INCREASE YOUR PROFIT BY SPENDING : SIMPLE ORDERING METHODS (SPAN INDEX)!!!
1 min readJan 14, 2021
HOW UNSCIENTIFIC PARTS ORDERING EFFECTS YOUR DEALERSHIP
- INCREASE IN NON MOVING & DEAD STOCK
- BURDEN OF BANK INTEREST
- SHORTAGE OF STORAGE SPACE
- CHANCES OF STOCK MISAPPROPRIATION
- ROOM FOR STOCK VARIANCE
SPAN INDEX FOR ORDERING (Simplest method)
Step 1: Take current stock
Step 2: Add Goods in Transit
Step 3: Add Pending orders
Step 4: Sum up all the above data
Step 5: Take past average sales
Step 6: Divide Total stock with average sales
Step 7: Result is in current stock holdings
Split the data based on Current stock holding in 4 categories before ordering
SPAN INDEX
- (S) SAFE TO ORDER (Current holding stock between 1 month to 2 months)
- (P) PRECAUTION (Current holding stock between 2.1 months to 4 months)
- (A) AVOID (Current holding stock between 4.1 months to 8 months)
- (N) NOT AT ALL (Current holding stock more than 12 months)