For the last two years, I had a top

For the last two years, I had a topic pending on the table which I will finally address this year. It is about financial house keeping.
Our stock valuation must reflect fair market value at all times. This is achieved by creating provisions for ageing stocks.
All our stock items so far were categorized with a shelf life of 30 Months in our SAP, which is wrong and too long in most cases. When in 2013 we had to sell off old stock with a shorter shelf life than 30 months in the past, we always had to write off a big chunk without a provision onto your P&Ls. I also had to do this again in the stocks & debtors meeting end of last year to reflect real market value of some items in TH.
In 2013, we had cleaned up and our ageing stock is small now. This is why we now do the next correction, namely the reflection of appropriate shelf life in SAP.

We (Komon, Itchaya, Siew Tin and I) analyzed all regional stocks and identified for each product, which is the correct shelf life. We found out that most of our materials either have a shelf life of 24 months or 6 to 12 months with very few outside of these ranges.
We will therefore re-categorize all products into the two groups 7 to 12 months as well as the bulk of our materials into the category 12 to 24 months. We will not use the category 30 months anymore.
We will implement this change in July 2015 in SAP. This will then trigger automatically an adjustment of your stock provisions and the additional charge will hit your P&L once this year.

To give you a magnitude:
We currently have a stock provision for the whole region of SGD 257K. By reclassifying our products to faster provisioning for ageing stock, the additional provision will be another SGD 333K for all countries together. The figure for TH (+220K) and ID (+65K) are showing most impact while the other countries are hardly affected. Had we done that adjustment two years ago, the additional provision would have been SGD 3 m !!! - that is why I waited to do it.
This rather small P&L impact can either be fully avoided by managing these products out of the ageing category with more focus until year end 2015 or by just living with this new reality if the stock level is at an appropriate level.

To give you a management tool, you will receive from Khun Komon a detailed list by country, showing you the current and the new provision as well as the products affected as well as an analysis of shelf life category. The recoding will be done centrally in July, so that the Q2 result is unaffected. We all have now three months to adjust stock levels where needed before we do this adjustment. Then we have 6 months with a new list to reduce the impact to a minimum for this year. Please talk to the DMs and ensure they understand the severity for their specific products.
Those of you without ageing stock beyond 6 months will have no or minimum provisions anyway.

Thanks for managing this with your teams. If you need help to move stocks, talk to RSC (Komon) or to your regional colleagues.
Best regards and thank you for your support.
Marc

ผลลัพธ์ (อังกฤษ) 2:

For the last two years, I had a topic pending on the table which I will finally address this year. It is About Financial House keeping.
Our valuation must Reflect Stock Market VALUE fair at all times. This is achieved by creating Provisions for aging stocks.
All our items so Far Stock were categorized with a Shelf Life of 30 Months in our SAP, which is Wrong Too long and in Most Cases. When in 2013 we had to sell off old stock with a shorter shelf life than 30 months in the past, we always had to write off a big chunk without a provision onto your P & Ls. I also had to do this in the stocks Again & Debtors Meeting End of last year to Reflect Market Real VALUE Some of items in TH.
In 2,013, we had cleaned up our aging and Small Stock is now. This is why we do now the next correction, namely the Reflection of appropriate Shelf Life in SAP. We (Komon, Itchaya, Siew Tin and I) all Regional stocks analyzed and identified for each product, which is the Correct Shelf Life. We Found out that Most of our Materials either have a Shelf Life of 24 months or 6 to 12 months with very few Outside of these Ranges. We Will Therefore re-categorize all Products Into the Two groups 7 to 12 months as well as the bulk. of our materials into the category 12 to 24 months. Will we not use the Category 30 months anymore. We Will Change in July 2015 in this IMPLEMENT SAP. Will this then an adjustment Automatically Trigger your Stock of Provisions and the additional Charge Will hit your P & L once this year. To give You a magnitude: We currently have a Stock Provision for the whole Region of SGD 257K. By reclassifying our products to faster provisioning for ageing stock, the additional provision will be another SGD 333K for all countries together. The figure for TH (+ 220K) and ID (+ 65K) are showing most impact while the other countries are hardly affected. Had we done that adjustment two years ago, the additional provision would have been SGD 3 m !!! - That is why I waited to do it. This rather Small P & L Impact Can either be fully avoided by Managing these Products out of the aging Category with more Focus until year End the 2,015th or by just Living with this New Reality if the Stock level is at. an appropriate level. To give You a Management Tool, You Will receive from Khun Komon a detailed list by Country, showing the current and the New You Provision as well as the Products as well as an AFFECTED Analysis of Shelf Life Category. The recoding will be done centrally in July, so that the Q2 result is unaffected. We all have now three months to adjust stock levels where needed before we do this adjustment. Then we have 6 months with a new list to reduce the impact to a minimum for this year. Talk to please the DMs and ensure they Understand the Severity for their specific Products. Those of You Without aging Stock Beyond 6 months Will have no minimum or Provisions anyway. Thanks for this with your Managing Teams. Help if You Need to Move stocks, Talk to RSC (Komon) or to your Regional colleagues. Best regards and Thank You for your Support. Marc.