Continuing our cash velocity discussion started on March 16, 2007
Side Bar for Wednesdays March 21 post:
To minimize the amount of materials we have on hand, we should examine our purchasing policies. Many times we purchase in large quantities to save money. If we purchase in large quantities, we can often receive a quantity discount, and we also can spread the transportation cost over more items. This savings in raw materials and logistical costs are a mirage, because we have to store what we don’t use and we are at risk for inventory obsolescence. If instead, we replenish our materials based on the Demand Pull / Replenishment systems, then we can minimize what we have on hand while ensuring that we have what we need. In addition, our cash position is stronger. We will have only spent/invested what was necessary.
Here’s to maximizing YOUR profits!
By Dr Lisa Lang