Inventory Rationalization And Right Sizing Strategies

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Executive Summary

The impact of inventory on cash flow can be devastating, resulting in everything from payable extensions to missed payrolls and loan defaults. Still, despite the lean six sigma purists who preach that inventory represents waste, inventory does play an important strategic role in buffering against demand variations and potentially harmful supply disruptions. Therefore, the key challenge is selecting the appropriate inventory management strategies and clearly understanding the cost and benefit implications to business performance. The business climate has changed dramatically over the past 20 years along several different dimensions that have significantly increased the challenge in selecting appropriate inventory strategies.

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