Yarn Inventory and Working Capital
topic
Ring spinning inventory comprises: raw material stock (30–60 days of cotton, value $1–5M for 50,000-spindle mill), work-in-progress (blow room to roving: 7–14 days), and finished yarn stock (14–30 days). Total working capital tied up in inventory: $3–15M. Inventory turns: 8–15 per year for efficient mills, 4–8 for less efficient. Cotton price risk: holding 60 days of cotton at 50,000 spindles represents $2–4M exposure to a 10% price movement.
Role
Working capital management in ring spinning directly affects mill cash flow and financial risk. The cotton purchase decision — how much to buy in advance at what price — is the largest financial risk management decision in the spinning business, often exceeding the scale of capital investment decisions. Engineers who understand cotton price exposure and inventory turnover contribute to financial risk discussions beyond their technical role, increasing their business impact.