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The Imprest Stock System That Doesn’t Ruin Your Business

Any company aims at providing the highest level of customer service. The level of service can determine the value that characterizes the size of the company’s overall efforts to complete their customers’ orders. The following factors determine the success of a specific enterprise-level service:

Note that the company should produce as much as it can sell (to meet the demand) plus an amount of items for its imprest stock system to cover uncertainties. It’s impossible to limit and control the minimum and maximum levels of the imprest stock, since its value is dynamic and constantly changing.

The main purpose of the imprest stock system is to cover uncertainties that are always present in real industrial activities, and to increase the levels of customer service.

The basic principle of this method is to establish imprest stocks with some minimal level of imprest items. When reaching this level, items will be replenished with new ones, i.e. once the actual amount of the items in stock falls below a certain level, a new order is made to supply this item or product from the manufacturer. The amount depends on the implementation of time requirements (time of delivery or production), the quantities ordered by customers and some other parameters. All this is done to ensure a balance between the cash flow and the amount of stock and to maintain effective functioning of the company.

How to Reduce Delivery Costs?

The imprest stock system allows you not only to keep your items and cash flow balanced, but also reduce delivery costs. By combining several individual items’ packages, transportation costs can be cut down significantly. As a rule, the bigger the cargo and the greater the distance is, the lower cost per unit is required to transport the cargo. First, this requires the development of special programs that will allow you to order small loads in bulk. Secondly, when working with foreign companies in e.g. London, UK, all the actions are coordinated between the UK manufacturer and the US buyer in advance, and it is almost impossible to add this or that item to the cargo and you will have to wait until the next shipment.

This is where the imprest stock system will be very practical. It ensures the availability of supplies where they are needed. This is done in many different ways. The most common practice is to increase the number of items in stock when you anticipate orders from your customers. Determining the proper amount and the location of warehouses as well as the policy of the safety stock is one of the major challenges in designing the imprest stock system. Many US companies create alternative logistics structures in order to enhance their ability to fully meet the requirements of items in stock that are demanded by customers. A company can maintain two stocks: one stock will provide basic services, and another one will be used as an auxiliary source of supplies.

Let’s suppose the main stock is a large US automated distribution center in Ontario and another center is a less productive stock in NY, USA. In such circumstances, the company will obviously prefer to send most of its items from the first stock to fully exploit its advantages: automation, performance and location. However, if the main distribution center in Ontario suddenly experiences a shortage of items, the company will always have an alternative center in NY, USA. Companies that have subsidiary stocks make every effort to ensure their customer satisfaction. For example, if the first stock in Ontario can complete only a part of a customer’s order, a NY stock will be used to satisfy the remaining requirements.

Maintaining high availability stocks requires careful planning, not just the distribution of stocks in different locations. In fact, the main point here is to ensure availability of stocks for key customers keeping the total gross loans in stocks and storage facilities at a minimal level. This requires the integration of all logistics resources and a clear focus on specific options that are available for specific customers, including online personal loans or payday loans online.

Prediction of the Imprest Stock Balance

Due to the fact that companies produce their annual budget long in advance (at least in a month), there is a need to predict the imprest stock balance for both raw materials and ready-to-go products at the beginning of the year.

If the analysis of the imprest stock dynamics shows that the amount of items is at about the same level in the beginning of each month (this situation can be observed either when the company’s activity is rather balanced with maintaining the imprest stock at a certain level, or when “dead stock” is there, which is a common thing for many companies in the USA), then the available data on the stock balance can be taken, for example, based on the previous months of the current year. All this is done to reduce the amount of credit remortgages as well as to improve cost effectiveness and efficiency of the stock.


Tags: online pay online payments Investment Mutuals Closed End Funds Open end fund Stocks Money Financial funds

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