• Advertise
  • Contact Us
  • About Us
  • Supplier Directory
  • SCB YouTube
  • Login
  • Subscribe
  • Logout
  • My Profile
  • LOGISTICS
    • Air Cargo
    • All Logistics
    • Express/Small Shipments
    • Facility Location Planning
    • Freight Forwarding/Customs Brokerage
    • Global Gateways
    • Global Logistics
    • Last Mile Delivery
    • Logistics Outsourcing
    • LTL/Truckload Services
    • Ocean Transportation
    • Rail & Intermodal
    • Reverse Logistics
    • Service Parts Management
    • Transportation & Distribution
  • TECHNOLOGY
    • All Technology
    • Artificial Intelligence
    • Cloud & On-Demand Systems
    • Data Management (Big Data/IoT/Blockchain)
    • ERP & Enterprise Systems
    • Forecasting & Demand Planning
    • Global Trade Management
    • Inventory Planning/ Optimization
    • Product Lifecycle Management
    • Sales & Operations Planning
    • SC Finance & Revenue Management
    • SC Planning & Optimization
    • Sourcing/Procurement/SRM
    • Supply Chain Visibility
    • Transportation Management
  • GENERAL SCM
    • Business Strategy Alignment
    • Education & Professional Development
    • Global Supply Chain Management
    • Global Trade & Economics
    • HR & Labor Management
    • Quality & Metrics
    • Regulation & Compliance
    • SC Security & Risk Mgmt
    • Supply Chains in Crisis
    • Sustainability & Corporate Social Responsibility
  • WAREHOUSING
    • All Warehouse Services
    • Conveyors & Sortation
    • Lift Trucks & AGVs
    • Order Fulfillment
    • Packaging
    • RFID, Barcode, Mobility & Voice
    • Robotics
    • Warehouse Management Systems
  • INDUSTRIES
    • Aerospace & Defense
    • Apparel
    • Automotive
    • Chemicals & Energy
    • Consumer Packaged Goods
    • E-Commerce/Omni-Channel
    • Food & Beverage
    • Healthcare
    • High-Tech/Electronics
    • Industrial Manufacturing
    • Pharmaceutical/Biotech
    • Retail
  • THINK TANK
  • WEBINARS
    • On-Demand Webinars
    • Upcoming Webinars
    • Webinar Library
  • PODCASTS
  • VIDEOS
  • WHITEPAPERS
Home » Measuring 'Real Money Cost' of Inventory Would Help Reduce Overstocking

Measuring 'Real Money Cost' of Inventory Would Help Reduce Overstocking

September 30, 2009
Industry Week

Since the end of 2008 a trend known as "destocking" has occurred at many manufacturing plants across the country. Simply put, manufacturers have been cutting or halting production while unloading inventory stockpiles that built up because of decreasing demand.

The unloading process signals that much of the manufacturing industry underestimated the severity of this year's recession. 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, says Tom Speh, associate director of MBA programs at Miami (Ohio) University's Farmer School of Business.

"Everyone wanted to address the fuel issue. People were trying to reduce miles and increase loads, and in many cases shipping full truckloads, which was driving up inventory," he says. "We did have a natural evolution of increasing inventories because everyone was trying to save transportation dollars."

Consequently, 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, says Speh. Some of the inventory glut may have been avoided if manufacturers had implemented accounting systems that measure the "real money cost" of inventory, Speh says. That includes capital expenses tied to storing inventory, borrowing rates, insurance costs and losses incurred from damages and obsolescence.

Read Full Article

RELATED CONTENT

RELATED VIDEOS

Logistics Inventory Planning/ Optimization Supply Chain Visibility Technology Global Supply Chain Management Order Fulfillment Warehouse Management Systems Pharmaceutical/Biotech
KEYWORDS Global Supply Chain Management Inventory Planning/ Optimization Logistics order fulfillment Pharmaceutical/Biotech Supply Chain Visibility Technology Warehouse Management Systems
  • Related Directories

    SnapFulfil

Industry Week

Integrated View of Supply Chain Helps Build in Resiliency to Risk

More from this author

Subscribe to our Daily Newsletter!

Timely, incisive articles delivered directly to your inbox.

Popular Stories

  • A PAINTING IN WHICH A RED HOT AIR BALLOON IS TETHERED TO A GIANT ANCHOR

    Will FTC Succeed in Banning Non-Compete Clauses in Employment Contracts?

    HR & Labor Management
  • WORKERS INTERACT WITH VARIOUS TYPES OF CARGO MOVING EQUIPMENT ON A CROWDED DOCK

    White House Urged to Intervene in West Coast Port Labor Talks

    Global Gateways
  • A MEDLEY OF GRAPHS SHOWING ZIG-ZAG RESULTS AGAINST A MAP OF THE WORLD AND AN IMAGE OF OIL DERRICKSiStock-peshkov-1316669671(1).jpg

    Bringing the Supply Chain Closer: Nearshoring Is Here

    Sourcing/Procurement/SRM
  • TWO FINGERS MANIPULATE WOODEN LETTER BLOCKS TO TURN FROM SHOWING THE WORD RECOVERY TO RESILIENCE

    A Data-Driven Approach to Supply Chain Resilience

    Technology
  • A WOMAN STANDS NEXT TO A BIKE, DAPPLED BY THE SHADOWS OF BICYCLE RACKS.

    Walmart is Changing the Way Its Employees Get to Work

    Sustainability & Corporate Social Responsibility

Digital Edition

Scb q1 2023 cover

2023 Supply Chain Management Resource Guide: Packing for a Difficult Year

VIEW THE LATEST ISSUE

Case Studies

  • New Revenue for Cloud-Based TMS that Embeds Orderful’s Modern EDI Platform

  • Convenience Store Client Maximizes Profit and Improves Customer Service

  • A Digitally Native Footwear Brand Finds Rapid Fulfillment

  • Expanding Apparel Brand Scales Seamlessly with E-Commerce Technology

  • How a Global LSP Scaled its Security Program and Won More Business

Visit Our Sponsors

Orderful Yang Ming Alithya
Barcoding Blue Yonder BNSF Logistics
CoEnterprise Data Capture Deposco
E2open GAINSystems Generix
Geodis GEP GreyOrange
Here Holman Logistics Honeywell Intelligrated
IFM Infor Inmar
Keelvar Kinaxis Korber
Lean Solutions Group 2H Liberty SBF Locus Robotics
Logility LogistiVIEW Lucas Systems
MCA Connect MPO Nvidia
Old Dominion OpenText ORTEC
Overhaul Parsyl PMMI
QIMA Redwood Logistics Ryder E-commerce by Whiplash
Saddle Creek Logistics Schneider Dedicated Setlog Holding AG
Ship4WD Shipwell Shyft
Sourcemap Tecsys TGW Systems
Thomson Reuters Tive Trailer Bridge
Vecna Robotics Verity
Verusen
  • More From SCB
    • Featured Content
    • Video Library
    • Think Tank Blog
    • SupplyChainBrain Podcast
    • Whitepapers
    • On-Demand Webinars
    • Upcoming Webinars
  • Digital Offerings
    • Digital Issue
    • Subscribe
    • Manage Your Subscription
    • Newsletters
  • Resources
    • Events Calendar
    • SCB's Great Supply Chain Partners
    • Supplier Directory
    • Case Study Showcase
    • Supply Chain Innovation Awards
    • 100 Great Partners Form
  • SCB Corporate
    • Advertise on SCB.COM
    • About Us
    • Privacy Policy
    • Contact Us
    • Data Sharing Opt-Out

All content copyright ©2023 Keller International Publishing Corp All rights reserved. No reproduction, transmission or display is permitted without the written permissions of Keller International Publishing Corp

Design, CMS, Hosting & Web Development :: ePublishing