Take a look at your inventory. Raw and finished materials are likely a large part of your expenses. What is the value of this asset to you if used in production and what is the value of the asset if you cannot use it and need to sell it as is.
Just in Time (JIT); A strategy for inventory management in which raw materials and components are delivered from the vendor or supplier immediately before they are needed in the manufacturing process.
Just in time inventory management where you have the materials delivered as they are needed and complete the finished product just before it is shipped can work if your work flow is steady and you do not do a great deal of customization.
In housing the nature of our construction side of the business made just in time deliveries a necessity because there was very little on site storage to accommodate storage. The drywall for example was delivered and installed the next day. Inventory and storage were in this case someone else’s problem…. until the construction boom 1990’s when material shortages became a problem.
If you are receiving material only as you need it you will not be able to take advantage of fluctuations in seasonal prices or special close out or inventory reduction opportunities. In the construction business we would often get off season lumber specials but storage fees offset the cost savings.
If you are receiving materials in bulk how quickly can you liquidate it in a crisis and what would be the cost. How much of your working capital is tied up? Are there other ways to get access to inventory such as multiple local suppliers? Multiple sources may be possible if your raw material is a commodity such a lumber where one supplier is about as good as the next. It will not work if raw material is design or quality specific to a single supplier.
Look at your inventory system. Do not assume that because it is working it is the best it can be. Can it be better?
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