The keys to freeing up Working Capital in Inventory Management
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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