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10/1/2009 2:07:57 AM

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Measuring ‘Real Money Cost’ of Inventory

United States

Measuring ‘Real Money Cost’ of Inventory

Due to a decrease in demand, manufacturers are cutting, and evening halting production, while "destocking" built-up inventory. Tom Speh, Associate Director of MBA programs at Miami Ohio University's Farmer School of Business, says, "One reason why manufacturers may be grappling with excessive inventory levels is their previous focus on reducing transportation expenses during gasoline price spikes rather than total stocking costs." "Consequently," he continued, "when fuel prices came down and demand for their products dropped, many manufacturers were left with warehouses full of inventory that they've been unloading for the past year." Speh believes overstocking could have been eliminated if manufacturers had implemented accounting systems that measure "the real money cosy" of inventory. Supply Chain Brain (9/30)

By anna_kurg

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Logistics Intelligence, Logistics News, Supply Chain Articles, Supply Chain Innovation, Supply Chain Intelligence, Supply Chain News,

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