Wireless carriers made improvements in inventory management during the first quarter, according to a new study by InfoTech Marketing.
While total cost of equipment sales rose, inventory levels fell by $195 million, near third-quarter 2003 levels, said the report. Days of sales tied up in inventory fell from 48.2 percent to 41.9 percent quarter to quarter. Ten carriers reduced their inventory days, while six increased inventory days, said InfoTech.
“As expected, the first quarter offset the inventory accumulation in the fourth quarter’s holiday season,” said Tim Walters, president of InfoTech Marketing. “Cingular, AT&T and Sprint all significantly depleted their inventory. Carriers should look to continue this efficiency into the second quarter.”
Of the carriers studied, Alamosa PCS showed the best efficiency with 24.7 days of sales in inventory. Cingular surpassed Verizon among large carriers in efficiency, maintaining just 32.9 days of sales in inventory, said the report.
“Our models show that almost $500 million of cash flow could be generated by carrying only 30 days of inventory,” Walters said. “Even if the carriers with over 40 days of inventory get to just 40 days, they would produce $200 million of industry cash flow. Carriers can attain these levels through a commitment to inventory management, better forecasting and improved ordering procedures.”
