Framework
The Storage Decision Matrix
TL;DR
A decision framework for evaluating whether to build reserves (cash, inventory, capacity) or operate on immediate consumption for any given resource.
A decision framework for evaluating whether to build reserves (cash, inventory, capacity) or operate on immediate consumption for any given resource.
When to Use The Storage Decision Matrix
When deciding resource allocation strategy for cash, inventory, talent, capacity, or IP. Use to evaluate trade-offs between storage costs and scarcity risks.
How to Apply
1
Evaluate Storage Criteria
Assess whether storage conditions favor building reserves
Questions to Ask
- Is scarcity predictable? (recessions every 7-10 years, seasonal demand drops)
- Is scarcity duration long? (weeks/months, not days)
- Is retrieval feasible? (not locked in illiquid assets)
- Is storage cost < scarcity cost?
- Is capital available without harming operations?
Outputs
- Storage criteria score (count of Yes answers)
2
Evaluate Immediate Use Criteria
Assess whether immediate use conditions favor consumption now
Questions to Ask
- Is scarcity unpredictable? (black swan events, chaotic markets)
- Is scarcity duration short? (daily/weekly gaps)
- Is retrieval difficult? (resources locked, frozen, inaccessible)
- Is storage cost > scarcity cost?
- Is capital constrained?
Outputs
- Immediate use criteria score (count of Yes answers)
3
Make Decision
Compare criteria scores and select strategy
Questions to Ask
- Which criteria set has more Yes answers?
- Are critical resources involved (favor storage)?
- Is environmental volatility high (favor hybrid)?
Outputs
- Decision: STORE, USE IMMEDIATELY, or HYBRID with specified split