Inventory levels are often confusing, but they are important issues for all contract manufacturers and their customers, and they are a critical part of the cost equation.
To better serve our customers, ACC provides periodic Inventory Level Reports.
ACC quotations state that customers are responsible for all excess inventories. That means if you stop building a product, you are responsible for paying ACC for the “left-over” inventory. ACC’s definition of ‘excess’ is important. We consider a part to be “excess” only if it is unique to your product(s) – not if it is used in products that we build for other customers.
Inventory Level Reports will provide a summary total of all the raw materials ACC has in stock that are unique to your product(s). This includes any raw materials allocated to current orders. So, current orders do account for a percentage of this value; but, if you have no current orders with ACC, the report is truly reflective of your current excess inventory level.
Excess inventory is often confusing since it is a dynamic quantity with an equally dynamic dollar value. As an illustration, an example is provided. As the example shows, excess inventory levels can vary rather dramatically after each production run.
Furthermore, this is especially useful if you are planning a redesign or replacement of your product. We will attempt to purchase components in minimum quantities in an effort to avoid excess.
The Inventory Level Reports will be supplied on a six-month basis to keep us working together to minimize the amount of excess for which you are responsible. We can supply the reports more frequently if you prefer.
Please don’t hesitate to contact us if you have questions. We want you to feel confident that ACC is managing your inventory appropriately.