Inventory management is a complex topic and is at the core of most companies' operations. Whether you’re a manufacturer or a retail company, you must manage your inventory for two basic business functions: one is financial, and the other is operational.
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Financial implications of inventory management are tied to financial reporting. All public companies are bound by financial reporting laws and regulations, including the Sarbanes Oxley Act (SOX) of 2002. A number of the SOX provisions also apply to privately held companies as well. After SOX was enacted in the US in 2002, many countries around the globe adopted SOX type regulations.
These financial reporting requirements drive how often your business is required to count inventory, and most public companies lean on their auditors to inform them if their controls are suitable to pass the U.S. Government requirements. If your auditors sign off on your internal controls, many companies can forego a once-a-year physical “wall-to-wall” inventory count. Supply chain professionals know the cost of doing a physical inventory, which in most cases requires a business to shut down for three to four weeks to perform a detailed count. A physical inventory count can cost a large business between six and seven figures per facility, and it can also halt operations completely while the physical inventory count is being performed.
In our latest white paper, we discuss what inventory management looks like in post-pandemic world. Learn more about:
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