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The Hidden Cost of Non-Stock Items

Updated: Mar 12

One of my biggest pet peeves in business is non-stock items.  These are generally items with miniscule cost in comparison to the overall product or are very common or are easily interchangeable.  Some of these items are included in an assembly of finished products or used in the installation of or as an accessory to the big-ticket items sold.  Whatever the items are, every company has non-stocked items that are useful but not tracked.  And it could be costing your company more than you thought it would.

While I’m not suggesting that every little screw, nut, or bolt needs to be tracked through inventory, what I am suggesting is that all these items should be periodically evaluated from a fresh perspective to determine the true cost and value in their application and whether it is time to start tracking those items.  Going through the experience of evaluating items and processes from a fresh perspective, here are some eye-opening costs of non-stock items.

As the items are not trackable, there is no accountability for the costs of those items.  The costs may be covered within the pricing but there is no way to tell.  Accurate accounting of all items and time that go into products is critical to making sure that pricing is accurate to turn a profit.  When items are not accounted for in production, the true profitability can dwindle with the increase in unaccounted costs.

Non-tracked items are also seen as disposable items without thought to the cost of those items.  While an employee may take several items, not knowing how many will be needed, those not used may not make it back to the storage bin or to another project.  Now, the one or two installed have a cost of four or five of those items.

Items not included in inventory could be costing you valuable time.  With the use of digital inventory tracking through accounting programs, it is easy to export a list of items for reorder.  There are several potential points where labor can be lost.  First, not having the quantities easily available for reorder, time can be lost due to the time needed to check the bins of what needs to be ordered.  Another loss of time can occur when the items are needed but have yet to be reordered.  Time is either spent running to obtain those items or time is lost in the delays of delivery of the finished product while waiting for a supplier to send out the missing items. 

I say all that to say this…

Complacency in business can be harmful.  Cutting costs and increasing efficiency should be constantly evaluated.  While much of this article may not make or break a company, it can affect the overall profitability of an organization.  With periodic evaluations of product use and processes, profitability can be maximized.  Even little things like non-inventory items can have a positive impact.

Until next time.

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