Who Thinks of Inventory as an Investment? Raise Your Hand!

Take Charge of Your Supply Chain – Part 5 of 5

We’re going to guess that not too many hands went up. And, that doesn’t surprise us because Management always talks about the cost and dollar value of the inventory on hand rather than the opportunity value of that inventory. But, the reasons why inventory isn’t viewed as an investment go far beyond that.

Consider, of course, that if you’re like most supply chain managers, the business of managing inventory has only gotten more difficult as we continue to recover from the supply chain interruptions and seesawing demand patterns that characterized the pandemic and changed the very landscape of inventory management. Consider, too, the risks associated with underestimating or overestimating the sales velocity of a given item which either creates out-of-stock (i.e., lost sales) or overstock situations that lead to aging inventory, discounting and returns. And, consider that inventory doesn’t seem to meet many of the characteristics of a sound investment…things like stability, predictability, security, and rate of return.

But, how differently would you approach inventory management if you viewed inventory as an investment? Because it is. It’s an investment in customer satisfaction and market share. It’s an investment in vendor relationships and corporate profitability. It’s an investment in the breadth of offerings, just-in-time delivery, and competitive strength. And, like most investments, it is comprised of a series of decisions that are best made with the insights and knowledge that can come from sound data. That’s where a technology platform outperforms an Excel sheet every day.

Yes, the pandemic and the changing demand landscape have made things more challenging. In fact, it’s harder than ever to ensure that the right products are in the right places at the right times at the right prices and in the right quantities. But we contend that changing your own mindset…thinking about inventory as an investment rather than a cost…will reshape your approach to inventory management.

At 4R, we help our clients manage their inventory as an investment using our unified platform of Intelligent Inventory Optimization solutions. If you’re ready to reshape your approach, schedule a meeting with one of our inventory investment experts.

The fifth and final part of the series will be published soon.

Back to Part 1: The Days of Predicting Tomorrow Based on Yesterday are Gone

Back to Part 2: Applying the 4P’s to Supply Chain Management

Back to Part 3: Managing the Supply Chain Means Managing Every Link

Back to Part 4: Insights and Analytics: The Key to Avoiding Stockouts and Confusion :