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In this difficult economy, what can companies do to finance necessary growth?
Companies that follow a continuous improvement agenda have discovered a ready source of capital to finance growth: harvesting cash tied up in inventory. Some people look at inventory as necessary for customer service, but customers don't care if an order is filled directly from your manufacturing operation or from a warehouse, and it's more cost efficient shipping directly from operations.
The question is how to harvest this source of cash. As those involved in continuous improvement will tell you, it's not just a matter of delegating it to your manufacturing folks to implement lean tools. A sustainable commitment to reducing inventory--including raw, WIP and finished goods--is really a commitment to change the way you do business and it affects almost all of your business processes.
Source: Indusrty Week, http://industryweek.com
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