The "Lean" Business Model Bites Back

David Trammel's picture

If you have worked anywhere near manufacturing or retail then you have heard of the buzzword "lean" where it comes to business. The concept is one of those catchy phrases business management types fresh from college, or so far up the corporate ladder that they don't have to deal with problems, love to throw out there to look like they know what they're talking about.

Basically, it's has arisen because inventory is taxed, usually at the end of the business year. The more your business has in standing inventory then the more tax you get hit with. So clean out your warehouse and not only do you save on taxes, you push the cost of storage onto your suppliers. Who needs to keep inventory, if you can order it and it arrives the next day. Great idea, until something goes wrong and that one part you need to keep producing your product, isn't available.

As companies are now finding out.

"Hoarding is suddenly in, “lean” operations are out as shortages ripple across the globe"

We've entered one of those sharp downturns on the stair-step of the Long Descent. When it will be a great pickup line to whisper into a person's ear, "Want to come home and let me show you my well-stocked pantry?"

Changes in tax code drive plenty of business decisions.
In the publishing industry, publishers used to be able to warehouse books that were slow sellers, but still selling.
The tax code was changed, limiting storage of unsold inventory to a few years.
Publishers then had to either pulp the books or sell them to 1/2 price remainder chains.

If a title suddenly caught fire? Too bad.

As long as inventory is taxed, you'll continue to see "lean" because of the cost of paying warehousing fees AND additional taxes.

That's certainly one of the more idiosyncratic and amusingly odd pickup lines I've ever heard.

When we'd been dating for a couple months, my (now) husband told me it was the first time that dating anyone had saved rather than cost money. Huh? He said no one had ever offered to cook a meal before heading out for a play or a hike and it was nearly unbelievable that I was sending him off with leftovers in Tupperware for lunches. He was the first I'd dated who offered to do dishes after said home-cooked meal. After the first time he did dishes he suggested he could just wipe up the kitchen floor as long as he had hot dishwater in the pan.