“You can’t sell out of an empty wagon,” is a favorite saying among salespeople, meaning that you have to have inventory (usually lots of it) to quickly serve your customers. But it just isn’t true! In fact, if you have a successful Just In Time (JIT) supply chain management process, often the less inventory you have, the better you can service your customers. Here’s why:
- Lower inventory leads to having the right inventory in the right place at the right time – true JIT inventory management.
- Inventory buffers often lead to obsolete inventory.
- High inventory levels jam up the warehouse and make it harder to quickly find and pick what you want for shipment.
- Large amounts of inventory often lead to inaccurate records, so you don’t know what you have or what you need, resulting in stock outages.
- Too much inventory requires more storage capacity, which raises the cost of holding inventory and reduces profit.
These are just a few of the ways excess inventory hurts profits and cash flow. By running a true JIT system, you can better serve your customers and yes, you CAN actually sell out of an empty wagon.
© 2019– Rick Pay – All Rights Reserved