skip to Main Content

Critical Facts CFOs Need to Know Before Reducing Inventory

Inventory Optimization & Management  

In an effort to free up cash, many financial managers are all too eager to reduce inventory. However, taking steps to reduce inventory without being fully aware of the context can lead to disastrous outcomes.

 

CFOs need to be aware of two key points about inventory: first, inventory serves a purpose, and second, there is a "right" amount of inventory needed to meet demand.

 

Here are some important steps that company finance teams, operations managers and CFOs can take to avoid costly mistakes resulting from incorrect inventory reduction.

What should a CFO know about inventory and inventory turns?

Inventory, as a large item on the balance sheet, is always an important concern for a manufacturing company and its finance team. Most financial managers would like to see inventory reduced to free up cash for other purposes.

Read the article
Related Articles

Calculating Safety Stock: Simpler Might Not be Better

What is safety stock? Safety stock is the extra stock you maintain to mitigate the risk of running out of raw materials or finished goods due to uncertainties in supply or demand. The purpose of safety stock is to ensure [...]

Nine Factors That Influence Inventory Planning and Optimization

Inventory planning is hard to do. As supply chain complexity continues to expand, it’s getting more and more difficult to reach and sustain optimal inventory levels. Regardless of the level of difficulty, however, inventory must be managed, and the rewards [...]

Make the Transition to Inventory Forecasting Software

Maintaining the right amount of inventory is key to keeping up with the ebb and flow of customer orders. But what level is the “right” level? If a company doesn’t have enough product on hand, it may miss too many [...]

The Importance of Effectively Managing Raw Materials Inventory

In today’s world, the system of vendors, activity, and data required to source, produce, and deliver products to customers is increasingly complex. And the supply chain represents the steps required to make this happen. But as product companies extend their [...]

Improving warehouse inventory management

Warehouse inventory management is one thing that can have a big impact on productivity. All Things Supply Chain put together a list of 9 ways you can better manage your inventory. First things first, plan your space. As they said, [...]

The Future of Inventory Management: Five Predictions

For many companies, inventory management is where all the elements of the supply chain converge. Inventory may be seen as the bloodstream of any competitive business. Its unobstructed flow is critical to the well being of any organization that trades [...]

Is Poor Inventory Management Creating Chaos in Your House?

Planning for changes in demand for product is a situation everyone deals with. It’s not just a corporate issue either! At work, at home, in almost every space, there is a need for products, and those needs (demand) change due [...]

MRP & Inventory Management

Most companies use Material Requirement Planning (MRP) software, or an MRP module of an ERP, to plan and manage the purchase, production, and transfer orders of finished goods and components based on a demand plan or forecast. It is time-phased [...]

Excess & Obsolete Inventory Management

Inventory is an ongoing challenge for companies -- especially inventory that's considered outdated and over-stocked. The issue is caused by a series of unfortunate events, including lack of communication, not applying the true cost of inventory, poor end-of-life planning, lack [...]

What CFOs Don’t Know About the Cost of Inventory

Whether based in retail, distribution or manufacturing, supply chain processes are the backbone of the company. If you can’t provision orders, your bottom line will suffer. Perhaps this seems like an obvious statement but many an organization has brought process [...]
Subscribe to our Blog
Back To Top