Dear America, We Have Inventory Problems

Hope everyone is getting some time away from work this Labor Day Weekend. I decided to take time away from Houston and drive up back to Pennsylvania.

On these long drives, I always find it amazing that whether you are driving through Texarkana, Nashville, or Bristol you come across the same stores, fast food chains, and car dealerships everywhere. True, there might not be a Chase Bank in Allentown, but it seems that in America, corporations really go out of their way to have everything available, everywhere.

While the point was to take vacation, this 1500-mile drive ended up to turning into a quick survey to gauge what the state of inventory was across half the country. I wanted to see what was sitting around the yards of all small and medium-sized businesses, especially for the oil&gas companies.

While I did see tons of pumper trucks and petrochemicals sitting up on 59-N, those items weren’t actually the biggest buildup of static assets I found. No, instead that honor belonged to the thousands of cars sitting at dealership lots, the hundreds of brand new trucks sitting idle, and stacks upon stacks of stuff sitting on I-30 and I-40.

It made me really wonder why? Why do we store so much stuff when the advent of drones and modern transportation is moving everything towards an on-demand economy? Does everything actually sell? Who buys all this s***? Unless the turnover justifies it, we shouldn’t have so much in finished goods until it is actually needed.

To be fair to Industrial America, these questions also apply to the food & retail space, and even our own homes. We, as a nation, like to stock up on more than we need. After all, how many over-flowing food trolleys have you seen at places like WalMart, when you know there are literally 3 of them in the area and one is open 24 hours?

This is not to say safety inventory levels have no importance. Recent natural disaster hit places like Oklahoma, Louisiana, and whatever Hermine touched will benefit from what is currently available for their relief efforts. However, on that front, we need to also do a better job to make sure minimum stocks are in place.

It seems as a country, our inventory management systems can improve.

Those of you who view balance sheets for a living (operations managers, financial controllers, and C-level execs) know your current asset/inventory situation, especially in oil&gas. A lot of it is public data. Except for a few companies, we think the financial sheets actually “hide” the complexities of inventory activity.

One quarterly number and a small 10-K summary does not even begin to cover how we always have situations where “we need stuff immediately, and we are out of stock.”

At RigBasket, we are now planning to re-brand the company to help more industries and operations address this, starting in the Houston area.

We will start the discussion with our solutions to have the right amount of stuff in place instead of any amount. Whether we will operate as Inventory, Inc. or under another name is still to be decided.

In the meantime, we encourage everyone to start looking at their inventory situation more closely…it’s amazing how much excess you may find to free up cash, and maybe even contribute to the world’s current relief efforts.

-The RigBasket Team

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