Supply Chain Chronicles

Not all inventories in hand will get used before expiry. It is important to account for potential losses in value due to various factors such as expiration, damage, obsolescence, or theft. Over time, certain inventory items may decrease in value or become unsellable. Therefore, provisions need to be made to acknowledge and account for the potential loss in value associated with these items. By estimating and recognizing these potential losses, your company ensures accurate financial reporting and inventory valuation that reflects the true worth of the remaining inventory.  Let's consider a healthcare firm as a simple example where determining the total value of provisions is necessary on a monthly basis. To calculate the total provisions, we can divide them into three primary categories: expired items, items that will expire after one year, and excess inventory for the upcoming one-year period. 1.Expired Items Expired items refer to batches of inventory that have reached their expi...