Cutting Inventory, Stopping the Company: For Critical Inputs, the Real Risk Is Not Price—It Is Access

Sales volume had become volatile. The trend had turned downward.

One of the most critical raw materials in our product was sourced from abroad. Under our annual agreement, our minimum monthly purchase commitment was 120 metric tons.

As demand softened, continuing to buy the same volume would have meant higher inventory, greater working-capital requirements, and more cash tied up in stock.

After intensive negotiations and a lengthy effort to persuade the supplier, we reached a temporary arrangement. We reduced the minimum monthly purchase commitment from 120 metric tons to 40.

Under the conditions of that day, the decision made sense.

• Sales were declining.

• We were reducing inventory.

• We were protecting cash.

• We were bringing the purchasing commitment closer to actual demand.

Then, one morning, the world changed.

Conflict broke out in the region, and Iran's closure of the Strait of Hormuz severely disrupted global energy and raw-material flows.

The critical raw material we had been buying at roughly USD 1,750 per metric ton quickly moved toward USD 3,000 per metric ton.

A price increase of roughly 71 percent was significant.

But price was not the real problem.

The material itself had become difficult to secure.

At that point, the purchasing manager's question—

"At what price can I buy it?"

—started to lose relevance.

The real question at the executive table was:

"Can we secure enough material to keep production running?"

"With a critical input, price is not the first risk. Access is. Price becomes the second problem—and only if the material can still be found."

How Does a Sound Decision Become a Risk?

Looking back, I do not consider the decision to reduce the monthly commitment from 120 metric tons to 40 a bad purchasing decision.

On the contrary, under the demand and cash conditions at the time, it was a rational working-capital decision.

The real issue was elsewhere:

Demand risk and supply risk had not been evaluated within the same decision equation.

When companies manage inventory, they naturally focus on a few questions:

How much will we sell?

How much inventory are we carrying?

How much cash is that inventory tying up?

All of those are valid questions.

But with critical inputs, there is a fourth:

"What happens if we cannot regain access to this material?"

Excess inventory is a financial risk.

For some inputs, insufficient inventory can become an operational-existence risk.

That is why it is dangerous to manage every inventory item through the same financial logic.

A raw material may represent a small share of the purchasing budget. But if a large part of production cannot run without it, its true value is far greater than the amount shown on the invoice.

Criticality should be measured primarily by the consequence of absence.

The World Is Asking the Same Question

2026 data show that this is not a collection of isolated incidents affecting individual companies.

The International Energy Agency's Global Critical Minerals Outlook 2026 shows that high geographic concentration and limited alternatives remain core vulnerabilities in critical-mineral supply. The IEA also highlights how sectors ranging from energy and advanced technology to artificial intelligence, aerospace, and defense have become dependent on a relatively narrow base of critical inputs.

According to the OECD's April 2026 inventory, the number of export restrictions affecting critical raw materials increased fivefold between 2009 and 2024.

During 2022–2024, roughly 16 percent of monitored trade in critical raw materials was exposed to at least one export restriction.

The share reached approximately:

• 70 percent for cobalt and manganese,

• 47 percent for natural graphite,

• 45 percent for rare earth elements.

The Hormuz crisis demonstrated how quickly access risk can turn into economic consequences.

In April 2026, the U.S. Energy Information Administration reported that severe restrictions on flows through Hormuz had led six Middle Eastern producers to shut in about 7.5 million barrels per day of production in March and projected that amount to rise to 9.1 million barrels per day in April.

In its May assessment, estimated shut-in production increased to 10.5 million barrels per day.

Even after the reopening that followed in June, the EIA expected production and trade flows to take months to return to pre-crisis levels.

The management message behind these figures is simple:

A company's supply model may work perfectly under normal conditions. Resilience, however, is measured on the day normal conditions disappear.

A Forecast Is Not a Purchasing Policy

A sales forecast is an important input into purchasing decisions.

But for critical raw materials, it cannot be the only input.

A sales forecast primarily estimates demand.

A supply system must manage accessibility at the same time.

When expected sales decline, reducing order volume lowers the risk of excess inventory.

But if the same decision also:

• narrows inventory coverage,

• increases dependence because no alternative source exists,

• reduces the time buffer because replenishment is slow,

• or exposes the company to external shocks because supply is geographically concentrated,

then another risk is rising.

The same management decision can therefore:

reduce demand risk while increasing supply vulnerability.

The objective is not to hold more inventory.

It is to distinguish between inventory that is a financial burden and inventory that functions as production insurance.

"How much supply risk can a company unknowingly add while trying to reduce demand risk?"

Let's Pull a Rabbit Out of the Hat

Over the years, the disruptions I have managed across manufacturing, procurement, inventory, and working capital have kept pointing to the same conclusion:

Critical-input risk cannot be understood through price, stock quantity, or supplier performance alone.

The company must understand both the structural vulnerability of the input and the amount of time available if normal supply disappears.

This led me to structure the problem through three connected management tools:

KİRİS — Critical Input Risk Score

RDTS — Risk-Adjusted Replenishment Time

Safety Corridor

KİRİS — Critical Input Risk Score

KİRİS brings five questions into a single management view.

K — Source Concentration

How many genuinely independent sources can we access?

Three distributors tied to the same producer, country, or logistics corridor do not represent three independent sources.

The real question is not how many supplier names appear in the ERP system.

It is how many independent supply paths the company truly has.

İ — Substitutability

If the primary source disappears, do we have a technically and commercially usable alternative?

The fact that an alternative product exists in the market is not enough.

If quality approval, customer acceptance, process changes, testing, or certification are required, that time is part of the risk.

R — Replenishment Time

After a disruption, how long does it actually take to regain access to material that can be used in production?

Normal purchase-order lead time is not sufficient here.

The relevant question is the time needed to recover usable supply after normal conditions have failed.

İ — Business Impact

What stops when the material is unavailable?

One product?

A production line?

A strategic customer?

A major share of the plant?

This is the question at the center of KİRİS.

A low-cost input can still have an extremely high business impact.

S — Inventory Survival Time

For how many days can current usable inventory sustain production at the actual consumption rate?

Inventory under quality hold, with the wrong specification, at an unusable location, or not released for production is not safety stock for a critical input.

"KİRİS is not designed to tell a company how much inventory it should hold. It is designed to reveal where inventory reduction can dangerously increase the company's vulnerability."

Normal Lead Time Is Not Enough: RDTS

An ERP system may show, for example, a 30-day lead time for a raw material.

But what if the primary producer is down?

What if an alternative source must be activated?

What if a new logistics route is required?

What if customs or export restrictions intervene?

What if the alternative raw material requires customer approval?

What if the material must still pass incoming quality control after it reaches the plant?

Then the real lead time is not 30 days.

That is why I use a second measure alongside KİRİS:

RDTS — Risk-Adjusted Replenishment Time

RDTS measures the time required, under stressed conditions, to regain access to a technically and quality-approved quantity of a critical input that is sufficient to maintain the company's minimum production continuity.

For each viable recovery path:

**RDTSₚ = Source Recovery / Alternative Activation

• Supplier Production and Preparation

• Logistics and Alternative Routing

• Customs and Regulatory Processing

• Qualification or Customer Approval

• Incoming Quality Control and Release for Use**

RDTS is then defined as the shortest stress-adjusted replenishment time among viable paths that can genuinely meet the minimum continuity requirement.

A small emergency shipment that cannot sustain minimum production continuity is not a viable recovery path.

Where sufficient historical data exist, stress percentiles such as P90 can be used instead of average lead time.

Where data are insufficient, the company should develop:

• normal,

• stress,

• crisis

scenarios and document the assumptions used.

The distinction is straightforward:

KİRİS asks: How vulnerable are we?

RDTS asks: How long will it actually take to regain access during a crisis?

Management still needs one more answer.

Do we have enough time to survive that interval?

Safety Corridor

The third measure is:

Safety Corridor = Usable Inventory Days − RDTS

Assume:

Usable inventory: 45 days
Normal lead time: 30 days

A conventional report might conclude:

We have a 15-day buffer.

But if stressed RDTS is 75 days, the real position is:

45 − 75 = −30 days

The company does not have 15 days of safety.

It has a 30-day resilience gap.

A positive Safety Corridor represents a time buffer.

A corridor approaching zero signals a narrowing decision window.

A negative corridor means the company cannot cover the time required to restore minimum viable supply.

Tool Management Question
KİRİS How vulnerable are we?
RDTS How long will it actually take to regain access in a crisis?
Safety Corridor Do we have enough time to cover that interval?

The three measures should therefore be read together.

A high KİRİS score with a positive Safety Corridor represents structural vulnerability with time still available to act.

A negative Safety Corridor with low structural vulnerability may point to a short-term planning problem.

But the most dangerous combination is:

High KİRİS + Negative Safety Corridor

That is no longer merely a purchasing issue.

It is an executive business-continuity risk.

What Should the General Manager Ask?

For critical inputs, the executive discussion should not stop at:

"How many tons do we have in stock?"

Management should also ask:

• Are our sources genuinely independent from one another?

• If the primary source disappears, which alternative can we actually use today?

• Has the alternative supplier completed technical and customer approval?

• What is the normal lead time?

• What is the RDTS?

• How many days of usable inventory do we have?

• Is the Safety Corridor positive?

• Which production volume, customer commitments, and revenue streams are affected if this input disappears?

And perhaps most importantly:

"If we cannot place an order today—or if supply is interrupted—do we still have enough time to manage the problem?"

First 90 Days

Days 1–30 — Identify the Critical Inputs

Reclassify raw materials not only by purchase value or ABC category, but by their impact on production continuity.

Build a critical-input inventory.

In one management view, capture:

• source country,

• actual producer,

• logistics route,

• alternative source,

• usable inventory days,

• normal lead time,

• minimum continuity requirement,

• technical substitution options.

The first objective is not to redesign sourcing.

It is to understand where the company can actually break.

Days 31–60 — Measure the Risk

Apply KİRİS to the critical inputs.

Calculate RDTS for each one.

Then calculate the Safety Corridor.

Place the combination of high KİRİS + negative Safety Corridor on the executive red list.

Report data quality separately using an A/B/C confidence level:

A — reliable system data and sufficient historical records
B — partial historical data supported by verified supplier/logistics information
C — primarily expert judgment or scenario assumptions

Do not allow uncertain data to masquerade as low risk.

Days 61–90 — Build Resilience

Activate:

• alternative-supplier qualification,

• geographic diversification,

• strategic safety stock,

• framework agreements,

• alternative logistics routes,

• emergency sourcing protocols.

The objective is not to increase inventory across the board.

It is to determine, consciously, what financial safety premium is justified to protect production continuity.

Conclusion

When we reduced the monthly purchase commitment from 120 metric tons to 40, the objective was not wrong.

We wanted to avoid carrying unnecessary inventory and protect cash as demand declined.

But the crisis reinforced one lesson:

A demand forecast tells us how much material we expect to need. Supply risk tells us whether we will be able to obtain that material on the day we need it.

They are not the same thing.

For critical inputs, the company's question should not stop at:

"What price are we paying for this material?"

The real question is:

"If access to this material is cut off, how many more days can we keep producing—and how long will it take to regain access?"

Excess inventory can tie up cash.

But the absence of a critical input can stop the company.

And in some periods, the most expensive thing a company buys is not the raw material.

It is the risk of losing access to it.

Editorial and Intellectual Property Note

This article is an editorial management analysis based on publicly available sources and the author's professional experience. It does not constitute an audit, valuation, legal opinion, investment recommendation, financial or technical advisory service, or definitive performance assessment concerning any specific company, person, or institution. External data used in this article are based on publicly available sources considered valid as of the access date.

The KİRİS — Critical Input Risk Score, RDTS — Risk-Adjusted Replenishment Time, Safety Corridor, and their naming, classification, formulation, application logic, and integrated presentation were developed by Orkun Akçasarı for this work.

A preliminary open-source search conducted on August 11, 2026 did not identify a clear match using the same naming and the same integrated methodological structure. This search does not constitute a comprehensive legal clearance assessment for trademarks, patents, or other intellectual-property rights.

No monopoly is claimed over abstract ideas, general risk-management principles, supply-chain concepts, or methods for which applicable law does not recognize exclusive rights. Protection relates to the original expression, arrangement, naming, classification, model structure, formulation, and integrated presentation.

Unauthorized reproduction, republication under another name, adaptation, or use in commercial training, consulting, software, artificial-intelligence systems, reports, presentations, or similar products and services is prohibited.

Short quotations should identify the author, full article title, publication date, and active access address.

Specialist intellectual-property counsel should be obtained for specific registration, licensing, permission, or rights disputes.

© 2026 Orkun Akçasarı. All rights reserved.

References

1. International Energy Agency. Global Critical Minerals Outlook 2026. July 16, 2026. Accessed August 11, 2026.
   https://www.iea.org/reports/global-critical-minerals-outlook-2026

2. Organisation for Economic Co-operation and Development. OECD Inventory of Export Restrictions on Critical Raw Materials 2026: Monitoring the Use of Export Restrictions Amidst Growing Market and Policy Tensions. April 28, 2026. Accessed August 11, 2026.
   https://www.oecd.org/en/publications/oecd-inventory-of-export-restrictions-on-critical-raw-materials-2026_d5ca8f62-en.html

3. U.S. Energy Information Administration. Hormuz Closure and Related Production Outages Are Key Drivers in EIA's Latest Forecast. April 7, 2026. Accessed August 11, 2026.
   https://www.eia.gov/pressroom/releases/press586.php

4. U.S. Energy Information Administration. EIA Updates Forecast Amid Continued Mideast Disruption; Will Publish New Energy Security Datasets. May 12, 2026. Accessed August 11, 2026.
   https://www.eia.gov/pressroom/releases/press588.php

5. U.S. Energy Information Administration. EIA Increases Global Oil Production Forecast After the Opening of the Strait of Hormuz. July 7, 2026. Accessed August 11, 2026.
   https://www.eia.gov/pressroom/releases/press590.php