Improve your business with FINS: A Textbook Case Example
You have a 10 Million USD Business with a gross margin of 50% of the turnover. Your net purchasing is 5 Million and profit is 10% of the turnover. You need 6 months to avoid any inventory shortage to optimize your sales, so you are buying 5 Million USD/year to maintain a 2.5 Million inventory.
By using FINS you would realize the following benefits:
– Maintain the same inventory availability but by 6 months of implementation, reduce it from 2.5 Million to 0.8 Million (0.3 Million of finish goods inventory and 0.5 Million of non-assembled components) thereby freeing up 2.15 Million of net cash flow, with around 70% of your cash invested in inventory.
– Increase your profit by 55% the first year, as FINS allows increases in gross margin without any additional investments.
1- Inventory reduction
Using FINS: Total inventory: 0.8 Million USD total of which 0.3 Million USD is finished products & 0.5 Million USD is non-assembled components.
2- Cash flow improvement
Using FINS: Cash Flow: 1.65 + 0.5 (initial cash flow) + 0.5 (additional sales) = 2.65 Million USD.
Freed up cash flow: 2.15 Million USD
3- Turnover improvement
Using FINS: Turnover: 10 Million USD + 10% the first year as FINS uses an inventory optimizing algorithm to replenish more frequently used components based on purchase order history. The system can absorb a 10% turnover increase the first year without additional components deposit
4- Gross margin improvement
Using FINS: Gross margin: 5 Million USD + 10% the first year
Profit: A profit increase of 55% going from 1 Million USD to 1.55 Million USD.