Most
important of all, we found out how to use less money in our business by
speeding up the turnover. And in increasing the turnover rate, one of
the most important factors was the Detroit, Toledo, & Ironton
Railroad--which we purchased. The railroad took a large place in the
scheme of economy. To the road itself I have given another chapter.
We discovered, after a little experimenting, that freight service could
be improved sufficiently to reduce the cycle of manufacture from
twenty-two to fourteen days. That is, raw material could be bought,
manufactured, and the finished product put into the hands of the
distributor in (roughly) 33 per cent. less time than before. We had been
carrying an inventory of around $60,000,000 to insure uninterrupted
production. Cutting down the time one third released $20,000,000, or
$1,200,000 a year in interest. Counting the finished inventory, we saved
approximately $8,000,000 more--that is, we were able to release
$28,000,000 in capital and save the interest on that sum.
On January 1st we had $20,000,000.
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