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Well, no. A lot of businesses would store spare parts save the fact they are taxed quite heavily in some jurisdictions. My experience with lean/JIT in the manu

by R0b0t1 5y ago

Well, no. A lot of businesses would store spare parts save the fact they are taxed quite heavily in some jurisdictions. My experience with lean/JIT in the manufacturing space shows when it is actually done at every level your business starts hemorrhaging money waiting for parts to arrive. Each step of the process unless perfectly foretold adds 1-3 weeks in a good quarter. It is actually the local preference that we keep more spares than we do, but accounting says no. If you read the fine print with how Toyota implemented lean you find out that they made their partners contractually obligated to keep inventory, not themselves. Inventory was still kept but who paid the tax bill and who paid upkeep changed.

Optimal_Persona 5y ago
Agreed, I worked in food manufacturing for a while, and was fortunate to have suppliers who maintained 1-2 shifts worth of almost all obscure components as a good-faith gesture. As most of our own backstock was perishable, FIFO rotation kept us from having way too much, or any tax issues. I learned it was much better to deal with CEO/investors grumbling about $$$ tied up in backstock than Type A Sales Manager + CEO/investors wondering when the f^ck a single critical component would let us restart the production line to launch an overdue product. I don't miss that job! There was also the "Google the new CEO on his first day and find out he's under SEC investigation for withholding payments to his previous corp's suppliers to pad the balance sheet for buyout" but that is another story entirely!
dv_dt 5y ago
So don’t form the regulation that way… it could be as simple as allowing a write off for a small percentage of buffer inventory.
- simonh 5y ago
  That sounds pretty easily gameable, and how do you calculate an appropriate percentage that applies to many different businesses and industries? This sort of regulatory micro-managing is generally a really bad idea unless the regulator works very closely with the business. But that means greatly increased costs of implementing the regulations.
magicalhippo 5y ago
A lot of our customers, especially those with internet shops, are moving to bonded warehouses where they can keep the goods without paying import taxes until they need the part or made the sale. Then they do an import declaration on just what they need/sold. This way they don't have to cash out for whole containers at a time. Sure they'll have to pay for more declarations, but overall it's usually worth it, especially if the goods can sit there for a year or more. Our customs systems here is totally not made for this new world though.

by R0b0t1 5y ago

Optimal_Persona 5y ago

Agreed, I worked in food manufacturing for a while, and was fortunate to have suppliers who maintained 1-2 shifts worth of almost all obscure components as a good-faith gesture. As most of our own backstock was perishable, FIFO rotation kept us from having way too much, or any tax issues. I learned it was much better to deal with CEO/investors grumbling about $$$ tied up in backstock than Type A Sales Manager + CEO/investors wondering when the f^ck a single critical component would let us restart the production line to launch an overdue product. I don't miss that job! There was also the "Google the new CEO on his first day and find out he's under SEC investigation for withholding payments to his previous corp's suppliers to pad the balance sheet for buyout" but that is another story entirely!

dv_dt 5y ago

So don’t form the regulation that way… it could be as simple as allowing a write off for a small percentage of buffer inventory.

simonh 5y ago
That sounds pretty easily gameable, and how do you calculate an appropriate percentage that applies to many different businesses and industries? This sort of regulatory micro-managing is generally a really bad idea unless the regulator works very closely with the business. But that means greatly increased costs of implementing the regulations.

magicalhippo 5y ago

A lot of our customers, especially those with internet shops, are moving to bonded warehouses where they can keep the goods without paying import taxes until they need the part or made the sale. Then they do an import declaration on just what they need/sold. This way they don't have to cash out for whole containers at a time. Sure they'll have to pay for more declarations, but overall it's usually worth it, especially if the goods can sit there for a year or more. Our customs systems here is totally not made for this new world though.