Do you know how much it’s costing you to simply keep your inventory in your warehouse(s) each year? Not sure? You’re not alone. As many as 65 percent of wholesale distributors in the U.S. don’t know their carrying cost numbers, and experts estimate that the annual cost ranges from 18 to 35 percent-with some companies seeing their costs as high as 50 percent for their stock!

Even if inventory may be cheap in your industry, that doesn’t mean that you should carry as much of it as possible. After all, the interest you pay on your inventory is actually only a small portion of the total cost of carrying that inventory. To determine your true cost of carrying inventory, you must consider the following factors: storage, taxes, money spent in utilities, the cost of money, shrinkage and obsolescence. These costs will be present at all companies-though they will certainly vary from one to the next.

The cost of carrying inventory could literally sink your company. Luckily, one of our business partners, K3S, has a fantastic solution for these issues. K3S offers inventory replenishment and demand forecasting at retail stores and warehouses, helping businesses succeed and save money. K3S also offers consulting services, as it’s been in the business for over 25 years and houses some of the most experienced experts in the industry.

System features of the K3S offering include: automated forward buys, advanced demand forecasting, seasonal forecasting, dynamic lead-time forecasting, automated forward buys, automatic order building, overstock transfer management, replenishment analysis, buyer and supplier management, overstock transfer management and company inventory metrics. As you can see, the system has quite a lot to offer! In terms of benefits, these features lead to: better service levels, reduced inventory, increased profits, and saved time.

How Much is Your Inventory Costing You?