Kanban is “signal” in Japanese. A Kanban stocking contract allows you to maintain only enough inventory to produce the products you need in the near future. As you need more inventory, your suppliers will deliver a new shipment. Generally, KanBan stocking contracts allow for weekly, even daily deliveries as long as you have established schedule arrangements with your suppliers. Aspen Sales is a stocking rep that provides Kanban stocking contracts in California as well as KanBan stocking contracts in Utah.

The main advantage of entering into KanBan stocking contracts is inventory reduction. A reduction in inventory, allows capital to be used in other areas of the company. Also, it alleviates the financial loss associated with the depreciation of stock. As a manufacture stocking rep, Aspen Sales will ensure you have the stock you need without purchasing advance quantities only to sit in a warehouse to depreciate.

Each time you procure products and place them in your inventory, there is a daily cost to be absorbed. Normally, when a product is purchased, they have 30 day payment terms. Payment terms on your inventory purchases means there is a daily interest rate, which increases the initial cost. The longer the inventory sits in your stockpile, the more expensive those products become to you as a company.

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(Contributing Author: Anita Turner)