- August 3, 2014
- Posted by: EPP
- Category: Purchasing Help
Does Supply Chain Management Substantially Cut Inventory Costs?
Yes, one substantial benefit of selecting a plastic machining vendor that utilizes a proven Supply Chain Management system for plastic machining component purchases is the reduction on your stock inventory, of course resulting in lower inventory costs. The conventional plastic machining purchasing method is to purchase additional plastic machined components inventory. Most companies purchase 3-6 months supply per order. This plastic machined parts inventory sits on the shelf waiting to be assembled into a billable sale. Not only does component inventory take up unnecessary space on shelves, it also takes away from the bottom line. Depending on the cost of money (interest), this inventory can cost ½% / month to 1% per month and can translate to several hundred to many thousands of dollars (or millions) of cost that is sitting on the shelf. That is a waste of working capital and profit. The actual figure over any given time is accumulated by the product of (interest%) X (component cost) X (inventory days). The longer the excess inventory sits, the more the losses compound.
Not all supply chain management systems are all created equal. A plastic machining vendor that has a proven system has the capability of providing substantial savings throughout the plastic machined parts purchase process. EPP Corporation has a proven supply chain management system to save customer substantial money on plastic machined parts purchases.
For more detailed information on how EPP Corporation’s proven supply chain management system provides substantial savings on plastic machined components, read the How To Save On Plastic Machined Parts blog.