Aberdeen Group's and many other studies into managing inventory at manufacturers show that the most important keys to freeing up working capital when optimising inventory management include:
- reduce on-hand inventory whilst ensuring customer service levels - complete and on-time order delivery to customers - remain high, 96% is good
- minimise the cash conversion cycle, 50+ is best-in-class
- maximise finished goods inventory turn, 15+ is very good
- focus on the accuracy of inventory forecasting at the product level in critical nodes in the supply chain, best in class is 87%
- tie inventory and financial metrics together, and, in particular, segment finished goods inventory forecasting based on financial performance.
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