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The siren song of inventory reductions

  • October 2009
  • Number of views: 2774
  • Article rating: No rating

Dr. Albert D. Bates
President, Profit Planning Group
Boulder, Colorado 

The downturn in economic activity caught many firms somewhat off guard. As a result of sales challenges, cash suf­ficiency has become a very serious issue. For the typical EASA member, cash now represents only 6.7% of total as­sets. It is a cash position that does not leave a lot of room for error.

To offset the cash chal­lenge, most firms have looked at reducing the “cash traps” in the busi­ness, particularly inventory. While reducing the investment in inventory is a laudable objective, it is fraught with some danger. It is possible, and maybe even likely, that the drive to lower in­vestment levels will trigger further sales declines, through a higher occurrence of out-of-stock situations. 

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Getting The Most From Your Electric Motors

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Recommended Practice for the Repair of Rotating Electrical Apparatus
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EASA Technical Manual

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The EASA Technical Manual is the association's definitive and most complete publication. It's available FREE to members in an online format. Members can also download PDFs of the entire manual or individual sections.

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