“If I had to reduce my inventory by 30 percent by the end of May,” Bruce continued, “I would be able to spend more time analyzing which inventory I wanted to get rid of, adjusting my min/max and re-order points. I would look at inventory turns, lead times and ship frequencies.”
“So, what’s the difference in blowing out 30 percent of your inventory by the end of next week and reducing it by the end of May? You still get your inventory down?” I asked.
Bruce smiled. “If I just blow out my inventory in one week, I will guarantee that within two weeks, my levels would all be back. I might even have more inventory then, because people will be ordering stock outs without any rhyme or reason. In the short term it works, but in the long term, it all comes back.
“By working systematically, I can make permanent changes in stock levels. I will have much more control. We will have the profitable inventory we need, that turns, that makes us money. It gives us more predictability and consistency. It all gets back to the system.”