Inventory with High Turnover

A high inventory turnover means that the size of the inventory and the number of products in the inventory of a company is constantly increasing. A high turnover inventory can create a problem for the company as it may result in a complicated inventory tracking system and require large storage place in the warehouse. One of the major issues associated with high inventory turnover is record keeping in an error free mode. It is impossible to track high turnover inventory manually and it continuously creates a pressure on record keeping staff as a result the degree of error in recording transactions increase drastically.

There are several ways of managing a high turnover inventory. One of the ways is to reconfigure the entire warehouse so that each and every item of the inventory should pass through a bar code scanner at choke points and re-recorded in inventory records in an error free mode. Another way of tracking and managing high turnover inventory is to use radio frequency scanners that scan and record the location of each and every item in the inventory. Another way of tracking and recording high turnover inventory is receive advance shipping notices from the supplier about the size and the time of inbound batches of products. In this type of method the rate of accuracy depends upon the authenticity of the information provided by the supplier.

The storage costs of high turnover inventory can become a burden on the company as well. The cost of storage is also associated is with the height of the storage. For example if a company is storing all its products in a warehouse 30 to 40 meter high then it has to use special machinery and additional labor to put in and pull out the items from the height.

Other Related Accounting Articles:

• Internal Controls of an Inventory
• Consigned Stock
• Just In Time Inventory
• Inventory Turnover Ratio or Stock Turnover Ratio (ITR)
• Net Realizable Value
• Comparing LIFO and FIFO methods of Inventory
• Warehouse Financing
• Obsolete Inventory Percentage
• Warehousing
• Retail Inventory Method