If you survived last week's column on procurement and are back for more, welcome to the continuing discussion.
Most know not to buy a car at the beginning of the month. Likewise, most know, if you live in a place that charges car dealers personal property tax on the inventory on their lots on the last day of the calendar year, that the absolutely best time to buy a car in the whole year is the last week of the year. Dealers want to move that iron off the lot before the tax man cometh.
Well, what works for car dealers often works with the companies where we procure capital and maintenance goods. Their shops get full; their shops have spare capacity. This may or may not be seasonal. If I were I in charge of a mill today, I would look to my purchasing department to know these things on a continual basis, seasonal or not.
Maintenance stores inventory is often looked at as simply an overhead burden. It has certain capital costs and carrying costs associated with it. I am not aware of any mill ever, that looked at this with a smart buying approach, stocking up when prices are low and riding through times when prices are high (because they bought when price were low; I am not talking about taking risks that I will not have something when I need it).
I once was involved in a major capital project where the capital approval decision was delayed so long that when we finally had approval, the equipment manufacturing segment was in a real slump. Through no fault of our own (engineering) and no fault of the purchasing function, we likely bought all the equipment for that rebuild at a discount of 50% from what it had been just a couple of years before and was a couple of years later. Likewise, delivery was super-fast for that day and time.