Data processing: financial – business practice – management – or co – Automated electrical financial or business practice or... – Inventory management
Reexamination Certificate
1998-02-23
2001-06-19
Trammell, James P. (Department: 2764)
Data processing: financial, business practice, management, or co
Automated electrical financial or business practice or...
Inventory management
C705S028000, C705S014270, C705S007380, C705S002000, 36, 36
Reexamination Certificate
active
06249774
ABSTRACT:
BACKGROUND OF THE INVENTION
1. Field of the Invention
This invention relates to a method by which a distributor owns, manages, invoices, and automatically replenishes the inventory of a business that is a customer of the distributor so that the customer will not have to advance its own capital to maintain an inventory. The distributor invoices its customer for reimbursement, but only at the time when designated items from the inventory are sold to consumers.
2. Background Art
For small retail and large department and warehouse-type businesses, alike, maintaining an adequate inventory constitutes one of the most significant expenses for staying in business. The purchase of an initial or replenishment inventory, depending upon whether the business is established or new, can tie up operating capital for long periods of time and deny the business the opportunity to make needed improvements, such as expansion, advertising, hiring additional employees, and the like. In addition, a business must typically purchase all of the goods in a shipping container from a distributor even if there is only a small demand for the goods. In the case of a time-sensitive inventory, such as where merchandise is subject to spoilage or loss of efficacy over time, or where styles and consumer taste are known to change quickly, it is highly undesirable to maintain an inventory that cannot be quickly sold to consumers. Otherwise, the business is faced with high carrying costs as well as the possibility of wasting and/or losing its capital investment as a consequence of having to return or dispose of out-of-date merchandise or letting excess merchandise simply sit unsold on its shelves.
What is more, significant amounts of time are often spent by businesses to properly manage and restock their inventory. Otherwise, where a business carries a large number of different items to be sold to consumers, the business cannot always predict with accuracy when to re-order and the quantity of new merchandise required to replace its depleted inventory. Consequently, a new business may be overstocked or run out of inventory that is needed to generate income. In the alternative, the business can pay to have on-site inventory control professionals manage its inventory or leave inventory control to those responsible for delivering new stock. Nevertheless, unless the inventory is frequently inspected, a business may run low of needed items or mistakenly purchase an unnecessarily large supply of already fully stocked items.
Therefore, what is needed is a method by which to more efficiently manage the inventory of a business so as to enable it to reduce unnecessary outlays of capital while providing for the automatic and accurate replenishment of inventory to assure that the shelves of the business are regularly stocked with a suitable number of items based upon anticipated demand, whereby to avoid overstocking or running low of inventory for any prolonged period of time.
SUMMARY OF THE INVENTION
This invention relates to a method for owning, managing, invoicing, and automatically replenishing an inventory of items shipped by a distributor of such items to its customer. The customer and the distributor initially agree on a pool of certain designated items which are to be owned and managed by the distributor on behalf of the customer. After the inventory of designated items is delivered to the customer, it is counted and costed, and a perpetual inventory is established for the customer to enable the distributor to keep track of the identity and value of the designated items on an ongoing basis. At this point, all of the inventory of designated items is purchased from the customer and owned by the distributor. By virtue of the foregoing, the customer will not have to invest its own valuable capital to maintain an inventory needed to stock its shelves.
During a start-up period running for several weeks, information is collected by the distributor relating to the identity and quantity of designated items in the inventory of the customer that are dispensed (e.g. sold) to consumers. The information collected is processed by the distributor using commercially available computer software, and a perpetual forecast of demand for the designated items is established for the customer based upon the customer's history of dispensing the items during the start-up period. At the same time, a minimum or par level is set for each of the designated goods to insure that the customer will not run out of sufficient stock to meet the demand of consumers.
Only at the time when a designated item from the inventory of the customer is sold to a consumer, title to the item passes from the distributor to the customer and the customer is then billed by the distributor for reimbursement. At the same time that a designated item is sold by the customer, a record of the transaction is electronically sent to the distributor's computer where information is stored regarding the identity of the customer, the identity of the item, and the number of items sold. This information is used by the distributor to locate a corresponding item from its own inventory and generate an invoice which reflects each sales transaction as well as the cumulative sales transactions completed over a predetermined billing period (e.g. one day). Of course, the invoice may also reflect the cost of the item, appropriate taxes, and a transaction and shipping charge to cover the services of the distributor. As an important aspect of this method, the customer is billed on a unit of use basis. That is to say, regardless of the total number of items (e.g. antibiotics, bolts, candy, etc.) required to fill a standard container of such items from the manufacturer, the customer is only charged for the precise number of items that have been sold to consumers. This enables the customer to minimize costs and carrying charges.
Transaction information stored in the distributor's computer is also entered in the books of the distributor. Since title passes from the distributor to the customer only when a designated item is sold to a consumer, the distributor's own inventory must be correspondingly decremented. Moreover, the customer's perpetual inventory is instantaneously updated to indicate the sales transaction. Depending upon the customer's history for dispensing such items over time as reflected by the perpetual forecast of consumer demand relating thereto, the distributor will automatically ship (e.g. via truck) from its storage facility a new supply of items to replenish the shelves of the customer, or, if predicted demand is low, wait until the minimum inventory level is reached before additional items are shipped.
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Aeberli Urs E.
Roden Donald R.
Ruggerello Peter I.
Venezia Gloria
Yamashita Jadine Y.
Bergen Brunswig Corporation
Fischer Morland C.
Tesfamariam Mussie
Trammell James P.
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