Check out the Benefits for Your Company

Charles J. Bodenstab

A Spreadsheet That Will Demonstrate The Potential Savings In Cash And Added Profits For Your Company

At the end of this discussion there is an icon that downloads an Excel spreadsheet that will let you explore the financial benefits that even modest improvements in inventory management can have on your company.

By just specifying nine parameters about your company, the program will create a three year pro forma cash flow and income statement. Then by specifying another three items of potential improvement, the program will illustrate the cash preservation and profit improvement over the three year period. The entire process just takes minutes and is tremendously revealing.

When the Excel program comes up on the screen, it will contain figures for an imaginary company having $20 million in sales and $4 million in inventory. Additionally, some very conservative assumptions were made about the potential improvement in inventory and ordering practices from MARS. The results indicate over $2 million in cash preservation over the three year period and over $1 million in profit improvement.

You can customize this program to reflect your company by downloading the spreadsheet in accordance with the instructions below. First print out the simple guide that follows so that you will have some input on how to fill in the various parameters. Then go to the icon at the end of this page.

Guide to Filling out the Spreadsheet

The information to be inserted is enclosed in the shaded box and is generally self explanatory except for item 5 “Fraction Of Fill Improvement That Result In Sales” This figure is simply a statement of that expectation. The figure will range from zero to one.

• Zero would mean your customers are always willing to wait for the backordered product, and low fill has absolutely no impact on sales either short term or long term.
• A level of one, would mean that every backorder results in a lost sale.
• A level of .5 would mean that about half the backordered sales are lost.

Item 8, “Number Of Equivalent Buyers Doing Replacement Orders” means basically what it says. If there are four buyers, but about half their time is spent on other than replacement ordering, then the count is two.

Items 10 through 12 represent the improvement you may expect from the installation of the MARS-IW system. The figures in the example are very conservative in our opinion, but you can try other levels and see the result.

Download Self Extracting Excel Spreadsheet - BENEFITS.XLS

Instructions For Downloading The Excel Spreadsheet

• Click on the small icon above with the arrow.
• You will be notified that you “have chosen to open the file “BENEFITS.EXE” -- Click on “SAVE AS”
• In the SAVE AS window, select the folder that you wish BENEFITS.EXE to be copied into and click
• “SAVE”. (For this discussion let's assume you place in a “temp” file of the C: drive - make sure that you double click on “temp” and then “save)
• Exit the Internet with the X in the upper right.
• Using Windows Explorer, open the “temp” folder now containing BENEFITS.EXE.
• Double click on BENEFITS.EXE, and a black box will come up with some DOS statements – simply click on the ”X” in the upper right and exit.
• You will now be back in Windows Explorer where you will now see BENEFITS.XLS added to the file (This is the un-compacted version of the program that can now be executed)
• Double click on this icon and the program will come up in the Excel program.