Frequently Asked Questions

How can I proactively manage my inventory investment as business conditions change?

If a downturn hits ...

If a downturn hits and hits quickly it is often all you can do to cut and cut quickly. It is often crude and can hurt the business, your staff, your customers, your suppliers and you, personally. The C (of the ABC) items are cut back hard. The problem is that the C Items are where you made a lot of your gross margin and where service reputations are often won and lost. It is hard to do much more than that at times however as there can be many different factors to juggle.

... it can be hard to make the best decisions

Any one factor might be easy enough to comprehend. In the downturn interest rates might come down, often too slowly for your liking maybe, but they will still come down. Your customers will repair more than they replace. Plant utilisation will drop so planned maintenance and the forward orders for the Christmas shutdown will fall off – your customers will shift to break down repair and want replacement parts quicker than before. The product you used to sell in volume to the manufacturer collapses. The good news is that supply lead times improve as does supply reliability. The bad news is that it is just one of a dozen or so factors that you need to manage across all your products, suppliers, warehouses and market segments.

But then things turn for the better ...

Your manufacturing and building customers return to your order books. You survived the downturn better than some of your competitors. Lead times begin to creep up again. The bad news is that you have to translate all these changes in business conditions down to ‘days cover’ and other overly simplistic assumptions about how to manage your stock levels.

... and you can stay ahead of the business cycle

The good news is that you can manage these complex factors so that you can tune your inventory investment and purchasing decisions to stay ahead of the business cycles. micq-if can help you set overall and specific policies and then has the flexibility to help translate your objectives into inventory levels that make sense in the business environment in which you are operating. It can help you balance the breadth and depth of product your are holding, given the needs of your customers, the capabilities of your suppliers and your supply chain, and the profitability, service level and Return on Assets objectives that you have.

Read more on likely responses to downturns and upturns via the following questions:

  1. How can I set the right branch or store inventory levels as business conditions change?
  2. How can I adjust my inventory to the service levels provided by my suppliers during downturns and upturns?

Importantly micq-if can give you the confidence to ask the questions and find new answers to the challenges your business presents.