Purchasing & Inventory Management Hook Up!<\/h1><\/div><\/div><\/div>The following article will provide you with some quick purchasing and inventory management tips. To learn more about inventory management, consider the online course on NLPA Learning<\/a> “Profitable Inventory Management and Control.”\u00a0<\/em><\/p>\n<\/div>Will Your Role Include Inventory Management?<\/h2><\/div><\/div><\/div>A big trend is for organizations to blend their operational functions under the umbrella known as supply chain management. Often, the first two functions to merge are purchasing and inventory management.<\/p>\n
So, as a purchasing professional, you must understand inventory management principles to remain valuable.<\/p>\n
First, you must know how much inventory to have on hand to ensure continuity of supply in the event of an uncharacteristic increase in either demand and\/or lead time. This quantity of inventory is called the safety stock. There is no universally used formula for determining safety stock quantity, but this article,\u00a0Safety Stock Calculation<\/a> suggested a risk averse calculation.\u201d<\/p>\nSecond, you must know when to reorder materials for inventory. Generally, this point in time is determined when the quantity of materials in stock decreases to a certain level, called the reorder point. The reorder point is determined by the formula:<\/p>\n
ROP = SSQ + (QUD x ALT)<\/p>\n
Where,<\/p>\n
ROP = Reorder Point<\/p>\n
SSQ = Safety Stock Quantity<\/p>\n
QUD = Quantity Used Daily<\/p>\n
ALT = Average Lead Time (in days)<\/p>\n
Third, you must know how much to order. A complex mathematical equation determines the Economic Order Quantity, or EOQ. The equation recognizes the tug of war between acquisition costs and inventory carrying costs: when you order bigger quantities less frequently, your aggregate acquisition costs are low but your inventory costs are high due to higher inventory levels. Conversely, when you order smaller quantities more often, your inventory costs are low but your acquisition costs are higher because you are expending more resources on ordering. The EOQ is the order quantity that minimizes the sum of these two costs.<\/p>\n
Fortunately, inventory management systems calculate the EOQ for you. You might want to consider the online course on NLPA Learning<\/a> Profitable Inventory Management and Control.<\/p>\nRecommended Course:<\/b><\/p>\n\n- Profitable Inventory Management and Control<\/a><\/li>\n<\/ul>\n
NLPA Learning<\/b><\/a><\/span>:<\/b> Looking for authoritative procurement templates, tools, webinars, and more? Stop trying to create resources from scratch and start taking advantage of having exactly what you need right at your fingertips in NLPA Learning<\/span><\/a>.<\/span><\/p>\n<\/div><\/div><\/div><\/div><\/div>Do You Want a More Rewarding Procurement Career?<\/h5><\/div>![](\"https:\/\/www.certitrek.com\/nlpa\/wp-content\/uploads\/sites\/5\/2020\/12\/spsm_verify.jpg\" "\\"spsm_verify\\"")
<\/span><\/div>Are you tired of not getting enough opportunities, respect, and money out of your procurement career? Well, guess what? Nothing will change unless you take action towards becoming a world-class procurement professional.<\/p>\n
Earning your SPSM Certification is the action to take if you want to bring the most modern procurement practices into your organization and achieve your career potential. Download the SPSM Certification Guide today to learn how to get started on your journey to a more rewarding procurement career!<\/p>\n<\/div>
Download<\/span><\/a><\/div><\/div><\/div>Need Better Performance From Your Procurement Team?<\/h5><\/div>![](\"https:\/\/www.certitrek.com\/nlpa\/wp-content\/uploads\/sites\/5\/2020\/12\/services.jpg\" "\\"services\\"")
<\/span><\/div>Are you a procurement leader whose team isn\u2019t achieving the results you know are possible? Maybe it\u2019s not enough cost savings. Or frustrating performance from the supply base. Or dissatisfied internal customers.<\/p>\n
You need a performance improvement plan that\u2019s easy to implement and quick to produce results. The NLPA can help.<\/p>\n
Download our whitepaper \u201cThe Procurement Leader\u2019s Guide To A More Successful Team.\u201d You\u2019ll learn the 7 steps for transforming your staff into a results-producing, world-class procurement team.<\/p>\n<\/div>
The following article will provide you with some quick purchasing and inventory management tips. To learn more about inventory management, consider the online course on NLPA Learning<\/a> “Profitable Inventory Management and Control.”\u00a0<\/em><\/p>\n<\/div> A big trend is for organizations to blend their operational functions under the umbrella known as supply chain management. Often, the first two functions to merge are purchasing and inventory management.<\/p>\n So, as a purchasing professional, you must understand inventory management principles to remain valuable.<\/p>\n First, you must know how much inventory to have on hand to ensure continuity of supply in the event of an uncharacteristic increase in either demand and\/or lead time. This quantity of inventory is called the safety stock. There is no universally used formula for determining safety stock quantity, but this article,\u00a0Safety Stock Calculation<\/a> suggested a risk averse calculation.\u201d<\/p>\n Second, you must know when to reorder materials for inventory. Generally, this point in time is determined when the quantity of materials in stock decreases to a certain level, called the reorder point. The reorder point is determined by the formula:<\/p>\n ROP = SSQ + (QUD x ALT)<\/p>\n Where,<\/p>\n ROP = Reorder Point<\/p>\n SSQ = Safety Stock Quantity<\/p>\n QUD = Quantity Used Daily<\/p>\n ALT = Average Lead Time (in days)<\/p>\n Third, you must know how much to order. A complex mathematical equation determines the Economic Order Quantity, or EOQ. The equation recognizes the tug of war between acquisition costs and inventory carrying costs: when you order bigger quantities less frequently, your aggregate acquisition costs are low but your inventory costs are high due to higher inventory levels. Conversely, when you order smaller quantities more often, your inventory costs are low but your acquisition costs are higher because you are expending more resources on ordering. The EOQ is the order quantity that minimizes the sum of these two costs.<\/p>\n Fortunately, inventory management systems calculate the EOQ for you. You might want to consider the online course on NLPA Learning<\/a> Profitable Inventory Management and Control.<\/p>\n Recommended Course:<\/b><\/p>\n NLPA Learning<\/b><\/a><\/span>:<\/b> Looking for authoritative procurement templates, tools, webinars, and more? Stop trying to create resources from scratch and start taking advantage of having exactly what you need right at your fingertips in NLPA Learning<\/span><\/a>.<\/span><\/p>\n<\/div><\/div><\/div><\/div><\/div> Are you tired of not getting enough opportunities, respect, and money out of your procurement career? Well, guess what? Nothing will change unless you take action towards becoming a world-class procurement professional.<\/p>\n Earning your SPSM Certification is the action to take if you want to bring the most modern procurement practices into your organization and achieve your career potential. Download the SPSM Certification Guide today to learn how to get started on your journey to a more rewarding procurement career!<\/p>\n<\/div> Are you a procurement leader whose team isn\u2019t achieving the results you know are possible? Maybe it\u2019s not enough cost savings. Or frustrating performance from the supply base. Or dissatisfied internal customers.<\/p>\n You need a performance improvement plan that\u2019s easy to implement and quick to produce results. The NLPA can help.<\/p>\n Download our whitepaper \u201cThe Procurement Leader\u2019s Guide To A More Successful Team.\u201d You\u2019ll learn the 7 steps for transforming your staff into a results-producing, world-class procurement team.<\/p>\n<\/div>Will Your Role Include Inventory Management?<\/h2><\/div><\/div><\/div>
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Do You Want a More Rewarding Procurement Career?<\/h5><\/div>
<\/span><\/div>Need Better Performance From Your Procurement Team?<\/h5><\/div>
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![](\"https:\/\/www.certitrek.com\/nlpa\/wp-content\/uploads\/sites\/5\/2020\/12\/services-contracting.jpg\" "\\"services-contracting\\"")
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