Product Inventory - Using ABC Analysis to Improve Operations

There is an old rule that is still as relevant today as it has always been, and that is the 80/20 rule. This rule, when applied to your product inventory, says that 80% of you sales are from 20% of your inventory items. Know which items of the 20% are garnering the most sales can be crucial to growing your profits. That’s where ABC analysis can come in handy. ABC analysis within an inventory management software system is a practical report that can show you which items are most profitable. Here is how it’s typically broken down.

In an ABC analysis, inventory items are analyzed and ranked, based on a percentage of sales. Often, the software will give you the option of ranking your items based on either the “cost of goods sold” (COGS) during a chosen time frame (annual is the most popular), or else by the number of ‘hits’, which is the number of times the items have been sold.

When the analysis is done, items are typically ranked in descending order, using the following scale: A=80%, B=Next 15%, C=Next 4%, D=Next 1%, and X representing no sales. Many systems will even let you sort out specific product lines or items on which to perform the ABC analysis.

ABC Analysis can be extremely helpful for planning purposes, since it gives managers a clear picture of top performing items and can help solidify marketing plans, sales forecasts, purchasing plans, and more. By focusing on the 20% of the items that are responsible for 80% of your profits, you can create a smart plan to increase your profits down the line.

What Stresses You Out Most about Running Payroll?

Here at Red Wing Software, we talk to customers and prospects many times each day about payroll concerns. Every single company has different payroll issues that need to be handled in their own way. Frankly, many of our customers use Red Wing Payroll Software products to solve some of their biggest payroll issues and concerns! And when we cannot solve a payroll issue, we still do our best to help our customers handle them with our software. When prospects call us, the concerns we hear about most often include:

  • Employees working in multiple states.
  • Employees working in different departments on the same day.
  • Complex time calculations.
  • Unique deduction (and earning) tracking needs.
  • The need to solve time-consuming data entry.
  • The need to make tax filing and direct deposit more smoothly.
  • More flexible reporting with the ability to track specific information.
  • Flexible ways of paying employees.

So, what issues stress you out the most with running payroll?

Federal Unemployment Tax Act (FUTA) Rate Reduction

The effective tax rate for the Federal Unemployment Tax Act (FUTA) will be reduced from .8% (.008) to .6% (.006) on July 1, 2011. Congress has announced that the FUTA .2% surcharge, first enacted in 1977, will not be extended after June 30, 2011.

The IRS is currently revising Form 940 (Employer’s Annual Federal Unemployment (FUTA) Tax Return) to accommodate the two different FUTA rates for calendar year 2011.

Please sign in above and the select your product below for a PDF with full instructions on Modifying the FUTA Rate:

Accounting Software - Benefits of Implementing Order Entry Software

An accounting program allows you to electronically enter, process and save orders. Typically, an order entry system is a component that works along with an accounting and/or inventory management software system. Using order entry can save a business significant time and streamline processes, when compared to using accounts receivable without order entry. Is order entry right for you? Consider the benefits of order entry, and you will get a much clearer picture of whether order entry is right for your business.

  • Know what’s available and increase order accuracy. Instead of writing orders on paper, with order entry you are entering orders right within the software system, where you are able to view item availability as the order is being entered. So instead of saying, “Just a minute, I’ll run back and see how many are available,” you’ll be saying, “There are twelve available to ship, and I can put the rest on backorder for you.” Not only does this make your customer happy, but also saves you time and extra work.
  • Create packing slips and pick tickets. Most order entry systems provide the option of printing packing slips and pick tickets when you are processing orders. The pick ticket is used for the shipping team to know what goes in the shipment, and which shelf to pull it from. The packing slip shows exactly what’s included in the shipment for the customer. Both items keep you organized, and present a professional image of you to your customers.
  • Create partial shipments, and put items on backorder. This is one feature of order entry that probably makes the biggest impact. If you are using accounts receivable, you can only enter invoices; there is no option to keep track of which items have been shipped or which ones are on backorder. Order entry keeps track of all of that information, and also allows you to ship partial orders, which maintains a high level of customer service. Retaining items on backorder also helps you remember to ship items once they arrive into stock.
  • Turn quotes into orders. The ability to create and save quotes is critical for winning more orders. Order entry allows you to create and save quotes, and then change those quotes into orders when it’s time, or even make edits to the quote and then change it into an order. This saves you significant time and also gives your customers what they need in an efficient way.

Adding order entry to your software can greatly speed up your workflow, increase accuracy and most importantly, keep your customers happy.

How to Choose the Right Time Clock Software for your Payroll Software

Many different types of businesses find time clocks crucial to the smooth and accurate operation of their business. Strawberry farmers, machine shops, fast food restaurants, manufacturing facilities and plant nurseries are just a sampling of the business types that would be lost without the ability to import time from a time clock in order to efficiently run payroll. Typically, a payroll software program is sold separately from a time clock. Thankfully, many systems are made in a universal format, such that they can often work together correctly. Use this article as a guide for how to choose the right time clock software to work with your payroll software.

The range of time clocks available is quite large, so be sure to find one that is appropriate for your business. First, think about your requirements and what type of information you would like to import from the time clock into your payroll system. For example, if you have simple time tracking requirements, you may need to import just the employee abbreviation, date, hours, and earning code. For more advanced requirements, you may need to also track things like profit center, department, work shift, pay defaults, expense accounts, pieces, etc. This all depends on your business. After determining the type of detail you would like to capture, it’s time to select the time clock. Determine the type of time capture tool appropriate for your needs and research manufacturers/distributors that offer the desired time clock solution. Here are a few examples of different types of tools that are available:

  • Electronic Time Clocks
    • Punch pad for employees to enter information
    • Card swipe (each employee has an employee identification card used to swipe)
    • Biometric (thumb or hand scan identifier)
  • Mobile/Hand held time capture devices (for capturing time/pieces at external locations)
  • Time Capture Software (computer based tracking)
  • Web-based time tracking tools

Before choosing the time capture device that’s right for you and your business, request a definition of the type of file their tool creates and the format of the file. If they can also provide a sample file, it is helpful in verifying compatibility. Here are the most common file formats.

  • Comma Delimited File Format (CSV) is a common file type for importing data. The data in the file is separated by a comma. For example: smithj,01012011,08,HR. The definition of that file would then be: employee abbreviation, date, hours worked and earning code.
  • Fixed Width File Format: The data isn't separated by any fields, instead the software tracks the number of characters per field being imported. An example of the data found in a fixed width file: 00000001110101201108HR. The file definition would then be: Characters 1-10 are the employee abbreviation,11-18 is the date, 19-20 is the number of hours and 21-22 is the earnings code.

Make sure that the file format for the time capture device you are interested in will work along with your payroll software. A call to your software provider would be helpful in ensuring the file format will work with the software.

Here are some of the popular vendors of time capture devices:

  • Qqest/Time Force
  • Acroprint
  • Nova Time
  • Kronos
  • T-3 Technology (hand held devise)
  • Agricultural Data Systems (hand held device)
  • Hand Track (hand held device)

Selecting the right time capture device to work with your payroll software will affect your business. Track the right information, select an appropriate time clock, set the whole system up correctly, and you will be on your way to seamless pay data entry for years to come.