Are you curious about how much it costs to handle your merchandise? The Gross Cost of Merchandise Handled (GCMH) is a critical metric that can help you understand the cost associated with managing your inventory from procurement to selling. In this post, we'll explore what GCMH means and how it affects your retail operations.
Gross Cost of Merchandise Handled refers to the total sum of all costs related to handling inventory. This includes the cost of goods sold, inventory valuation, supply chain management, and warehouse management expenses. Simply put, GCMH is the cost of taking raw materials, turning them into finished products, and getting them into the hands of your customers.
Understanding the Gross Cost of Merchandise Handled is crucial for any retail business since it directly affects your bottom line. By knowing your GCMH, you can identify areas where you may be overspending or where you could be cutting costs. This information can help you optimize your supply chain management and warehouse operations to minimize waste and increase profits.
Gross Cost of Merchandise Handled is calculated by adding up all the costs associated with managing inventory, including purchasing, manufacturing, storing, shipping, and handling. The equation for calculating GCMH is as follows:
GCMH = Cost of Goods Sold + Inventory Valuation + Supply Chain Management + Warehouse Management
Several factors can impact the Gross Cost of Merchandise Handled. These include fluctuations in raw material prices, changes in demand for products, increased transportation costs due to fuel prices or other factors, and changes in labor costs.
To reduce your Gross Cost of Merchandise Handled, you can take several steps such as optimizing your supply chain, improving inventory management, and implementing cost-effective warehouse practices. You may also consider renegotiating contracts with suppliers or outsourcing some of your operations to lower-cost providers.
The Gross Cost of Merchandise Handled is a critical metric for retail operations since it affects profitability. By understanding and monitoring your GCMH, you can make informed decisions about pricing, promotions, and inventory management that can help your business succeed.
