By Alicia Cahill, MWI Components
Should You Order Ahead or Buy From Project-to-Project?
Especially in this moment in the market, when components are sometimes scarce and always expensive, is it wise to keep a stock of essential parts on hand? Or, are you better off ordering only what you need for each project as you book them?
Here are some of the benefits and disadvantages of each inventory theory.
Benefits of Keeping Inventory
• Response time: meet any expected increases in demand; short lead time
• Captured cost: buy low and ride out potential increases
• Financial motivation: not only does inventory figure into a company’s cost of goods, it also contributes to a business profit margin
Disadvantages of Keeping Inventory
• Captured cost: if price drops, your “on the shelf” material is still costed at the higher rate of purchase
• Wrong SKUs: trends change, developing excess inventory that may not sell
• Shelf life: common products have life spans — losing inventory because it’s gone bad or has expired
Benefits to Job-Pack or Buying Project-to-Project
• Color choices: often if a company stocks colors, this is what they try to sell; in the case of job packs, they can sell a wider color variety
• Less handling/sorting: if you have a vendor that will job-pack for you, it can come in and go straight to the job
• Warehouse space: inventory is not using up your shelf space
Disadvantages to Job-Pack of Buying Project-to-Project
• Lead time: dependent upon manufacturer product at the time of order
• Shortages: your job completion may be stalled by not getting the material you need, when you need it
• Response time: if there is a problem or error, it may put a site completion at risk or cause high-cost substitutions