On Demand News: 03/08/18

Time Shifts And Mind Shifts

08 March, 2018 // This Sunday, most Americans “lose” an hour as they shift clocks ahead for Daylight Savings Time. While we understand the historical reasons for it, the ritual always struck us as a quirky social convention. The state of Arizona, for instance, just opts out. And, it takes more than a few tries to mentally resync with colleagues in Asia, where most countries remain on standard time. 

Then last year, a New York Times explanation cast the leap ahead in a new light. In that story, author and time-change expert David Prerau said the biggest reason for Daylight Savings Time is that it adds actual value to the day: 

“For most people, an extra hour of daylight in the evening after work or after school is much more usable than the hour of daylight in the morning,” Prerau told the times. It also increases GDP as those same folks get in their cars, drive more and go spend money. 

It’s time policy as economic policy—and it’s sort of a neat trick in this light. Wind our clocks forward, and we don’t just get more productive; we get richer.

A similar idea applies to the emerging trend of outsourced inventory ownership. Traditionally, an enterprise with a global, multi-party supply chain uses capital to own goods from, say, the time of purchase at a factory until they are sold to customers. That ownership period can range from days to months depending on means of transport, warehousing and distribution practices and customer patterns.

With outsourced inventory ownership offerings (Disclosure: our own Inventory On Demand is one of them), the enterprise is able to time-shift its purchase until the most efficient time, typically just before selling to the customers. That frees significant capital for other purposes. 

That also frees managers to make the best decisions about supply chain flow instead of being ruled by the clock, the budget or both. For instance, no more penalties for being a bit off on quarter end projections. And, no more trade-offs between cost-effective shipping consolidations and modes versus inventory carrying costs.

Of course, there’s some cost to outsourcing inventory ownership. When structured properly, though, the benefits can far outweigh those expenses. That’s a shift we can all believe in.