And this squeeze is Killing Your Profits
- Domestic vendors continue to set their pricing structures to invent you to carry higher levels of inventory. This drives your inventory costs up, decreases your working capital and increases your carrying costs, which directly costs you more money and quickly eats up your profit.
- Foreign vendors add to the squeeze with their long lead times and regulatory requirements. These factors tend to drive your inventory levels up and decrease your working capital even further, while increasing your carrying costs, which costs you even more money.
- Customers want to stock lower inventory levels so that they can reduce their own overhead costs and then demand the product from you even quicker, adding even more pressure. And have you noticed that while they want their orders filled faster with a higher fill rate than ever before, a low price is still a primary factor to most of them?
- The Economy. The constant economic roller coaster makes it really tough to manage sales expectations. Most banks have not made this any easier, as they have likely had to tighten their policies around maintaining a line of credit. This cuts even further into available cash to cushion you against any purchasing miscues.
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