We have already spoken about completed Inventory and Work in Progress (WIP) in C4.3.3. This included the hidden destruction that it does to your cash flow and therefore your profitability. If you are in an inventory-intensive industry, like wholesale/retail and manufacturing, it is very important to manage stock purchases in the short term. This is to reduce the amounts you have to pay out and help your cash flow.

Do You Have Stockpiles of the Raw Materials For Your Production Cycle?

The traps of quantity discounts when buying inventory:

Immediately Develop The Following Discipline:

The concept of “Just In Time” (JIT) ordering is well known amongst larger, successful, businesses.
JIT ordering arranges for stock to arrive only when it is required.
It maintains as little as one or two days (and sometimes only one or two hours) of stock at any point in time.

Explore buying smaller quantities at more frequent intervals as a way to manage stock purchases. This allows a match between raw material orders coming in to products going out.

12Faces has several articles on Inventory Management.
Go to the list of articles: Inventory Management and Work in Progress.
For additional information, go to the Diagnostics System linked in the black box below.

Managing your stock is something that almost any business can do immediately.

For more help understanding any issues relating to this Section of the Turnaround90 Campaign, use the 12Faces Diagnostic System to drill down to root causes of problems and find our suggested Treatments.

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