How Much Cash Do You Have locked down in Inventory?

In these times when cash can be hard to come by for most businesses it is as important as ever to have an inventory program that gives you as much cash flexibility as possible. Still many companies continue to operate on the “got to buy volume to get best price” mentality. This purchasing path takes a company into Cell Block NEOC – Not Enough Operating Capital.



Why be prisoner to vendors that make you produce in volumes equal to your annual uses? Have you considered your cash is locked into parts sitting on shelves at your facility? What about the parts that you don’ t sell? You know a discounted sale is coming for those bad boys.

When you take into consideration all the expenses related to mass production or high volume buying the payoff really does not make any sense. I mean, if you can buy high volume and move the product that is great. But too many companies are buying too much product because of the imaginary pot of gold at the end of the rainbow.

Think about it – so you pay 25% more per part on a $5 part because you bought 500 pieces instead of 2,500 pieces. That is an extra $625 over the 500-piece lot. Now let’s say that you move 500 pieces in 3 months so it would take you 15 months to move the 2,500. If you purchase the 2,500 pieces then you will lock up $2500 for an extra 3 months, $2500 for an extra 6 months, $2500 for an extra 9 months and $2500 for an extra 12 months. Total cash lock down over the initial 3 months is $10,000. Total lock down over the 1-year period is $5,000. All for $625 per quarter?

How much is it worth to have cash available when you need it? Good night sleeps for 3 months is way more valuable than $625. So what is the solution? Buy in lower quantities. Buy from a trusted supplier that speaks your language and can be reached when you need them. Buy where you are making the greatest impact for your own company and your neighbors. Buy right Here – in the USA. It is the best place to buy!

If you want to get started on your freedom program contact Short Run Pro today and let us show you how short run production can make your business smoother and cash happy. Contact us at sales@shortrunpro.com or 877-829-9293.