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Preparing for the Bullwhip Effect

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by Tim Reynolds

I thought this article from the Wall Street Journal might be of interest. Even if the economy remains relatively flat this year, we will be seeing a pickup in demand in the industrial sector as inventory levels are replenished throughout the supply chain. Careful inventory management and, especially, careful cash management are critical in the beginning stages of a recovery and the “bullwhip effect” that this article refers to can be very challenging for small businesses.

It is for this reason that you are seeing even the politicians becoming concerned about the availability of financing for small businesses. Look for both state and federal programs to focus on access to capital for the smaller enterprises. Stay close to your banker too. Bankers are getting pressure from both the regulators (to restrict lending) and the politicians (to expand lending). They will want to be able to increase lending to credit-worthy borrowers.

Keep your financial house in order and you’ll get the benefit of expansion capital. Tribute can help you tune up your inventory management processes and conserve your cash as you face the stresses of a recovery. We’ll soon be offering on-line seminars in this area, and our consulting staff can provide on-site consulting and training to get you to optimum efficiency. Be Prepared!

Tim Reynolds is the President of Tribute, Inc., the Chairman of COSE - the Cleveland Council of Smaller Enterprises, and on the board of NSBA - the National Small Business Association.

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