Performance

Inventory (PI) by Navisiontech

The 21st Century Evolution of ABC Inventory

As a reseller, your inventory asset is clearly your most important busi-

ness investment, and undeniably, the ultimate means to your success.
Navisiontech wants to empower you to maximize your Return on that
In Product Sales, Investment with our Performance Inventory for your Microsoft NAV,
there is one LS-NAV, or AX System.
undeniable truth
profitable A Blueprint for Successminimize Risk, maximize Returns,
enhance Reinvestment
inventory turnover
is the dynamo In the modern era, with just-in-time inventory drop-shipment options
of prosperity. available to most Omni-channel product resellers (see Navisionechs
Smart Ship and Supplier on Demand), the trend in their electronic product
catalogs is bigger is better in other words: the larger their selection,
the greater their market prominence. If this sounds like your scenario,
then simply determining what you need to carry in actual on-hand stock
is truly more of a conundrum today than ever before. Thus for all your
replenishable inventory products, PI delivers you the dynamic solution.

470 Enterprise Circle, Suite 312

Lakewood Ranch, FL 34202 USA
T: (941) 914-9144 | navisiontech.com
Performance Inventory (PI)
The 21st Century Evolution of ABC Inventory

PI is a configurable blueprint for Perpetual Inventory Optimization with which you

can identify and maintain just the right on-hand quantities, of just the right prod-
ucts, at just the right costs, in order to optimize customer throughput and loyalty;
and ultimately minimize Financial Risk; maximize Return on Investment; and en-
hance Reinvestment Capital. PI dynamically blends the time-honored concepts of
the Pareto Principle (aka the 80-20 Rule) with your own Business Intelligence, to
present a re-organized view of all replenishable products into top down ranking of
their individual cyclical value to your bottom line.

How PI WorksKPIs to ABCsa 3-Step Process

Margin Contribution Ratio Annualized Item

1
PIs algorithms apply a user-configurable
weighting to each of the five (5) historical Profit Margin ($) / Annualized Total Profit Margin
KPI statistics (detailed below) as they ($) = %; 0 % 100
relate to every product: Provides management a real indicator of an items significance
to, (or) contribution % of, the organizations total gross profit
margin. By broadly employing this single factor, an organization
Item Consumption Ratio Annualized Item Cost can extrapolate its most profitable Item, Category, Style,
of Goods Sold / Annualized Total Cost of Goods Department, Store, Dimensional Profit Center, and etc.
Sold = %; 0 % 100 Note: Do not confuse this with a similar sounding cost accounting term
Provides management with an initial indication of an items Contribution-Margin which is used in classic break-even analysis.

importance to overall sales revenue. It acknowledges an

items Consumption, and not its Profitability, as some items
can and will be used as loss-leaders to generate collateral
profitable sales. Note that this ratio is traditionally the sole
comparative factor used in determining A B C valuation in
many common ERP inventory systems; but its primary
weakness is that it can not measure item popularity for
that we rely on supplemental help from both Item Turnover
Rate and In-Transaction Frequency.
Item Turnover Rate Annualized Item Cost of
Goods Sold / Item Average Daily Investment
Value = n; 0 n
Provides management with an indication of an items average
investment flip-rate (or) time-value investment profitability. Value = %; 0 %
It does indeed aid in determining general Item popularity;
and it is also critical in demand vs. supply cycle forecasting
of products with high Margin Contribution Ratios. Overall, this
rate is of supplemental importance to Financial Budget
Management in their comparative ROI analyses of broad
product Categories, Departments, and Dimensions.
In-Transaction Frequency Annualized Item
In-Transaction Count / Annualized Total
Transaction Count = %; 0 % 100
Provides management with a look at an items day-to-day
popularity and reinforces the Item Consumption Ratio as a
determinant of an items intrinsic value to the organization.
Also, as this analysis requires a look into detailed transaction
history, that history will also provide side benefits of revealing
common tag-a-long or paired items to promote and exploit
Cross-selling and Substitution opportunities.
Return on Investment Annualized Item Total
Profit Margin ($) / Item Average Daily Investment
Provides management with a historical comparative investment
rate of return % as it is used in all financial circles; and in that
realm, where it truly shines as the number, it is usually
presented as a % for a department, division, store, or enterprise
to lure investment funding. For credence as a % for individual
items, it really requires analytical assistance from Item
Turnover Rate and especially Margin Contribution Ratio.
Performance Inventory (PI)
The 21st Century Evolution of ABC Inventory

2 PI amalgamates the resultant values into a

single Value Coefficient tag per Item.

PI ranks the Value Coefficients, highest to

3 lowest, and it additionally tags the numerical

top 20% of items as A-Items, the next 30% as
B-Items, and the remaining 50% as C-Items.

PI is Crucial for Procurement and

Corporate / Financial Managers

For Procurement Managers: PI provides an outstanding tool with

which to maintain a hands-on stewardship over the entire stocked
product line; and to keenly focus on trends and fluctuations in supply
and demand for A-Items in order to maximize profitability, and
customer loyalty and satisfaction.

For Corporate and Financial Managers: PI delivers a decisive wheel-

house perspective for long-term success. Clearly the overview and
guidance that PI provides upper management, focuses their attentions
on proliferating capital reinvestment and expansion into product lines
from A-Profit Centers.

This is truly a Win-Win

Application for the Enterprise
and each Subscribing Supplier! 470 Enterprise Circle, Suite 312
Lakewood Ranch, FL 34202 USA
T: (941) 914-9144 | navisiontech.com