What are the criteria to be part of the inventory ownership of the business?

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Accounting

What are the criteria to be part of the inventoryownership of the business?

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If I were an entrepreneur involved in manufacturing I would love to own inventory that is just required for that days production needs If I am big reseller I would like to buy material that is just required to meet days demand If I am a big buyer I would prefer suppliers to carry inventory that is required by me The reason for all these demands is that Inventory costs money and its money to carry the same And that is the reason everyone would like to differ the inventory carrying Do we have solutions to meet this requirement within Supply Chain And that is the reason we are here to find out the solutions In general supply chain innovations or improvements focussing on inventory optimization target either lead time reduction or cost savings and in some cases both The bottomline for these concepts is to reduce or eliminate inventory and minimize the impact of inventory carrying costs on the PL and to reduce the lead time inished Goods Inventory Financing In another instance where 3PL may buy the finished goods inventory from their clients The clients would then be able to recognize revenues immediately and also get these assets off their balance sheet At the same time their customers would be able to buy these products and thus put them on their balance sheet only when they absolutely have to do This would help clients in a Vendor Managed Hub situation and clients who need to get sales revenue recognized at the end of a quarter to meet their financial goals The risk of obsolescence would be borne by the client would be treated as sales returns and any shrinkage or losses would be borne by 3PL andor client The benefits for the clients are phenomenal as can be imagined As part of this package 3PL would also be willing to purchase up all the inventories of a client and park these assets on their balance sheet The immediate impact on cash flow and lines of credit for a client is immense Raw Materials Purchase Help finance the raw materials or finished goods trading for a client directly from the suppliers In this instance would pay cash for the raw materials and put these assets on balance sheet The advantage for the client would be that the client can negotiate a bulkcash rate from their suppliers and take advantage of the lower cost The client will then pay for the materials as and when they draw from this inventory Here again the cash flow is a significant impact for the client as well as opening up the lines of credit for other core activities It is needless to add that the obsolescence is borne by the client and warehousing charges for holding the inventory will be paid by the client Best of the breedIn this model they use a financial institution and 3PL act as a custodian of the inventory The material purchased by the 3PL client will be paid by the financial institution as per agreed commercial terms This helps the suppliers to get their payments quickly and is willing to offer cash discounts to the buyer in this case 3PLs client 3PL will release inventory to their client based on the amount of payments cleared and on the instructions of the financier However the buyer 3PL client will own the inventory and be accountable for the obsolescence This will help the buyer to See Answer

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