

Understated

No Effect

Understated

Overstated

Overstated

No Effect

Overstated

Inaccuracy at any stage of stock-taking can be disastrous to the decisions made by owners and managers. For both ease and ultimate accuracy, give SIMMS 2013 Inventory Management software a try. Visit www.simmssoftware.com or email sales@kcsi.ca for more information.

Inventory Turnover Ratio

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The Inventory Turnover is a very significant activity ratio that provides an indication of how effectively that a company is using its inventory. Such ratios measure the number of times the business’ inventory has been turned over (sold) during a specified period.

For example, an inventory turnover ratio of 10 means that the inventory has been turned over 10 times in the specified period, usually a year. The Days of Inventory at Hand (DOH) specifies how many days worth of inventory the company had in hand. A “DOH” of 36 days, for example, means that the company had 36 days of inventory at hand during the period.

Days of Inventory and Inventory Turnover are inversely related. If inventory turnover is high, the DOH will be low and vice versa.

To measure the performance of the business, the ratio is compared with others in the industry. A high inventory turnover ratio generally means that the company is managing its inventory effectively. It can also mean that the company has shortage of inventory which could actually impact the revenues. To identify which is the correct situation, the analyst will interpret this ratio in combination with revenue growth. If revenue growth is slow, and the inventory turnover is high, it indicates a shortage of inventory. A low inventory turnover ratio, compared to its peers, could indicate that the company is not able to sell its inventory.

Backflushing of Stock

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“We finished 5 bicycles. Deduct ten tires from the stockroom inventory.”

In many companies that manufacture goods for future sale, when the production is posted against the operation, the process is known as backflushing. The operator will generally enter the production order number, operation, quantity good, scrap quantity, and labor and machine information and then issue all the materials as one transaction just as would usually be done in the pre-production phase. One often uses the option to change particular item quantities and add particular scrap quantities. When you have your issuing program working in the background without the manufacturing department ever seeing its contents, such is known as blind backflushing.

Some advantages of backflushing are:

  • When you use bulk materials like sheet goods or dry goods, bar stock or roll stock, often exact quantities cannot be picked.
  • When using point-of-use materials, post-production issuing simplifies the issuing process by making it easier to conduct counts on your point-of-use materials. If you pre-production issued these materials, the system counts would have to be reconciliation with any orders having quantities issued but not yet consumed. One pointer is that if you post-production issue, after each post-production posting you need a system-to-actual-count match.
  • When scrap content is usual in the finished item and you finally have a good quantity approximate to the ordered quantity, you find this post-production issuing simplifies the issuing process because you will not be aware of how many you run until production is complete.

Backflushing is just a method for issuing materials that works well when applied properly and poorly when applied improperly. Processes that do not employ point-of-use materials, bulk materials, or those where production scrap does not encourage an increase in run quantities find no advantage from backflushing. The concept involved is similar to the reversal of the flow of materials to drive contaminants from a filtering device, such as are what is performed at a water treatment plant, where water that is filtered through sand (to remove impurities) will have its flow reversed through the sand to force any contaminants to where they can easily be removed. In any production process, sometimes applying the backflushing concept can reveal wastage and unnecessary steps in the process that can be left out of future production runs, thus saving time, materials and labor.

The Buildup Chart

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One of the great tools in inventory analysis is the Buildup Chart. It uses the recognized x-y coordinate chart, and on it you plot cost build-ups over time (usually organized by product group) with Cost on the vertical “y” axis and Time on the horizontal “x” axis.

Most often, costs of raw materials accumulate first over time, soon to be followed by labor and overhead costs. In the design you must allow for safety stock, lot size inventory, transit stock, defects/rework/scrap, and finished goods and distribution pipeline stocking. It ultimately also reveals the affect of consignment arrangements. Various analysts also treat accounts receivable as a type of de facto inventory, until it is paid for.

Once the chart is completed, show it around for shock value. Created correctly, it will cause much thought about the effect of constraints and decisions on inventory. It will help inventory managers realize where the weaknesses in the current stock management system and will help devise the changes that need to be made.

Two examples of how Buildup Charts can indicate areas to be improved are as follows:

– One company had a 14-month buildup curve, which was reduced to 4 months.

– Another company discovered that the longest lead time material item accounted for only 20% of the product cost, so stocking only that item — instead of finished goods or instead of only reacting to orders — enabled them to radically reduce the response time for orders by 70%. It also added the flexibility of being able to use that raw material to make a number of different end items.

SIMMS 2013 Inventory Management software has a wide variety of analytic tools to help you gain the most important information about how many aspects of your business are doing. Visit www.simmssoftware.com or email sales@kcsi.ca to learn more.

Aggregate Stock

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Aggregate Stock is the total volume of multiple classifications of goods contained within a storage facility. The inventory may contain finished goods, raw materials and components. It is also called aggregate inventory. The purpose of aggregate stock is to establish overall levels of inventory that you desire and then applying controls to guarantee that decisions are made so that materials replenishment achieves the goals of the company.

The following goals must be in effect when Aggregate Stock methods are to be used:

• Assess investment levels of the whole company and set targets for improvement

• Develop accountability and link aggregate inventory management controls

• Employ specific techniques like ABC analysis, control parameters and input-output controls

• Measure performance against your own record and against that of your competition

• Pinpoint the drivers of inventory investment levels and then control them.

Most managers have employees making stock that has no immediate demand, they need to produce materials that will earn profits. They may use resources that could better be used for more immediate and profitable needs. Proper deployment of stock can create liabilities. Excess of goods in one place usually means that other places experience a drought. All of these challenges can be overcome by accurate analysis and proper practical planning.

Stock management must establish the lowest level of inventory consistent in balance with achieving the company’s objectives. An excess of stock reduces your Return on Investment and Return on Assets, causing a lower profit margin. Concurrently, it also increases expenses from damage, handling, insurance, interest payments, loss, management, obsolescence, storage tracking and taxes. Aggregate Stock Analysis can maximize inventory levels within the parameters defined by costs, investment objectives, logistics, processes and services.

Whether you use Aggregate Stock in your business or rely on older and slower methods, SIMMS Inventory Management software can help you master your accounting and inventory management needs. Visit www.simmssoftware.com or email sales@kcsi.ca for more information.

Absorption Costing

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Some of the direct costs associated with manufacturing a product include wages for workers physically manufacturing a product, the raw materials used in producing a product, and all of the overhead costs, such as all utility costs, used in producing a good. This method is known as Absorption Costing.

As opposed to the most-used method, Variable Costing, Absorption Costing treats operational overhead in a different way. Where Variable Costing only takes into account costs directly affected by changes in production volume, Absorption costing takes into account all direct and indirect costs of production. Variable Costing is typically used internally for budgeting and forecasting, while Absorption Costing is suited for external financial reporting.

Absorption costing includes anything that is a direct cost in producing a good as the cost base. This is contrasted with variable costing, in which fixed manufacturing costs are not absorbed by the product. A great many business leaders prefer absorption costing because fixed manufacturing costs provide future benefits.

It may the method worth trying in your business.

Cash Flow and Inventory

Water tap dripping dollar bills, Water waste concept

Cash that you have to spend before you can get paid is known as working capital. It is used for inventory and funding your operation. Many companies, if not most, borrow to support their short-term cash needs. If they do not manage cash well, they can run out and the bank may not be willing to lend more. One enormous drain on a company is inventory stock. Reduce inventory stock and you increase the amount of available cash for running your business. It takes cash to buy or build the inventory you are going to sell. If you have no cash, then you have no way to pay suppliers or to make payroll. This seemingly bottomless hole is something businesses must avoid.

Stock levels not only affect the flow of cash, but also affect profits. Each dollar gained in reducing inventory will lead to a dollar’s worth of working capital needed before you have to borrow needed funds from elsewhere. Borrowing less means lower interest rates that you have to pay as well. One might conclude – and quite accurately, too – that every dollar you reduce your stock holding by, two dollars in profit is made.

Demand must drive stock management with the goal being “dollar focus”. This goal is required in order for buyers and planners will make more effective choices and working first on the most important part numbers. The stock that brings the largest dollar counts must be watched closely so that adjustments can be made quickly.

Buyers’ and planners’ primary concerns are to manage stock dollars and then increase the “performance” of the inventory. Focal points are inventory dollars, order quantities and safety stocks – all of which must be in step with current demand. Whatever tools are used, businesses must master both their management of stock levels and operating capital.

Purchasers and policy planners need to decrease stock and increase the margin of cash for running the company. A useful reminder to business leaders is that far more businesses fail due to a lack of cash than from a lack of profits.