Taking stock of the situation

February 28th, 2009

Acme Tool Co. is not especially vulnerable to the current economic climate, supported as we are by a repair industry, and repair being a fact in a cynic’s life and not just a realtor’s dream of an ever-exploding house value. But the collapse of unbounded optimism is sucking quite a lot down the drain with it. Somewhere around a dozen salaried employees were shed from our plant; we were among the fortunate, and the discerning ear can hear the tremors of further exfoliation.

One of the reasons our employment has not deteriorated further is the decision by our new Vice-Admiral to build up inventory–lots and lots of inventory. I’m sure I commented at least once on this site that the simplest way to improve your on-time delivery is to have plenty on hand to ship, and that is the general direction we are headed in. The obsession with cash flow — or inventory turnaround — has faded to a background murmur. After all you can’t worry about cash flow unless you have money flowing in, and you can’t have that without product flowing out. And today that means you can’t afford to let a customer walk away just because you couldn’t ship on the same day he ordered.