With credit at a premium its in a companys best

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manufacturing, assembly, and distribution represents credit-funded inventory. With credit at a premium, it's in a company's best interest not only to keep inventory levels tight, but also to sell goods as soon as possible. Reducing costs and squeezing maximum utility out of fixed assets is nothing new to Black & Decker Corp.'s Hardware and Home Improvement Group in Lake Forest, California. The unit supplies hardware to big-box retailers that have responded to the economic downturn with new low-price strategies. It now falls on Scott Strickland, vice president of IS, to help the group squeeze down its own costs and maintain profit margins. "We had been loath to drive inventory down to this level," Strickland says. However, the company had gained invaluable experience by deploying an integrated inventory-management system prior to the downturn. The result was that the key decision makers throughout its supply chain were operating with the same information, planners focused only on exceptions, and supplier and material issues were quickly resolved. The system, Strickland says, does the heavy lifting, and as a result, the unit has cut planning cycles from weeks to days and improved forecast accuracy by 10.4 percent. "If someone had told us nine months ago that we could lower inventory as fast as we could to address a sales decline, we would not have believed it was possible," Strickland says. However, "because of the impetus on freeing up working capital, we have been focused on lowering our inventory and levels. We figured we could do this, and it turned out to not be the bad experience we had imagined."
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The effort to lower inventory levels to free up working capital has proved so effective that the Black & Decker unit and its partners are jointly considering making it standard practice even after the economy recovers, Strickland says. O'Reilly Auto Parts Inc., in Springfield, Missouri, uses inventory as a competitive differentiator, says Greg Beck, vice president of purchasing. One of the largest specialty retailers of automotive aftermarket parts, tools, supplies, and accessories in the United States, O'Reilly is responding to the recession differently than many other companies. "Business is increasing because of the downturn," Beck says. "People aren't buying new cars but instead are putting more money into fixing old cars." This isn't to say that O'Reilly lacks supply chain challenges or that it can let down its guard. As the result of an acquisition last year, the company increased its total store count to more than 3,300 and now operates in 38 states. To bolster its competitive advantage, O'Reilly's strategy is to increase customer service levels and replenish inventory on a nightly basis, while at the same time managing an increasing number of products. The partnership between the supply chain operation and IT was critical to O'Reilly's strategy.
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