Having less inventory is almost always better financially. The
inventory you didn't build represents money you didn't have to borrow in
the first place. From a cash flow point of view, it's silly to spend a
dollar to build inventory so you can borrow 50 cents.
I was the business operations manager of a large ($300 million per year
revenue) commodity semiconductor department before I retired, and much
of my attention was spent on driving manufacturing cost reductions.
Cost effective manufacturing is dependent upon a ton of variables, but
build-to-order is usually a desirable objective. It requires, however,
that you do many things well in order that you don't alienate your
customer base via long lead times, or incur other unexpected
manufacturing costs (labor inefficiencies, yield losses, higher scrap).
You need a flexible workforce that doesn't have to be retrained as
volumes change, you need piece parts and materials that are standardized
across multiple products, you need supportive suppliers, you need
products and processes that have been designed for predictable yields
and low cycle time of manufacturing, plus a ton of other considerations.
My guess is that many antenna manufacturers are forced into
build-to-order to preserve cash in what is generally a low margin
marketplace (anyone doubt that hams are penny pinchers?), but I'll bet
most of them try to keep overhead low and haven't had the time, staff,
or money to devote to establishing a proper manufacturing flow. It
often requires re-engineering the manufacturing system (sometimes it
even requires redesigning the product) to switch from a
build-to-inventory business model to build-to-order, and in most cases
these small companies are probably still building their products pretty
much the same way they always have.
It's a tough situation for both sides and I'm not trying to make a value
judgement here ... only an observation.
73,
Dave AB7E
Dick Green wrote:
> For many manufacturers, having finished inventory in stock is better than
> having raw material in stock. Banks credit lines are typically based on
> 75%-80% of Accounts Receivable and 50% of *finished* inventory. They won't
> accept raw inventory as collateral.
>
> 73, Dick WC1M
>
>
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