Keep Your Inventory Balance as Low as Possible!
By: Robert Curry
This article is a true story out of my first book: From Red to Black – A Business Turnaround!
Always keep your inventory balance as low as possible but not to the point that it causes inefficiencies in production. A client of mine in Florida manufactures and installs hurricane shutters to commercial and residential properties. The company’s annual sales when I started the turnaround was $2 million. The company had approximately $650,000 in inventory in the warehouse which was about $500,000 too much.
There is nothing good that happens to a company with overstocked inventory. The stock gets lost, stolen, damaged and depreciates. The more overstocked inventory, the less the chance that the company will ever be profitable. You may need to check every teardrop pallet rack to get a visual idea of how much stocks you have in your storage. A warehouse management software may be able to help you manage the stocks and supplies in your warehouse. In addition, you may invest in hand trucks that your workers can use when handling and sorting your supplies.
Aluminum is the raw materials to manufacture hurricane shutters. The distributor that could deliver the raw materials to my client within 24 hours of him ordering the product. There was no reason for the company to be warehousing any raw materials to manufacture hurricane shutters.
One of my first tasks, when I started the turnaround, was to reduce the inventory balance. I met with the distributor to negotiate terms for them to come to pick up the entire amount of the excess inventory. We were able to return over $450,000. Within the two months, my client’s average cash balance in the bank account went from $50,000 to $500,000.
Keep Inventory Low – Money in the bank is always better than excess inventory in the warehouse.
My name is Robert Curry, and I am an Author, CEO Coach, Keynote Speaker, and Turnaround Specialist. Over the past 20 years, I have worked with more than 70 companies taking their businesses from Loses to Profits.
Recently I published two books about turnarounds: “From Red to Black – A Business Turnaround” and “The Turnaround.” Both books are true stories about turnarounds of real companies that I have turned around during my career. In both books, I have shared all my Profit Improvement Recommendations (“PIR’s”). PIR’s helped to grow sales, reduce expenses, improve cash flow, and most importantly, strengthen the management teams.
If the information in this article Keep Your Inventory Balance as Low as Possible helps you, your family or a business associate, please email me at bob@ceorsc.com and share with me the story.
If you would like to purchase either or both books autographed by the author, please click on the following link: Redtoblackbooks.com.
