(06-03-2022 12:32 PM)Stammers Wrote:  

(06-03-2022 12:28 PM)Hernando Hills Tiger Wrote:  

(06-03-2022 11:21 AM)Stammers Wrote:  

(06-03-2022 10:21 AM)griffin Wrote:  With regards to a higher revenue:

Yesterday I happened to be in a very well know business in Memphis and was chatting with the leader and he informed me that his inventory is very low, the lowest it has ever been yet he is making far more money than he has in over ten years. By having less inventory on hand, his inventory "turn" is 3x what it was and his is doing exceptionally well. The markets have changed and people are adapting to having "less" to choose from yet will pay more for it and the demand is far greater than before.

Economics, funny how they work - time tested more than once.

In the freight business, suppliers for BMW and Toyota hold told me that the shelf life for parts inventory is anywhere between 15 minutes and 3 hours for most of their parts from the time they are manufactured to the time they are off of the shelf and on their way to a dealer.

Gone are the days where most manufacturers, distributors and suppliers have inventory stacked from the floor to the ceiling. Most of my customers need their freight out the door within a day or two because they don't have room for it at their facilities.

My most recent opportunity was for a Japanese company called Denso in Osceola, AR. We made HVAC's and other parts for Toyota and were partly owned by Toyota. In the past Toyota was big in "just in time" inventory processing but not as much anymore based on the model being built. No freight company was ever used as trucks ran from our plant to Toyota, in Princeton, IN, 5 times a day. We held some safety stock but for the most part we carried no inventory. Toyota however had quite a bit and sometimes an HVAC would go several months before being installed in a vehicle.

It is pretty cool to see so many moving parts working with exact precision.

Interesting time to be owing a business that had a "shelf" cash flow tied up in inventory, say your turn was even on the low end of 2 to 4x, that cash flow now is open and added to your bottom line or used to grow your business because of the shift of the market with customers accepting the reality of today and the market change. Found equity like never seen before with businesses that had shelf life products.

It's a good time to acquire businesses that have these types of inventory management levels in place and pick up some equity to expand some business from someone who is ready to cash out and move on.