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Free Up Cash by Reducing Inventory

12/15/2014

Free Up Cash by Reducing Inventory

All of us have experienced one, if not all, of the contributing factors associated with increased inventory dollars and cases:

  • Higher order minimums in terms of cases, weight or cube
  • Suppliers Requiring Pallet or Layer Quantities by SKU
  • Longer supplier leadtimes causing you to carry more safety stock
  • Increased Cost to Warehouse & Handle Disposables - A 2013 Technomics Study discovered Disposable Products have 2.5 times the Cost per Cube to handle vs. food items. Disposables, therefore, consume a disproportionate amount of warehouse space.
  • Suppliers Introducing new items- Let me get the “Magic 8-Ball” to see how many to bring in???
  • Customers wanting a “Widget” vs. 1 of 8 “Similar” Widgets already stocked - Typically Increases one’s Safety Stock
  • Fish Inventory – First In, Still Here
  • Supplier Year End Buy Ins
  • Need for Additional & Temporary Warehouse Space or Trailers - Temporary Warehouse Space can become a permanent Warehouse Expansion Project

Inventory shrinkage due to damage or theft

  • Excess inventory increases warehousing handling costs, ties up cash and negatively impacts the Balance Sheet and Working Capital.
  • There is a disconnect between how manufacturers want to ship goods and how customers want to receive goods.
  • Manufacturers want to ship truckloads of unitized or palletized increments while end users want what they need, when they need it.

R3 can bridge the gap by ordering the way that manufacturers want to ship and delivering in increments customers want to receive at a cost that makes both parties more profitable.

  • R3 offers a more profitable option that frees up cash, space and labor for more profitable employment. 
  • The Increased Cost to Handle Disposables can inhibit one from investing in more Profitable Food Items. 

The Working Capital Estimator is one tool to compare one’s current state to what it could be when working with R3. See the Working Capital Estimator here.

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