Tom Johnson, newly hired supply management director at Smithers Industries, Inc., was about to tackle an inventory octopus. Word had just come from the board room that the directors had decreed a $1 million raw materials and supplies inventory reduction to conserve the company's working capital.
Smithers's president, Brashly Wintersee, had told Johnson during the hiring interview that inventory was one of their biggest problems, and that's why they were looking for a supply and inventory control person who could show them how to work some of the fat off the company's inventories. Johnson's background and experience were expected to turn the trick.
Johnson started to dig into the problem via a visit to each of Smithers's divisions: Mill Machinery Division, Whizzo Tool Division, and Aerlectro Division.
At the Mill Machinery Division, he heard from Elihu Adams, supply superintendent, "Don't know as how the home office can give us much help on inventory, Johnson. We've been making machinery here since 1887, and every customer knows he can get a replacement part from us for almost every machine we've ever made. That's the real service that sells our machines. See that pile of raw castings and plates out there? Don't imagine there's another company in the country that has such a complete stock of material all ready to be made up to customer orders. It's taken years to build this up, and it's worth millions! We figure it's all gravy after depreciation, too."