How Much Inventory is Enough and Too Much?
This table -- which indicates raw materials inventory levels of IW's Best Plants winners and finalists -- is not meant to identify the optimal level of days-on-hand raw-materials inventory. Too many factors can influence what makes sense for any individual manufacturer. That said, manufacturers should be asking, 'Am I carrying extra inventory because my suppliers are failing to deliver on time? Could I find a closer supplier that would allow me to reduce the level of inventory I keep on hand? Is my buffer this large because I can't trust my own processes?'
|Average days of raw materials inventory|
Source: 2012 IW Best Plants Statistical Profile