Rolling Inventory Issues Down The Road
16 January, 2019 // From our “right idea for the wrong reason” file: The Wall Street Journal recently reported on the rising use of truck trailers as warehouses on wheels (“Swamped With Inventory, U.S. Companies Turn to ‘Mobile Storage’ ” - subscription required for access).
It seems that many manufacturers turned up their manufacturing lines at the end of 2018 in an effort to produce goods before new import tariffs became effective. One problem with that strategy: What to do with all that stuff until demand catches up with the artificially high supply?
For many, the answer has been to pack those goods into truck trailers and park them somewhere. The WSJ story cites a new “mobile warehousing and storage” service from Milestone Equipment, a leasing company that counts retailers like Home Depot as customers.
Milestone’s Sarah Johnson told the WSJ, “It’s like a warehouse on wheels. We now think about our trailers as more of a real estate alternative than just a trailer.” That’s a savvy insight, but the strategy o leaving goods in parking lots doesn’t work for higher-value inventory or products with short lifecycles.
At Morgan, we built on a similar idea when we introduced our Inventory On Demand service way back in 2008. Our solution wasn’t built just for market distortions such as tariffs, though. Instead, we worked to transform existing transit times, turning goods in motion into true moving warehouses.
With Inventory On Demand, Morgan buys goods on behalf of its OEM customers—at the overseas factory, from suppliers or wherever the OEM would otherwise be taking title. As this inventory moves through the supply chain, it’s on Morgan’s books—not the customers. So, there’s an immediate balance sheet benefit as the OEM can use its capital for other purposes.
It turns out, when we own goods we are able to optimize movement and warehousing—or work with existing supplier to accomplish those goals. Because clients have a built-in, in transit buffer, forecasting doesn’t have such high stakes. So, consolidations, mode-shifts and targeted distribution all become easier.
Those efficiencies may not matter so much for makers of bolts and screws. For our high tech, electronics, biotech and other customers, though, they add up to substantial cost and performance improvements.
If your enterprise might benefit from Inventory On Demand, let us know. We’d be happy to review your supply chain and assess whether the value to be gained.
While You Were Shipping…
More Recent Stories You May Have Missed That Caught Our Eye
More On Tight Warehousing Markets. The Wall Street Journal (tiered subscription model) reports that demand is way ahead of supply for U.S. warehousing space. Industrial vacancies are at an all time low of 4.8 percent with SoCal, New York, Pennsylvania and Vegas particularly constrained.
Good Driving Is An Inside Job. (Journal of Commerce; tiered subscription model) As trucking companies search for drivers in a tight market, more are recruiting, training and promoting from their existing workforce. Says Werner Enterprises CEO Derek Leathers: “Driver tenure is the biggest metric of financial success” for ground transportation providers.
Keep On Truckin’ (Logistics Management) Meanwhile, the American Trucking Association reports that driver turnover declined 11% in the third quarter of 2018, the lowest level since early 2017. While that’s an improvement for employers, it’s still a historically tough market for finding drivers.