Investment in Inventory – Delicate Balance?

Supply Chain Café by PICS Belgium & ABCAL 22.05.2025
Speaker: Jelena Skuridina

During our recent Supply Chain Café we discussed the following key takeaways:

Communicating Inventory Metrics

Inventory Turnover and Days of Supply measure the stock level compared to sales. We will speak with Sales and Marketing in terms of Days of Supply, and with Finance in terms of Inventory Turnover.

Revenue vs. Cost-Focused Measurements

Some measurements, like Cost of Out Of Stock in FMCG sector, address the increase of the revenue. But the major part of inventory – related measurements examine the costs created by stock.

Cashflow and Working Capital

Cashflow is always the major focus for a company. Stock value enters in the calculation of Working Capital Requirements that show higher or lower pressure on the company Cashflow. In other words: You need Cashflow to pay your invoices. Unpaid invoices is Nr 1 Killer of the enterprises. Reduction of the stock value reduces the pressure on the cashflow, and at the same time reduces the Inventory Holding Costs.