This will be short and sweet. I was having a conversation with the CEO of a major food producer recently. We talked about what he needed to do in order to start to turn his company Lean. During our conversation it became clear that excess inventory, both raw materials and finished goods was a major problem for them. I explained that one of the intents of Lean is to minimize inventory at which point he made an interesting observation. He said "we haven't actually worried as much about inventory levels since the cost of borrowing got so cheap."
I thought about that and realized that he was probably right. When the cost of capital is high it costs companies more money to hold onto inventory and as a result they are more likely to manage that spending. However when inventory doesn't "cost" much in terms of interest rates there is less incentive to control those costs. I wonder just what the impact of lower interest rates is on the rate of adoption of Lean principles.
@leanmind
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