Will recession drive lean(er) inventories?
That is the question. I don't mean finished goods inventories, but the extra raw and WIP inventories so many companies carry to avoid being caught short.
According to an item I read today, it's already happening. Rather than buying 10 pieces to hold in stock, companies are buying 5, for instance, in an effort to hold onto cash--or because that's all the dollars they have to spend.
Will this involuntary (sort of) reduction in inventory continue once the economy turns around? It's certainly an opportunity for manufacturers to learn that they can perform just as competently without the huge stores of inventory as they did with the extra inventory. At the very least, it's an opportunity to learn how to perform just as competently--or perform even better--without excessive safety stock. Think of all the dollars this would free up.
Of course, the challenge will be to create, employ and sustain the processes that are necessary to make leaner inventory a successful way of doing business, even when the poor economy is not driving your decisions. It seems to me to be a challenge worth attempting.
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Jill Jusko
IndustryWeek Senior Editor
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