Your Inventory Has Doubled - Now What?

Industry Trends and Challenges

The electronics manufacturing industry is grappling with an unusual combination of rising inventory levels and softened demand, despite lingering shortages. Businesses must navigate this delicate balance to stay competitive and avoid holding excess stock, which ties up crucial cash flow.

The Cash Conversion Cycle

Understanding the cash conversion cycle—comprising day sales outstanding (DSO), inventory days (DIO), and days payable (DPO)—is key to maintaining financial health. Companies that optimize these metrics can free up cash to reinvest in operations, equipment, and growth.

Increasing Cash Flow

Dustin Carlson shared practical actions businesses can take to improve cash flow, such as split invoicing, renegotiating payment terms, and using receivables as collateral. These strategies keep capital flowing even in challenging market conditions.

The Future of Distribution and Automation

As cloud computing and machine learning rise, distribution models may shift, but they are unlikely to disappear. Companies are investing in purchasing automation, aiming to streamline processes while balancing cost and flexibility.

Conclusion

The electronics manufacturing industry faces a complex web of supply chain issues, cash flow challenges, and evolving business models. Companies that embrace flexible inventory management, optimize their cash conversion cycles, and foster strong relationships with suppliers and customers will be better equipped to weather ongoing volatility. As automation and new technologies shape the future, the ability to adapt will be the key to long-term success in an unpredictable market.