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Extra Features and Video Online FloristsReview.com R E A D O N L I N E 55 says John Manzella, a consultant on global business and economic trends, based in East Amherst, N.Y. "is approach reduces efficiencies but favors risk reduction." Companies are willing to turn upside down the traditional views of inventory control, given the increased risk of shortages and customer goodwill. "Many companies are investing more cash in inventories, and banks seem content with lending against that," Hannan says. While businesses must pay the price for bolstering inventory levels, such costs must be balanced against operational expenses such as the need to pay higher prices for goods when a company scrambles to fill customer orders— or lost revenues when an unhappy customer jumps ship for a competitor. "Risk mitigation has become more important than efficiency gains," says Manzella. Furthermore, three historic costs of inventories—interest, obsolescence and shrinkage—no longer universally apply. "e interest rate you earn for having cash in the bank now is approximately diddly-squat," says Conerly. And obsolescence would be an issue only if something was expected to go out of fashion. "Many products in short supply today are the same products as last year's models, and they are not going to go obsolete." Shrinkage, Conerly adds, is not an issue in some industries and, in others, can be controlled with requisite security steps. Cheap or not, inventory storage must be allocated selectively. "Companies need to think about 'What might be in short supply when we try to ramp up our production?'" Conerly continues. "ey may well buy a year's supply of a relatively cheap item that is a small part of what a company uses but is vital to producing a finished product." Despite the inventory mind shift, many business owners feel that a return to the days of warehouses bulging with inventory is not in the cards. "Everybody has become accustomed to reducing costs by minimizing touch points, moving goods from the ship straight to the distribution facility and on to the customer," says one operator. Indeed, cooperative efforts with suppliers and customers may well help bring back a greater emphasis on "just-in- time." "I believe that the economy will eventually get back to that just-in-time concept as market disruptions lapse and the continued collaborative partnerships with vendors and suppliers remain a priority," Hannan proffers. The Road Ahead Businesses face a conundrum as the world emerges from the pandemic: How quickly will demand increase for products and services, and will the increase be steady or erratic? e wrong answers can result in a pile up of inventory or lost revenues and customers. "e risk is especially great for goods requiring long production lead times [such as cut flowers and plants]," Hannan notes. e solution, says Hannan, is to develop a playbook to address possible disruptions and evaluate risks up and down the supply chain, then develop a plan to address those risks. And management must grapple with other unknowns such as whether the surge in the prices of manufactured goods can be passed along to consumers. All this may reduce profits until everything shakes out. "Revenues will probably hold up or even increase because of higher demand, but margins will likely take a hit because of increases in the costs of materials, labor and inventory," Palisin says. "It's a highly unusual situation where all these cost increases happen at once—and at a time when tariffs are still in place. Companies just can't pass along everything to customers." As for the road ahead, Conerly anticipates a gradual improvement in the operating environment. Many business owners and managers concur, believing that, with the pandemic coming to an end, now is the time to find all possible ways to deliver quality service and, thereby, gain market share. Says one, "We're assuming the worst and hoping for the best. Our overriding goal is to protect the health of our people and service our customers. ose things haven't changed, and we'll do whatever it takes to get it done."

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