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Organizational effectiveness: Definitions, models, and examples
Productivity 10 min read

Organizational effectiveness: Definitions, models, and examples

Learn all about the concept of organizational effectiveness and explore various theories and models in our new blog post.

How to Choose the Right Knowledge Management System for Your Team
Project Management 10 min read

How to Choose the Right Knowledge Management System for Your Team

Considering investing in a knowledge management system? Learn what knowledge management systems are and how you can use them effectively in your company.

How to Use Amortization Schedules
Project Management 10 min read

How to Use Amortization Schedules

Unless you're a whiz with financial mathematics, "amortization schedule" is probably one of those terms that immediately makes your eyes glaze over. Well, take a few blinks — because an amortization schedule is something you're highly likely to encounter at some point in your life. It's worth understanding (at least at a high level) what it is and how it works so that you can keep a better eye on your money. Already cringing? Don't worry. We have your simple and straightforward guide to amortization schedules. Here are the details on what these schedules are, why they matter, and how you can create your own.  What is an amortization schedule? An amortization schedule is a table used to see and track payments on a loan. Put simply, it shows your loan repayment schedule. The amortization schedule displays your beginning balance, principal, interest, payment amount, and ending balance over the life of the loan. For that reason, you might also hear it referred to as a loan amortization schedule. What does an amortization schedule look like? An amortization schedule is actually a pretty simple table with several columns and then a row for every single loan payment you need to make (which is usually monthly with most loans). Want to see one in action? Imagine that you're taking out a business loan for new product development. You're taking out $100,000 at a 7% interest rate and will pay it back monthly over the course of 10 years. Here's a quick look at what the first few rows of your amortization schedule would look like:  What can you use an amortization schedule for? An amortization schedule can be used to display the periodic payments for really any type of loan — whether it's a car loan, business loan, mortgage, or any other type of loan.  When thinking about business loans specifically, you might take out a loan to build a new facility. Or purchase a piece of equipment. Or develop new products. Or really any other purchase or activity that you're unable to finance entirely yourself.  In most cases, your lender will provide you with an amortization schedule or payment schedule so you understand how your monthly payments apply to your outstanding balance and will reduce your loan obligation. If they don't, you can ask them to supply you with an amortization schedule for your loan.  Why is an amortization schedule helpful?  Why even bother creating or referring to this table that's full of seemingly endless digits? There are a few reasons why an amortization schedule is important:  1. Understand the breakdown of your loan For starters, any time money is involved, it's smart to understand where your dollars are going.  An amortization schedule helps you see how much of your payment is applied to the principal (that's the amount you originally agreed to pay back) and how much goes to interest (which is the extra charge or fee you pay your lender in order to borrow the money).  2. Keep track of your loan payments Additionally, loan repayment is important — but it's only one of the responsibilities you have on your plate. An amortization schedule is a super easy table you can look at to make sure you're on track with your loan payments so that you can avoid incurring any late fees.  3. Compare loan options Maybe you haven't gotten a loan yet and are comparing options from several different lenders — who all have slightly different interest rates and loan terms. An amortization schedule will help you match up those different loans against each other to get a grasp on what your monthly payments would actually look like with each of them.  4. Strategically pay off your loan Finally, an amortization schedule can help you be more strategic with your payments to pay off a loan faster. For example, let's revisit our $100,000 business loan. The quicker you can pay it off, the less interest you pay — which means you'll spend less money in the long run.  So, if your business is doing well and you have some extra money to put toward your loan repayment, you can specify that you want your additional payments to be applied directly to the principal.  We'll spare you the in-depth math lesson, but that approach lowers your ending balance for that month, which means you'll have a lower beginning balance at the start of the next month. That's a smaller number to multiply by your interest rate, which means you're strategically paying less interest over time.  How to create an amortization schedule: Three steps to follow Now that you understand the ins and outs of an amortization schedule, there's another big question you need answered: How do you create an amortization schedule for yourself? Here are three steps to help you set up your own table.  1. Know the nuts and bolts of your loan Before you open any sort of spreadsheet (which is, by and large, the most common and popular approach for creating an amortization schedule yourself), you first need to make sure you have the right information. Regardless of whether you're creating a business loan amortization schedule, mortgage amortization schedule, or one for any other type of loan, there are four key pieces of information you need. Here's what they are, along with examples that stick with our $100,000 business loan scenario: Loan amount: The total amount that you borrowed from the lender. Example: $100,000 Interest rate: The rate that you agreed to with the lender. Example: 7% Term: The length of time you have to pay back your loan, plus interest. Example: 10 years Payment cadence: The intervals in which you'll make payments. Example: Monthly 2. Understand the amortization formula Are you ready for a quick math lesson? Here's a look at the amortization formula you could use to calculate your monthly payments manually: [caption id="attachment_474911" align="aligncenter" width="688"]Image source[/caption] Before you start sweating and having flashbacks to your high school algebra class, here's what all of those numbers and letters mean:  A = Periodic payment amount (in other words, your monthly payment) P = Amount of principal, net of initial payments i = Interest rate (make sure to get the interest rate for your term rather than simply using the annual interest rate — for our example, you'd divide .07% by 12 months to get your monthly interest rate for your loan) n = Total number of payments (so, if you're paying monthly, you need to multiply the years of your loan by 12) You need to use the amortization formula to calculate your monthly payment for each month of your loan. So, sticking with our 10-year and $100,000 business loan example, that'd mean you'd need to run this same calculation 120 separate times (that's 10 years times 12 months in each year). Yikes.  But for the sake of an example, here's what the formula would look like if you plugged in the numbers for your $100,000 business loan to get your monthly payment amount.  The good news is that you don't need to whip out the calculator and do all of this manually. You can create a spreadsheet template for yourself. Or there are amortization schedule calculators that will do all of the hard work for you. Don't worry — we'll cover those in detail a little later. 3. Create your amortization schedule You don't want to have to return to a complicated formula every time you want to get a grasp on your monthly payment and what dollars are allocated where. That's why all of your monthly payment details should get calculated upfront. Those will then be displayed in your amortization schedule, which should include columns for: Month number: Is this the first month you're making a payment? Or the 23rd month? Payment date: The date that the monthly payment is due. Beginning balance: How much is left on your loan at that point in time. Payment amount: How much you owe for loan repayment that month. Principal: How much of your payment is principal, meaning the amount going toward the total you originally took out. Interest: How much of your payment is interest, meaning the amount going toward the fee to borrow the money. Ending balance: How much is left on your loan after that payment. In the very last row of your amortization schedule, your ending balance should be $0. That means your loan is paid off — and it's time to celebrate. Again, here are the first few rows of the amortization schedule for our $100,000 business loan we've referenced throughout this guide:  Are there easier ways to create amortization schedules? It's possible to create an amortization schedule yourself — but that doesn't mean it's practical. In fact, it's a lot of work. That's especially true if you need to calculate the monthly payments for a longer-term loan. If you're paying your loan back over the course of 30 years, that's 360 monthly payments and spreadsheet rows you need to calculate. Fortunately, there are a couple of other ways to create amortization schedules that involve little to no elbow grease on your end.  1. Use an amortization schedule template A spreadsheet tool like Excel is one of the most popular solutions for creating an amortization schedule. Excel makes it even easier with a loan amortization schedule template.  With the templated amortization schedule, Excel simply requires that you enter your basic loan information like your loan amount, annual interest rate, loan period in years, number of payments per year, and the start date of your loan. Punch in those details and Excel will take it from there to create a simple and helpful amortization schedule for your loan.  2. Use an amortization schedule calculator There's an even easier way to get your amortization schedule: use an online amortization schedule calculator. Much like the Excel template, you simply need to enter in your basic loan information and it'll generate the schedule for you. Except you don't even need to go so far as to download a template or open a spreadsheet.  Here are a few popular and reliable amortization schedule calculators to check out:  https://amortizationschedule.org/  https://www.amortization.org/  https://www.loanamortizationschedule.org/ https://www.bankrate.com/mortgages/amortization-calculator/  Wrike can streamline financial planning for your business The simple mention of an amortization schedule might make your eyes glassy — and, in all honesty, the process of creating it entirely yourself can be pretty daunting and tedious. A template or calculator are the far faster and easier ways to go. However, even with your amortization schedule sorted out, there are plenty of other financial aspects you need to manage for your team or business. Wrike can help you stay on top of your resources and your finances with features like:  Customizable hourly rates Project scoping and budgeting Spend monitoring Reports and real-time data Integration with Excel so you can easily import and export spreadsheets Whether it's loan repayment, project budgets, or billable hours, you don't want to leave any element of your business' finances up to chance. Wrike eliminates the guesswork and helps you keep a close eye on all of your numbers — even if your eyes are admittedly still a little glazed.  Ready to bring some order to your business' finances and projects? Start your free trial of Wrike today.

Wrike Named G2’s Software of Choice for Marketing Resource Management
News 3 min read

Wrike Named G2’s Software of Choice for Marketing Resource Management

Wrike has been named the leading marketing resource management software solution by G2, beating 23 competitors. Find out more here.

14 Resources To Help Professional Services Teams Build Business Resilience for an Uncertain Economy
Leadership 7 min read

14 Resources To Help Professional Services Teams Build Business Resilience for an Uncertain Economy

Professional services firms must be efficient to weather market uncertainty. Discover resources to help professional services teams build business resilience.

Ready, Set, Thrive: How Building Business Resilience Will Protect Your Organization From Uncertainty
Leadership 7 min read

Ready, Set, Thrive: How Building Business Resilience Will Protect Your Organization From Uncertainty

Business resilience is key in this period of uncertainty. Learn how to build a business resilience framework to protect your organization with Wrike’s resources.

What Is Cost Overrun? How to Prevent It
Project Management 10 min read

What Is Cost Overrun? How to Prevent It

Struggling with project cost overrun? Find out how to prevent cost overrun in project management with actionable tips, tools, and strategies.

Operational Planning: How to Make an Operational Plan
Project Management 10 min read

Operational Planning: How to Make an Operational Plan

Learn how to create an operational plan that will help your business succeed. Check out our guide to everything you need to know about operational planning.

What Is Resource Management and Why Is It Important?
Productivity 5 min read

What Is Resource Management and Why Is It Important?

Resource management requires a thorough understanding of and transparency into your objectives and capacity. By establishing a good process for resource management planning, you’re maximizing efficiency and overseeing the utilization of those resources.

Inventory Management: Definition, Benefits, and Techniques
Project Management 10 min read

Inventory Management: Definition, Benefits, and Techniques

Businesses that effectively use inventory management are destined to succeed. With the help of inventory management software, companies can automate the process of ordering, storing, and optimizing their goods in a single place. In this article, we will expand on the importance of inventory management, as well as the different inventory management techniques, benefits, and examples managers need to know. Keep reading to learn the key to inventory management that will give you a competitive edge.  What is inventory management? Inventory management refers to the process of storing, ordering, and selling of goods and services. The discipline also involves the management of various supplies and processes. One of the most critical aspects of inventory management is managing the flow of raw materials from their procurement to finished products. The goal is to minimize overstocks and improve efficiency so that projects can stay on time and within budget.  The proper inventory management technique for a particular industry can vary depending on the size of the company and the number of products needed. For instance, an oil depot can store a huge inventory for a long time. Or for businesses that deal in perishable goods, such as fast-fashion items, keeping on top of your inventory can be very costly. One way to account for inventory is by grouping it into four categories: first-in-first-out, last-in-first-out, weighted-average, and first-in-first-out. Raw materials are the components used by a company to make its finished products. Depending on the type of company that it is dealing with, different inventory management methods are used. Some of these include JIT, material requirement planning, and days sales of inventory. Other methods of analyzing inventory can also be used depending on national and local regulations. For instance, the SEC requires public companies to report the existence of a so-called LIFO reserve. Having frequent inventory write-offs can be a red flag that a company is struggling to sell its finished products or is prone to inventory obsolescence. Learn even more about inventory management from Walton College’s Supply Chain Management program’s introduction on the subject covering everything from forecasting to point models:  Why is inventory management important? One of the most valuable assets of a company is its inventory. In various industries, such as retail, food services, and manufacturing, a lack of inventory can have detrimental effects. Aside from being a liability, inventory can also be considered a risk. It can be prone to theft, damage, and spoilage. Having a large inventory can also lead to a reduction in sales. Both for small businesses and big corporations, having a proper inventory management system is very important for any business. It can help you keep track of all your supplies and determine the exact prices. It can also help you manage sudden changes in demand without sacrificing customer experience or product quality. This is especially important for brands looking to become a more customer-centric organization.  Balancing the risks of overstocks and shortages is an especially challenging process for companies with complex supply chains. A company's inventory is typically a current asset that it plans to sell within a year. It must be measured and counted regularly to be considered a current asset.  What is the goal of inventory management? The goal of any good inventory management system is to help warehouse managers keep track of the stock levels of their products. This means allowing them full transparency into their chain to monitor the flow of goods from their supplier.  The benefits are both operational and financial. Not only will it serve to improve performance, but it’s also useful for preventing theft with the help of product tracking and security.  Managers can also aim to use their inventory management plan to monitor sales procedures which leads to better service. Inventory management is especially useful for businesses that want to effectively manage seasonal items or new bestsellers throughout the year without disrupting the rest of their chain. Benefits of inventory management The main benefit of inventory management is resource efficiency. The goal of inventory control is to prevent the accumulation of dead stocks that are not being used. Doing so can help prevent the company from wasting its resources and space. Inventory management is also known to help:  Order and time supply shipments correctly  Prevent theft or loss of product Manage seasonal items throughout the year Deal with sudden demand or market changes  Ensure maximum resource efficiency through cycle counting Improve sales strategies using real-life data  Inventory management system examples Although inventory management can change from industry to industry, there are some big-picture themes worth learning about. Here are three major retail categories with real inventory management system examples: Grocery store chains  Modern groceries have managed to manage inventory coming in from different suppliers all over the world. Giving consumers several different types of internationally-grown produce in both organic and non-organic varieties at an affordable price, even when the fruits and vegetables aren’t in season, is a modern marvel thanks in part to inventory management.  Overseeing stock in real time and even setting up automated replenishment systems is mission-critical to many.  Online retailers On average, Amazon ships approximately 1.6 million packages from their brand to third-party sellers per day. Their Smart Warehouse uses robot and human help to get the job done, but it’s inventory management that keeps it all rolling. According to Tech Vision, “Amazon’s management technique, along with all that automation, have made the business astonishingly lean and mean by historic standards.” Toilet paper companies The inventory management of toilet paper companies was in the hot seat in early 2020 as panic-buying led to shortages nationwide. As demand outgrew supply beyond anything the brands had seen before (about 845%), it’s no surprise why there has been an increased focus on inventory management since.  Their secrets to overcoming this unprecedented event? Temporarily narrowing down their portfolio of products, sending out “defective” yet functional rolls, and even transitioning to a direct-to-consumer model, all with the help of strong inventory management systems.  Steps and types of inventory management Most product inventory management systems follow the same basic steps for finished products:  Products arrive at your warehouse  Products are checked and stored  Managers or crew update inventory levels  Customers place an order  Customer orders are approved based on inventory  Products are pulled and packaged  Inventory levels are updated again  This process is fairly straightforward and often involves help from software. There may be variations depending on what type of inventory management you are doing. Here are the main types you should know:  Raw materials This refers to pieces of your product that need to be shipped to you and assembled by your team. Inventory systems that track these must account for supplier timelines.  In progress Products made from raw materials and are currently being assembled or grouped fall under this category. This stage of inventory management may have one or several active projects at a time.  Repair Scheduled maintenance, updates, and refurbished goods all count toward this segment. Repairs may be handled in-house or in collaboration with a third party.  Finished goods Any good that is ready to ship to businesses or consumers is considered finished. These need to be updated regularly and constantly monitored to meet demand.  Inventory management techniques Without accurate inventory information, it can be very difficult to make decisions that affect your business. There are two main methods of keeping track of inventory: periodic and perpetual. The main difference between these is how often data is updated. Regardless of how often you track inventory, you may want to use one of the following inventory management techniques:  ABC Analysis ABC (Always Better Control) Analysis is inventory management that separates various items into three categories based on pricing and is separated into groups A, B, or C. The A category is usually the most expensive one. The items in the B category are relatively cheaper compared to the A category. And the C category has the cheapest products of all three.  EOQ Model Economic Order Quantity is a technique utilized for planning and ordering an order quantity. It involves making a decision regarding the amount of inventory that should be placed in stock at any given time. The order will be re-ordered once the minimum order has been reached. FSN Method This method of inventory control refers to the process of keeping track of all the items of inventory that are not used frequently or are not required all the time. They are then categorized into three different categories: fast-moving inventory, slow-moving inventory, and non-moving inventory. JIT Method Just In Time inventory control is a process utilized by manufacturers to control their inventory levels. This method saves them money by not storing and insuring their excess inventory. However, it is very risky since it can lead to stock out and increase costs. Minimum Safety Stocks The minimum safety stock refers to the level of inventory that an organization maintains to avoid a possible stock-out. MRP Method Material Requirements Planning is a process utilized by manufacturers to control the inventory by planning the order of the goods based on the sales forecast. The order is usually based on the data collected by the system. VED Analysis VED is a technique utilized by organizations to control their inventory. It mainly pertains to the management of vital and desirable spare parts. The high level of inventory that is required for production usually justifies the low inventory for those parts.  How to improve inventory management with Wrike One of the most critical factors that a company should consider is the accuracy of the information presented in its inventory databases. The data should be updated regularly to prevent it from getting distorted. Wrike is a project management solution that can help you do exactly that.  With Wrike's product management tools, you can manage all of your product team's activities in one place and get the most out of every project. Wrike's product launch automation helps accelerate product launches with a streamlined approach. Managers can easily keep inventory and shipping processes in check by planning and allocating tasks to the right people all from one central dashboard.  Wrike also makes it possible to create workflows that keep everyone up-to-date with the latest inventory progress. Tools like interactive charts and task dependencies help team members at every level identify and prevent delays. You can communicate with both vendors and clients through the advanced CRM built directly into the platform.  Plus, Wrike's advanced insights tools allow you to track progress in real time, which is important for any successful inventory management strategy.  Why choose Wrike as your inventory management software? Wrike is a project management solution that makes it possible to achieve all your inventory management goals while also maximizing the benefits of the process. Regardless of which inventory management technique you use, Wrike can help you take the process step by step to ensure your inventory is always accurate regardless of what type you’re managing. Improve your inventory management plan today with Wrike’s two-week free trial. 

Bottom-Up Estimating in Project Management: A Guide
Project Management 7 min read

Bottom-Up Estimating in Project Management: A Guide

Need help creating the most accurate project forecast of all time? Look no further than bottom-up estimating.  Bottom-up estimating in project management is a method of estimating project duration or cost by aggregating the estimates of the lower-level components of the Work Breakdown Structure (WBS). In this article, we’ll dive deep into what bottom-up estimating is, the pros and cons of bottom-up estimating, and how it differs from a ‘top-up’ estimating approach.  Explore more about this effective technique, along with the tool you‘ll need to master it.  What is bottom-up estimating? Bottom-up estimating is a technique that helps determine the overall cost and timeline of a project. It works by gathering all the details of a project at the most minute level. It provides a better, more accurate forecast than other project planning methods because it allows managers to see every available element of the project before it even begins.  How accurate is the bottom-up estimation technique? Because the bottom-up estimation technique uses every known factor to determine the project’s needs, it is considered more accurate than most other methods.  When you have all the details related to a project before you begin, it is easier to determine:  Where bottlenecks may arise (and how to banish them before they do) How to overcome a lack of project resources How your team can strategically navigate this particular project This is particularly effective when starting a project that is unique or new to your team and doesn’t have historical data to pull from.  Pros and cons of a bottom-up approach in project management The pros of bottom-up estimating include:  Highly accurate. Laying out the project's scope can be very challenging since it involves estimating the exact details of the project and the people involved in its execution. Bottom-up estimating allows team members to see all the components of a project in one place, and it saves them time and effort by estimating separately. Saves time. By estimating the work package in advance, a manager can make better decisions and avoid costly mistakes. It also helps avoid surprises down the road. Even though there is a large time investment up front, the idea behind the method is that it will prevent wasted time down the road.  Reduces risk. A bottom-up estimate allows the manager to address issues related to the estimates without making significant changes. This allows the team to avoid making significant errors. Improves success. A bottom-up analysis also allows managers to implement strategies to help the team execute the project more effectively. A comprehensive bottom-up analysis also allows the manager to identify potential issues before they occur, which allows the team to react more effectively to those that arise. Increases productivity. The team's autonomy and control are also distributed through the various members of the team, which allows them to work efficiently. Bottom-up estimating cons:  Not scalable. Bottom-up estimation requires project managers to start from square one on each new project. There are opportunities to pull details from related projects from the past. But the point of bottom-up estimation is to create a forecast based on the individual components of this particular assignment.  Time-consuming. The project planning work is front-loaded. It can take days, weeks, or even months to gather all the necessary information. For teams with a high volume of incoming projects or staffing issues, this may not be ideal.  Slow-moving. Bottom-up estimation is typically not done in a hurry and is therefore incompatible with last-minute projects or work that has a short timeline.  Bottom-up vs. top-down estimating Bottom-up estimating is different from a top-down approach. In top-down estimating, management estimates the project based on the previous work on the same or similar projects.  Bottom-up estimation is ideal for unique projects or work that is unlike anything the team has done before. Top-down estimation, however, is ideal for duplicate projects, recurring assignments, or work that needs to be completed ASAP.  It’s also easier to templatize past project plans in top-down estimating than in bottom-up estimating. Bottom-up estimating example In its simplest form, bottom-up estimation looks at the individual costs and time duration required for each project task.  For example, let’s say you own a wedding cake bakery. The last time you gave a wedding cake quote for a three-tier and several dozen cupcakes, you underestimated the cost and lost profit on the project. Now, you’d like to better estimate a brand new order to avoid making the same mistake twice.  In this scenario, you would lay out the individual components needed for each baked good. Everything from frosting quantity to hairnets is factored in. You’ll also need to account for the time it takes to do the shopping, coordinate customer service, and more.  Having all of this together on one list will make it possible for you to see the entire scope of the project and provide an accurate estimation this time around.  Why you should use Wrike for bottom-up projects Wrike is a project management tool that allows users to create robust yet simple bottom-up estimates for work of any kind.  First, Wrike allows you to lay out all of the tasks that are involved in the project. Wrike’s task feature offers individual task due dates, descriptions, assignees, and more.  Once a task is assigned to an individual team member, you can also assign approvers and factor into decision-making time to your bottom-up estimate. Instead of asking for approval from everyone, the manager focuses on getting feedback from all team members. Wrike also makes it easy to identify the various skills and people needed to complete the assigned tasks using information already stored in your dashboard. Not only will you have the most qualified team members working on the right tasks, but you’ll also be able to balance out scheduling so that no one person is bearing the majority of the workload.  Finally, Wrike's Gantt Chart offers a visual view of project progress that lets you keep track of all your work's phases and dependencies. With our tools, you can set milestones, link task dependencies, and provide a clear step-by-step explanation of your bottom-up estimation to stakeholders.  Ready to take your project management strategy to the next level? Use Wrike’s two-week free trial today to create a highly accurate bottom-up estimation for your next project. 

Announcing Resource Management Enhancements for Wrike Resource
News 5 min read

Announcing Resource Management Enhancements for Wrike Resource

New resource management enhancements are now available in Wrike! See resource needs across your entire portfolio and adjust employee workload quickly.

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