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October 2002                www.strategosinc.com

Inventory--Why All The Fuss?

Inventory reduction is a persistent theme in Lean Manufacturing; but, why so much ado? Some of the answer is that inventory devours cash like a black hole. Operating with less inventory frees cash for more constructive use.

Inventory is expensive to keep. In addition to the interest cost on money it requires space, insurance, computers and stock-keepers. It is susceptible to damage and obsolescence. The total annual carrying cost often runs 20%-60% of the inventory value.

But there is much more. The practices, techniques, policies and decisions that reduce inventory also eliminate many other forms of waste. By reducing inventory, your operation becomes more productive, more profitable and more responsive to customers.

Our latest “White Paper” explores some of these issues and offers new perspectives. You can find it on our website at


Best Regards,

Quarterman Lee


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