Compiled ByDeborah Austin For high-tech manufacturers, 2001's inventory charges and write-downs were the first tidal wave. Now another looms: off-balance-sheet inventory liabilities (OBSILs), suggests a new report from management consulting firm Booz Allen Hamilton, MacLean, Va. For manufacturers that have amassed purchase commitments far outstripping demand, OBSILs pose invisible risks to shareholders and even management -- until suppliers push for make-goods on promises -- says the report, "High Tech's Inventory Overhang." The report outlines a process for manufacturers to assess potential liabilities and dispose of them effectively. Key steps include:
- Assessing current risks
- Immediately communicating inability to meet supply-chain commitments
- Vendor negotiation
- Leveraging tradables to reduce cash outlay
- Ongoing OBSIL-monitoring processes
