{"id":6527,"date":"2026-10-06T09:00:00","date_gmt":"2026-10-06T07:00:00","guid":{"rendered":"https:\/\/www.stockm.eu\/?p=6527"},"modified":"2026-09-23T15:09:09","modified_gmt":"2026-09-23T13:09:09","slug":"is-inventory-an-investment","status":"publish","type":"post","link":"https:\/\/www.stockm.eu\/en\/is-inventory-an-investment\/","title":{"rendered":"Inventory and working capital: is inventory an investment for a business?"},"content":{"rendered":"\n<div class=\"wp-block-cover is-light has-text-color has-link-color editorskit-no-tablet editorskit-no-mobile wp-elements-1\" style=\"border-top-left-radius:20px;border-top-right-radius:20px;border-bottom-left-radius:20px;border-bottom-right-radius:20px;color:#000000;padding-top:40px;padding-right:40px;padding-bottom:80px;padding-left:40px\"><span aria-hidden=\"true\" class=\"wp-block-cover__background has-white-background-color has-background-dim-100 has-background-dim\"><\/span><div class=\"wp-block-cover__inner-container is-layout-constrained wp-container-core-cover-is-layout-9c76880f wp-block-cover-is-layout-constrained\">\n<p class=\"has-normal-font-size wp-block-paragraph\">In the case of a working capital shortage in a business, inventory is one of the first things that managers consider. And the first question usually is \u201cHow much inventory can we cut?\u201d<\/p>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">However, it is a question about the money that has been previously invested into inventory and the chance to free up some of it. Indeed, inventory is not a storage cost nor a balance sheet entry. It is money that is deliberately invested into the <strong>supply chain<\/strong> in order for the company to be able to make sales, deliver services, and provide production or supply continuity.<\/p>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">Selling an item sitting on the shelf secures income. Availability of key components avoids production interruption. Seasonal inventory created in advance allows meeting demand prior to its replenishment by suppliers.<\/p>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">At the same time, inventory uses the company\u2019s money until it is sold, consumed, returned, or written off. Inventory that no longer has a clear connection to actual sales, customer service, or production needs can limit the company\u2019s ability to pay suppliers, invest in growth, ensure the availability of critical products, or respond to changes in demand.<\/p>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">The objective, therefore, is not to reduce inventory at any cost. The objective is to manage inventory as an investment: to hold enough stock to protect the flow of the most important products, but not more than current demand and real supply conditions require. This is where <strong>inventory management<\/strong> and working-capital management come together.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-theme-primary-color has-text-color has-link-color wp-elements-2\" style=\"font-size:24px;font-style:normal;font-weight:500\">Why is inventory a working-capital issue?<\/h2>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">In financial statements, inventory is generally reported as a current asset. It is usually measured at the lower of cost and net realizable value. If products are damaged, obsolete, partially obsolete, or expected to be sold for less than their cost, the value of the inventory must be written down. This is the accounting perspective.<\/p>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">From a management perspective, however, every product, raw material, part, or component held in a warehouse represents money the company has already spent, even though revenue from selling or using that item has not yet been received.<\/p>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">This capital creates value when it:<\/p>\n\n\n\n<ul style=\"font-size:16px\" class=\"wp-block-list\">\n<li>ensures the availability of in-demand products;<\/li>\n\n\n\n<li>helps maintain service levels for important customers;<\/li>\n\n\n\n<li>reduces the risk of lost sales;<\/li>\n\n\n\n<li>protects production from downtime;<\/li>\n\n\n\n<li>helps prepare for seasonality, promotions, contracts, or major customer projects;<\/li>\n\n\n\n<li>enables the business to respond reliably to demand.<\/li>\n<\/ul>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">Inventory therefore has two functions. In accounting, it is an asset; operationally, it is an investment in product availability and flow.<\/p>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">However, the capital invested in inventories is directly related to liquidity as well. According to the <a href=\"https:\/\/kpmg.com\/us\/en\/articles\/2025\/working-capital-trends-us-market.html\" target=\"_blank\" rel=\"noreferrer noopener\">KPMG study<\/a> on more than 2,700 public U.S. companies, the average inventory-days ratio increased from 73 days in 2020 to 80 days in 2024. In the meantime, the cash conversion cycle equaled 89 days in 2024. Thus, the capital invested by the company in inventory becomes locked for a longer time, with higher levels of inventory being one of the factors responsible for it.<\/p>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">As <a href=\"https:\/\/www.pwc.co.uk\/services\/value-creation\/insights\/working-capital-study.html\" target=\"_blank\" rel=\"noreferrer noopener\">noted by PwC<\/a>, inventory is a \u201csilent absorber of uncertainty.\u201d To ensure their protection from potential <strong>supply chain<\/strong> interruptions, businesses raise the amount of stock; however, in this case, the level of liquidity may decrease together with higher expenses for storage and higher risks of obsolescence. It is also noted by PwC that in 2024, in capital-intensive industries, the average days inventory outstanding were 90.2 days in the European Union, 68.6 days in North America, and 62.8 days in the UK.<\/p>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">Therefore, when discussing inventory and the money invested in it, the key question is not, \u201cHow much inventory should we reduce overall?\u201d The more important question is which inventory protects sales and production flow, and where capital no longer creates sufficient value.<\/p>\n\n\n\n<h3 class=\"wp-block-heading has-theme-primary-color has-text-color has-link-color wp-elements-3\" style=\"font-size:20px;font-style:normal;font-weight:500\">When does inventory create value?<\/h3>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">The value of the inventory lies in its functionality within the business process. A product stored in the right place, at the right time, and in the right amount could lead to making the deal which might have been missed otherwise. A critical part would save the production process from coming to a halt, whereas an excess of seasonal inventory could cater to the demands during a shortage.<\/p>\n\n\n\n<figure style=\"font-size:16px\" class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>Inventory position<\/strong><\/td><td><strong>Why can it create value?<\/strong><\/td><\/tr><tr><td>A fast-selling product at the point of sale<\/td><td>Ensures availability and helps prevent lost sales<\/td><\/tr><tr><td>A critical production component<\/td><td>Helps maintain uninterrupted production flow<\/td><\/tr><tr><td>Inventory for a known seasonal demand peak<\/td><td>Makes it possible to meet demand before normal replenishment can respond<\/td><\/tr><tr><td>A product reserved for a confirmed customer commitment<\/td><td>Helps fulfil a planned sale, contract, tender, or project<\/td><\/tr><tr><td>Inventory held at a location with stable demand<\/td><td>Shortens response times and improves customer service<\/td><\/tr><tr><td>A product held to cover its actual replenishment lead time<\/td><td>Provides the necessary protection until the next delivery arrives<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">In the same way, there is a dynamic relationship between products. For instance, a fast-moving product will start to sell at a slower pace. In addition, a seasonal product becomes excess inventory once the season has passed. Where the supplier delivers more frequently, the local stock requirements may reduce. One product may be required in one warehouse but not in another.<\/p>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">For this reason, inventory investments need to be reviewed regularly, not only when the company is already experiencing a cash-flow problem.<\/p>\n\n\n\n<h3 class=\"wp-block-heading has-theme-primary-color has-text-color has-link-color wp-elements-4\" style=\"font-size:20px;font-style:normal;font-weight:500\">When does inventory stop creating value?<\/h3>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">Inventory requires attention when it remains in the warehouse but no longer serves a clear commercial or operational purpose. This can happen when:<\/p>\n\n\n\n<ul style=\"font-size:16px\" class=\"wp-block-list\">\n<li>demand declines or shifts to another product;<\/li>\n\n\n\n<li>the item was purchased for a promotion, season, project, or tender that has already ended;<\/li>\n\n\n\n<li>inventory was bought to meet a supplier\u2019s minimum order quantity, obtain a discount, fill a pallet, or meet a transportation threshold;<\/li>\n\n\n\n<li>the product is held at a location with low demand, while it is needed elsewhere;<\/li>\n\n\n\n<li>assumptions about lead times no longer reflect the supplier\u2019s actual performance;<\/li>\n\n\n\n<li>replenishment parameters were set in the past and have not been reviewed for a long time;<\/li>\n\n\n\n<li>the product is being replaced, discontinued, or becoming obsolete;<\/li>\n\n\n\n<li>safety stock for the same demand stream is held at several points in the supply chain.<\/li>\n<\/ul>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">In these situations, inventory continues to tie up company funds while contributing less and less to product availability, sales, or production flow.<\/p>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">It is necessary to notice these situations on time, when there are still many options available for the company. It can decrease or terminate future deliveries, move the product to another place, have a clearance sale, change prices, develop bundles of products, negotiate the return with the supplier, and conduct a product discontinuation process.<\/p>\n\n\n\n<h3 class=\"wp-block-heading has-theme-primary-color has-text-color has-link-color wp-elements-5\" style=\"font-size:20px;font-style:normal;font-weight:500\">Why is a general inventory reduction not a good approach?<\/h3>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">A general inventory reduction target could be a good financial indicator because it reflects how much capital is occupied by the inventory at the moment. However, the target itself does not tell which positions need to be reduced.<\/p>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">Reducing the inventory levels of all products proportionally means that the company will lose the opportunity to have enough supply of the most important, the fastest moving, or the highest revenue products. This will cause problems such as lost sales, customers&#8217; dissatisfaction, urgent purchases from suppliers, higher costs of transportation, delays in production, and additional work for the purchasing and sales departments.<\/p>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">However, the decision to reduce excess inventories is rarely implemented quickly. Reducing future orders does not mean that excess products will be quickly sold from the warehouse. Additional actions are required: transfer, clearance sale, price change, kitting, return to supplier, or discontinuation.<\/p>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">The opposite situation is also possible: a company may have a high total inventory value while constantly facing shortages of its most important products. In this case, the issue is not only the overall amount of inventory, but also its poor allocation across SKUs, locations, and the wrong products.<\/p>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">Inventory management is therefore a balance between customer service, cost, and working capital. Some critical products require a greater investment in availability. For others, excess stock only reduces liquidity and increases the risks of storage costs, obsolescence, and write-offs.<\/p>\n\n\n\n<h3 class=\"wp-block-heading has-theme-primary-color has-text-color has-link-color wp-elements-6\" style=\"font-size:20px;font-style:normal;font-weight:500\">Inventory is more than one number<\/h3>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">Management often sees the total value of inventory and asks whether it is too high. But this question is too broad to support a precise decision.<\/p>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">A company may have an overall inventory value that appears acceptable at first glance, while its inventory structure is still unsuitable:<\/p>\n\n\n\n<ul style=\"font-size:16px\" class=\"wp-block-list\">\n<li>too much inventory is held in slow-moving SKUs;<\/li>\n\n\n\n<li>too little inventory is available for fast-selling or strategically important products;<\/li>\n\n\n\n<li>one location holds excess stock while another experiences shortages;<\/li>\n\n\n\n<li>high inventory volumes were created by supplier requirements rather than actual consumption;<\/li>\n\n\n\n<li>safety stock for the same need is held at several points in the supply chain.<\/li>\n<\/ul>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">For this reason, inventory should be assessed at SKU and location level. Only then is it possible to understand exactly where money is tied up, what function a particular inventory position serves, and which action is most appropriate.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1000\" height=\"563\" src=\"https:\/\/www.stockm.eu\/wp-content\/uploads\/2026\/09\/ar-atsargos-yra-investicija.webp\" alt=\"Ar atsargos yra ivesticija?\" class=\"wp-image-6506\" srcset=\"https:\/\/www.stockm.eu\/wp-content\/uploads\/2026\/09\/ar-atsargos-yra-investicija.webp 1000w, https:\/\/www.stockm.eu\/wp-content\/uploads\/2026\/09\/ar-atsargos-yra-investicija-300x169.webp 300w, https:\/\/www.stockm.eu\/wp-content\/uploads\/2026\/09\/ar-atsargos-yra-investicija-768x432.webp 768w\" sizes=\"auto, (max-width: 1000px) 100vw, 1000px\" \/><\/figure>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\" style=\"padding-top:20px\">When assessing inventory, it is useful to monitor not only its total value but also:<\/p>\n\n\n\n<ul style=\"font-size:16px\" class=\"wp-block-list\">\n<li>inventory turnover or days of inventory on hand;<\/li>\n\n\n\n<li>availability of the most important products;<\/li>\n\n\n\n<li>stockout incidents and lost sales;<\/li>\n\n\n\n<li>fast-moving, slow-moving, and non-moving products;<\/li>\n\n\n\n<li>lead-time and delivery reliability;<\/li>\n\n\n\n<li>the product\u2019s importance to the business;<\/li>\n\n\n\n<li>inventory value by SKU and location;<\/li>\n\n\n\n<li>the risk of write-offs and obsolescence.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading has-theme-primary-color has-text-color has-link-color wp-elements-7\" style=\"font-size:20px;font-style:normal;font-weight:500\">How does StockM help make this practical?<\/h3>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">Our experience working with clients shows that most companies want to reduce inventory. In many cases, they even know how much of their inventory is non-moving or slow-moving. However, this information alone is not enough to manage inventory effectively.<\/p>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">The main challenge is usually not identifying that there is too much inventory. The harder part is understanding:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li style=\"font-size:16px\">which specific products and locations are creating the problem;<\/li>\n\n\n\n<li style=\"font-size:16px\">which products are most important for sales and availability;<\/li>\n\n\n\n<li style=\"font-size:16px\">whether excess inventory has been caused by a change in demand, unsuitable parameters, supply conditions, or poor allocation between locations;<\/li>\n\n\n\n<li style=\"font-size:16px\">what specific action is needed in each case;<\/li>\n\n\n\n<li style=\"font-size:16px\">how to prevent the same issue from recurring in the future.<\/li>\n<\/ul>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">Once <a href=\"https:\/\/www.stockm.eu\/en\/\">StockM system<\/a> has been implemented, initial parameters have been set, and the system has been allowed to operate for at least several replenishment cycles, a detailed view of inventory becomes available at SKU and location level. The analysis distinguishes critical products and their availability or stockout risk, fast-moving products, slow-moving products, and non-moving inventory positions.<\/p>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">This makes it possible to move away from one blanket solution for every item. Instead, the company can establish clear procedures for different situations so that employees know exactly which actions to take.<\/p>\n\n\n\n<figure style=\"font-size:16px\" class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>Situation<\/strong><\/td><td><strong>Possible action<\/strong><\/td><\/tr><tr><td>An important product repeatedly approaches a stockout<\/td><td>Increase the buffer; review replenishment lead time or supply reliability<\/td><\/tr><tr><td>A fast-moving product has insufficient availability<\/td><td>Increase the inventory buffer and replenishment priority<\/td><\/tr><tr><td>A product has been moving slowly for an extended period<\/td><td>Reduce future orders, review the buffer, or consider product-discontinuation options<\/td><\/tr><tr><td>A non-moving product no longer has a clear demand<\/td><td>Stop replenishment; initiate a clearance sale, return, or product discontinuation<\/td><\/tr><tr><td>One location has excess stock while another has a shortage<\/td><td>Centralise replenishment and supply products based on demand<\/td><\/tr><tr><td>Demand for a product has declined, but replenishment parameters remain unchanged<\/td><td>Reduce the buffer and adjust replenishment rules<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">StockM helps not only identify these situations but also manage inventory levels systematically. For products facing a recurring risk of stockouts, the system can signal the need to increase the inventory buffer. For products whose inventory remains excessive for a long period, buffers can be reduced and replenishment can be stopped so that money is no longer invested in inventory with declining demand.<\/p>\n\n\n\n<h3 class=\"wp-block-heading has-theme-primary-color has-text-color has-link-color wp-elements-8\" style=\"font-size:20px;font-style:normal;font-weight:500\">TOC methodology: where should inventory be held?<\/h3>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">The fundamental question every company needs to answer is: where should it focus attention and invest in inventory to protect product flow, and where can that investment be safely reduced?<\/p>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">This is a more precise approach to working-capital management. In the <a href=\"https:\/\/www.stockm.eu\/en\/buffer-inventory-management\/\">Theory of Constraints (TOC) methodology<\/a>, an inventory buffer is deliberately defined protection for a specific product at a specific location. Its purpose is to hold enough inventory to support sales or production while replenishment is taking place. The aim is not to hold the maximum possible quantity for every product.<\/p>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">This approach helps companies:<\/p>\n\n\n\n<ul style=\"font-size:16px\" class=\"wp-block-list\">\n<li>retain inventory where it protects sales, customer service, or production continuity;<\/li>\n\n\n\n<li>review products that repeatedly face a stockout risk;<\/li>\n\n\n\n<li>identify products whose inventory remains high for a long period relative to real demand;<\/li>\n\n\n\n<li>reduce or stop replenishment when excess inventory becomes persistent;<\/li>\n\n\n\n<li>make clearance-sale, return, pricing, or assortment decisions for products that no longer have a clear role;<\/li>\n\n\n\n<li>work with suppliers on more appropriate order quantities, delivery frequency, and replenishment conditions.<\/li>\n<\/ul>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\"><a href=\"https:\/\/nscpolteksby.ac.id\/ebook\/files\/Ebook\/Accounting\/Cost%20Management-Accounting%20and%20Control%20(2006)\/22.%20Chapter%2021%20-%20Inventory%20Management%20Economic%20Order%20Quantity-JIT-and%20the%20Theory%20of%20Constraints.pdf\">TOC-based inventory management<\/a> uses buffers to protect product flow against disruption and focus attention on conditions that may affect availability. The business value is not merely lower inventory. More importantly, it is better control over where and why the company\u2019s working capital is being used.<\/p>\n\n\n\n<h3 class=\"wp-block-heading has-theme-primary-color has-text-color has-link-color wp-elements-9\" style=\"font-size:20px;font-style:normal;font-weight:500\">Dynamic buffers: adapting to changing conditions<\/h3>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">An inventory <a href=\"https:\/\/www.stockm.eu\/en\/toc-buffer-zones\/\">buffer<\/a> can be understood as the planned level of investment for a specific SKU at a specific location. However, it should be a dynamic target that responds to what is happening in the market and in the supply chain.<\/p>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">As demand and supply conditions change, the appropriate level of inventory investment must change as well. A product whose consumption is steadily increasing, whose replenishment lead time has lengthened, or whose business importance has grown may require a larger buffer. A product with declining demand, increasingly reliable supply, or consistently excessive inventory may require a smaller buffer and a lower investment.<\/p>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">A 2021 simulation study, \u201c<a href=\"https:\/\/www.tandfonline.com\/doi\/abs\/10.1080\/21681015.2021.1931493\" target=\"_blank\" rel=\"noreferrer noopener\">Evaluation of dynamic buffer management for adjusting stock level: a simulation-based approach<\/a>,\u201d found that <a href=\"https:\/\/www.stockm.eu\/en\/buffer-inventory-management\/\">dynamic buffer management<\/a> can reliably balance two inventory-management objectives: product availability and control of excess inventory. The study also emphasises that buffers should be adjusted in response to recurring changes, rather than a one-off fluctuation in demand.<\/p>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">In practice, this means that a company should not increase or reduce inventory merely because of one unusual order. It is important to determine whether the change is recurring and whether it reflects new customer demand, seasonality, a change in lead time, or another real operational factor.<\/p>\n\n\n\n<h3 class=\"wp-block-heading has-theme-primary-color has-text-color has-link-color wp-elements-10\" style=\"font-size:20px;font-style:normal;font-weight:500\">Effective inventory management is a shared business objective<\/h3>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">If inventory is viewed as a business investment, then involvement in inventory management should not be limited to the supply function. The best inventory-investment outcomes are achieved when finance, purchasing, sales, and supply teams assess it together.<\/p>\n\n\n\n<figure style=\"font-size:16px\" class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>Metric<\/strong><\/td><td><strong>What does it help us understand?<\/strong><\/td><\/tr><tr><td>Total inventory value<\/td><td>How much money is currently tied up in inventory?<\/td><\/tr><tr><td>Inventory value by SKU and location<\/td><td>Where exactly is working capital tied up?<\/td><\/tr><tr><td>Slow-moving, ageing, or non-moving inventory<\/td><td>Where demand is weakening or has already disappeared<\/td><\/tr><tr><td>Availability of key products<\/td><td>Whether the inventory investment protects sales and customer service<\/td><\/tr><tr><td>Stockout incidents and lost sales<\/td><td>The cost of insufficient product availability<\/td><\/tr><tr><td>Emergency orders and expensive transportation<\/td><td>Hidden costs created by stock shortages<\/td><\/tr><tr><td>Inventory turnover or days of inventory<\/td><td>How quickly inventory turns into sales; this should be assessed together with product availability<\/td><\/tr><tr><td>Buffer behaviour over time<\/td><td>Whether the inventory level for a specific product is too high, too low, or appropriate<\/td><\/tr><tr><td>Supplier lead-time reliability<\/td><td>Whether inventory levels reflect actual supply conditions<\/td><\/tr><tr><td>Inventory write-offs<\/td><td>Whether inventory value can still be recovered through sale or use<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">Finance sees the money invested in inventory, cash flow, the risk of write-offs, and the cost of financing. Purchasing sees supplier terms, ordering constraints, lead times, and delivery reliability. Sales sees customer commitments, demand, promotions, and commercial opportunities. The supply team sees production needs, warehouse capacity, and order-fulfilment performance.<\/p>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">A useful cross-functional review does not need to cover every SKU. It should focus on inventory positions and recurring patterns that require a specific decision.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" style=\"font-size:18px;font-style:normal;font-weight:600\">Example<\/h4>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">Imagine a distributor with EUR 3 million invested in inventory. Management wants to improve cash flow and proposes reducing inventory by 10%.<\/p>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">An equal reduction across all categories would theoretically release EUR 300,000. However, it could also reduce the availability of the most important and highest-revenue products.<\/p>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">A detailed assessment at SKU and location level may reveal a different picture:<\/p>\n\n\n\n<ul style=\"font-size:16px\" class=\"wp-block-list\">\n<li>several fast-selling A-category products are repeatedly out of stock;<\/li>\n\n\n\n<li>slow-moving products have remained in the warehouse for many months;<\/li>\n\n\n\n<li>some products are overstocked in one warehouse while unavailable in another;<\/li>\n\n\n\n<li>some inventory was purchased in large quantities to obtain supplier discounts or meet minimum order quantities;<\/li>\n\n\n\n<li>some products remained after a promotion or season had ended.<\/li>\n<\/ul>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">Such a solution shall involve retaining and possibly improving the availability of A category goods, limiting restocking of persistent surplus inventory, centralizing supplies as much as possible, negotiating better delivery conditions with suppliers, and conducting clearance sales or assortment adjustments for non-moving and declining goods.<\/p>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">The objective here is not EUR 300,000 of reduced inventory but better cash utilization: less money invested in non-profitable inventory positions and more resources freed for maintaining availability, settling accounts with suppliers, financing further growth or other goals of the company.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-theme-primary-color has-text-color has-link-color has-larger-font-size wp-elements-11\" style=\"font-style:normal;font-weight:500\">Inventory is an integral element of the business and should be managed as such<\/h2>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">Inventory is an integral element of operations in numerous trading and manufacturing enterprises. It guarantees availability, protects customer service, assists in manufacturing, and helps react to demand.<\/p>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">But inventory is also an investment, which means that inventory management must be based on business logic. Each position of the inventory should serve some particular purpose: to meet expected demand, safeguard the fulfillment of a critical customer commitment, assure a continuous production process, cover actual replenishment lead time, or prepare for a future event. In case something is changing, the corresponding inventory position should be reconsidered too.<\/p>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">This is the practical link between inventory management and working capital management. It seeks to channelize funds to those inventories which help in profitable turnover and free up funds from those inventories which don\u2019t do so.<\/p>\n\n\n\n<p class=\"has-normal-font-size wp-block-paragraph\">By applying the TOC methodology and using a system such as StockM, this becomes a structured, continuous management process: maintaining the necessary inventory where it matters most, identifying excess inventory early, and adjusting investment levels as real demand and supply conditions change.<\/p>\n\n\n\n<h4 class=\"wp-block-heading has-theme-primary-color has-text-color has-link-color has-larger-font-size wp-elements-12\" style=\"font-style:normal;font-weight:400\">FAQ: is inventory an investment?<\/h4>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1784885747144\"><strong class=\"schema-faq-question\"><strong>Is inventory an investment of the company?<\/strong><\/strong> <p class=\"schema-faq-answer\">Yes, since inventory is a current asset that appears in the balance sheet of the company. It turns into a valuable investment because inventory secures the existence of popular goods, avoids sales losses, and allows for a continuous production process or meeting commitments to customers.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1784885763924\"><strong class=\"schema-faq-question\">Why does the inventory impact working capital?<\/strong> <p class=\"schema-faq-answer\">Usually, a company purchases products, raw materials, or spare parts before generating income from their sale or consumption. As long as the inventory is not sold, used, returned to the supplier, or written off, it will take part of the working capital of the company.<br\/>Having too much inventory can lead to lower liquidity of the company and limit its opportunities to pay suppliers, grow, or buy best-sellers.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1784885724920\"><strong class=\"schema-faq-question\"><strong>Does low inventory mean good cash flow?<\/strong><\/strong> <p class=\"schema-faq-answer\">No. If the reduction in inventory is equal for all types of products, it may lead to an insufficient amount of fast-moving and important production components, hence causing losses in sales, downtime of production and additional purchasing and transportation costs due to rapid delivery of the goods.<br\/>The aim is not just a reduction of the overall inventory. The aim is to have a proper amount of inventory for each particular product and in each location.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1790165865365\"><strong class=\"schema-faq-question\"><strong>When does inventory bring value?<\/strong><\/strong> <p class=\"schema-faq-answer\">Inventory brings value when it fulfills a certain business purpose, such as preventing losses from sales of a fast-moving product, securing production from downtime with the use of critical components, and supporting high peaks of demand in case of seasonal inventory.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1790165897664\"><strong class=\"schema-faq-question\"><strong>When does inventory become excess stock?<\/strong><\/strong> <p class=\"schema-faq-answer\">Excess stock is a situation where the amount of inventory does not correspond to current demand and supply. It occurs because of declining demand, the end of a promotion or season, reduced lead times, increasing reliability of the suppliers, and changing assortment of the products.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1790165935834\"><strong class=\"schema-faq-question\"><strong>Why can there be a situation when a company has excessive inventory and at the same time experiences shortages?<\/strong><\/strong> <p class=\"schema-faq-answer\">Most often, the problem lies not in the total quantity of inventory but in its structure and distribution. There may be a situation when one warehouse is overfilled with slow moving products and another warehouse lacks fast-moving products.<br\/>This is why it is important to analyze inventory not only by its total value but also on an SKU-by-warehouse basis.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1790165982534\"><strong class=\"schema-faq-question\"><strong>What should a company do with slow-moving and obsolete products?<\/strong><\/strong> <p class=\"schema-faq-answer\">The company should start taking action right away. First of all, it should stop or limit future supply so that this type of inventory does not accumulate further.<br\/>According to the situation, the products can be moved to the warehouse where there is demand, reduced in price, combined with other products, sold via a clearance campaign, sent back to the supplier, or simply eliminated from the assortment. The sooner the action is taken, the more options are available to the company to recover the money.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1790166054638\"><strong class=\"schema-faq-question\"><strong>Why could a supplier discount raise inventory costs?<\/strong><\/strong> <p class=\"schema-faq-answer\">A volume discount, a minimum order quantity, or the need to order in full pallets may result in reduced cost per item. At the same time, such a discount may stimulate the company to order more items than it needs in the short term.<br\/>The extra stock will occupy capital, space, incur additional handling costs, and become subject to the risk of becoming obsolete. For this reason, the decision about making an order should take into account not just the cost per item but the overall cost of ordering more inventory than the business needs.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1790166142102\"><strong class=\"schema-faq-question\"><strong>What KPIs should be tracked when controlling inventory and working capital?<\/strong><\/strong> <p class=\"schema-faq-answer\">The important KPI to track are: inventory value by SKU and location; inventory turns or days on hand; losses from lost sales and out-of-stock situations; slow-moving and obsolete inventory; suppliers&#8217; reliability in meeting lead times; inventory write-offs and aging issues.<br\/>Altogether, they allow seeing where money is tied up, what risks exist regarding availability, and what actions should be taken.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1790166252976\"><strong class=\"schema-faq-question\"><strong>What is meant by inventory buffer?<\/strong><\/strong> <p class=\"schema-faq-answer\">Inventory buffer refers to a deliberately created protection level for a certain item at a particular location. It is intended to make sure that there is adequate inventory to facilitate sales or manufacturing till the next replenishment. The aim of buffer is not to keep the maximum amount possible. Instead, the objective of buffer is to have enough inventory to satisfy current consumption.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1790166296802\"><strong class=\"schema-faq-question\"><strong>Why should there be periodic buffer reviews?<\/strong><\/strong> <p class=\"schema-faq-answer\">The demand pattern, lead time, reliability of the supplier, product significance, and product line all tend to change with time. A buffer that was ideal one year ago might be inadequate or excessive at present.<br\/>Periodic buffer reviews will help keep availability where there is an increased risk of stockout and minimize investments where there is excess inventory.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1790166344569\"><strong class=\"schema-faq-question\"><strong>How is StockM able to enhance the working capital management process?<\/strong><\/strong> <p class=\"schema-faq-answer\">The StockM inventory management solution offers visibility of the inventory positions by SKU and location.<br\/>It identifies potential stockouts, fast\/slow moving products, and obsolete inventory positions. It can prioritize tasks based on the status of the inventory buffers, recommend replenishment amounts, and recognize when the inventory does not represent the current demand. It can recommend changes in the buffer levels or make these adjustments automatically.<br\/>It enables organizations to avoid replenishing excess inventory and safeguard the availability of key products.<\/p> <\/div> <\/div>\n<\/div><\/div>\n\n\n\n<div class=\"wp-block-cover alignfull is-light has-text-color has-link-color editorskit-no-desktop wp-elements-13\" style=\"border-top-left-radius:20px;border-top-right-radius:20px;border-bottom-left-radius:20px;border-bottom-right-radius:20px;color:#000000;padding-top:24px;padding-right:24px;padding-bottom:24px;padding-left:24px\"><span aria-hidden=\"true\" class=\"wp-block-cover__background has-white-background-color has-background-dim-100 has-background-dim\"><\/span><div class=\"wp-block-cover__inner-container is-layout-constrained wp-container-core-cover-is-layout-83bc96ca wp-block-cover-is-layout-constrained\">\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">In the case of a working capital shortage in a business, inventory is one of the first things that managers consider. And the first question usually is \u201cHow much inventory can we cut?\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">However, it is a question about the money that has been previously invested in inventory and the chance to free up some of it. Indeed, inventory is not a storage cost nor a balance sheet entry. It is money that is deliberately invested into the <strong>supply chain<\/strong> in order for the company to be able to make sales, deliver services, and provide production or supply continuity.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">Selling an item sitting on the shelf secures income. Availability of key components avoids production interruption. Seasonal inventory created in advance allows meeting demand prior to its replenishment by suppliers.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">At the same time, inventory uses the company\u2019s money until it is sold, consumed, returned, or written off. Inventory that no longer has a clear connection to actual sales, customer service, or production needs can limit the company\u2019s ability to pay suppliers, invest in growth, ensure the availability of critical products, or respond to changes in demand.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">The objective, therefore, is not to reduce inventory at any cost. The objective is to manage inventory as an investment: to hold enough stock to protect the flow of the most important products, but not more than current demand and real supply conditions require. This is where <strong>inventory management<\/strong> and working-capital management come together.<\/p>\n\n\n\n<p class=\"has-theme-primary-color has-text-color has-link-color wp-elements-14 wp-block-paragraph\" style=\"font-size:20px\">Why is inventory a working-capital issue?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">In financial statements, inventory is generally reported as a current asset. It is usually measured at the lower of cost and net realizable value. If products are damaged, obsolete, partially obsolete, or expected to be sold for less than their cost, the value of the inventory must be written down. This is the accounting perspective.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">From a management perspective, however, every product, raw material, part, or component held in a warehouse represents money the company has already spent, even though revenue from selling or using that item has not yet been received.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">This capital creates value when it:<\/p>\n\n\n\n<ul style=\"font-size:14px\" class=\"wp-block-list\">\n<li>ensures the availability of in-demand products;<\/li>\n\n\n\n<li>helps maintain service levels for important customers;<\/li>\n\n\n\n<li>reduces the risk of lost sales;<\/li>\n\n\n\n<li>protects production from downtime;<\/li>\n\n\n\n<li>helps prepare for seasonality, promotions, contracts, or major customer projects;<\/li>\n\n\n\n<li>enables the business to respond reliably to demand.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">Inventory therefore has two functions. In accounting, it is an asset; operationally, it is an investment in product availability and flow.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">However, the capital invested in inventories is directly related to liquidity as well. According to the <a href=\"https:\/\/kpmg.com\/us\/en\/articles\/2025\/working-capital-trends-us-market.html\" target=\"_blank\" rel=\"noreferrer noopener\">KPMG study<\/a> on more than 2,700 public U.S. companies, the average inventory-days ratio increased from 73 days in 2020 to 80 days in 2024. In the meantime, the cash conversion cycle equaled 89 days in 2024. Thus, the capital invested by the company in inventory becomes locked for a longer time, with higher levels of inventory being one of the factors responsible for it.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">As <a href=\"https:\/\/www.pwc.co.uk\/services\/value-creation\/insights\/working-capital-study.html\" target=\"_blank\" rel=\"noreferrer noopener\">noted by PwC<\/a>, inventory is a \u201csilent absorber of uncertainty.\u201d To ensure their protection from potential <strong>supply chain<\/strong> interruptions, businesses raise the amount of stock; however, in this case, the level of liquidity may decrease together with higher expenses for storage and higher risks of obsolescence. It is also noted by PwC that in 2024, in capital-intensive industries, the average days inventory outstanding were 90.2 days in the European Union, 68.6 days in North America, and 62.8 days in the UK.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">Therefore, when discussing inventory and the money invested in it, the key question is not, \u201cHow much inventory should we reduce overall?\u201d The more important question is which inventory protects sales and production flow, and where capital no longer creates sufficient value.<\/p>\n\n\n\n<p class=\"has-theme-primary-color has-text-color has-link-color wp-elements-15 wp-block-paragraph\" style=\"font-size:18px\">When does inventory create value?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">The value of the inventory lies in its functionality within the business process. A product stored in the right place, at the right time, and in the right amount could lead to making the deal that might have been missed otherwise. A critical part would save the production process from coming to a halt, whereas an excess of seasonal inventory could cater to the demands during a shortage.<\/p>\n\n\n\n<style>\n  .toc-table-wrap {\n    width: 100%;\n    overflow-x: auto;\n  }\n\n  table.toc-table {\n    display: table !important;\n    width: 100% !important;\n    max-width: 100% !important;\n    table-layout: fixed !important;\n    border-collapse: collapse !important;\n    font-size: 14px !important;\n    line-height: 1.5;\n  }\n\n  table.toc-table thead {\n    display: table-header-group !important;\n  }\n\n  table.toc-table tbody {\n    display: table-row-group !important;\n  }\n\n  table.toc-table tr {\n    display: table-row !important;\n  }\n\n  table.toc-table th,\n  table.toc-table td {\n    display: table-cell !important;\n    box-sizing: border-box;\n    padding: 8px;\n    border: 1px solid #ccc;\n    text-align: left;\n    vertical-align: top;\n    font-size: 14px !important;\n    white-space: normal !important;\n    overflow-wrap: anywhere;\n    word-break: break-word;\n  }\n\n  table.toc-table th {\n    font-weight: 700;\n  }\n\n  table.toc-table td:first-child {\n    font-weight: 600;\n  }\n<\/style>\n\n<div class=\"toc-table-wrap\">\n  <table class=\"toc-table\">\n    <colgroup>\n      <col style=\"width: 42%;\">\n      <col style=\"width: 58%;\">\n    <\/colgroup>\n\n    <thead>\n      <tr>\n        <th>Inventory position<\/th>\n        <th>Why can it create value?<\/th>\n      <\/tr>\n    <\/thead>\n\n    <tbody>\n      <tr>\n        <td>A fast-selling product at the point of sale<\/td>\n        <td>Ensures availability and helps prevent lost sales.<\/td>\n      <\/tr>\n\n      <tr>\n        <td>A critical production component<\/td>\n        <td>Helps maintain uninterrupted production flow.<\/td>\n      <\/tr>\n\n      <tr>\n        <td>Inventory for a known seasonal demand peak<\/td>\n        <td>Makes it possible to meet demand before normal replenishment can respond.<\/td>\n      <\/tr>\n\n      <tr>\n        <td>A product reserved for a confirmed customer commitment<\/td>\n        <td>Helps fulfil a planned sale, contract, tender, or project.<\/td>\n      <\/tr>\n\n      <tr>\n        <td>Inventory held at a location with stable demand<\/td>\n        <td>Shortens response times and improves customer service.<\/td>\n      <\/tr>\n\n      <tr>\n        <td>A product held to cover its actual replenishment lead time<\/td>\n        <td>Provides the necessary protection until the next delivery arrives.<\/td>\n      <\/tr>\n    <\/tbody>\n  <\/table>\n<\/div>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">In the same way, there is a dynamic relationship between products. For instance, a fast-moving product will start to sell at a slower pace. In addition, a seasonal product becomes excess inventory once the season has passed. Where the supplier delivers more frequently, the local stock requirements may reduce. One product may be required in one warehouse but not in another.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">For this reason, inventory investments need to be reviewed regularly, not only when the company is already experiencing a cash-flow problem.<\/p>\n\n\n\n<p class=\"has-theme-primary-color has-text-color has-link-color wp-elements-16 wp-block-paragraph\" style=\"font-size:18px\">When does inventory stop creating value?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">Inventory requires attention when it remains in the warehouse but no longer serves a clear commercial or operational purpose. This can happen when:<\/p>\n\n\n\n<ul style=\"font-size:14px\" class=\"wp-block-list\">\n<li>demand declines or shifts to another product;<\/li>\n\n\n\n<li>the item was purchased for a promotion, season, project, or tender that has already ended;<\/li>\n\n\n\n<li>inventory was bought to meet a supplier\u2019s minimum order quantity, obtain a discount, fill a pallet, or meet a transportation threshold;<\/li>\n\n\n\n<li>the product is held at a location with low demand, while it is needed elsewhere;<\/li>\n\n\n\n<li>assumptions about lead times no longer reflect the supplier\u2019s actual performance;<\/li>\n\n\n\n<li>replenishment parameters were set in the past and have not been reviewed for a long time;<\/li>\n\n\n\n<li>the product is being replaced, discontinued, or becoming obsolete;<\/li>\n\n\n\n<li>safety stock for the same demand stream is held at several points in the supply chain.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">In these situations, inventory continues to tie up company funds while contributing less and less to product availability, sales, or production flow.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">It is necessary to notice these situations on time, when there are still many options available for the company. It can decrease or terminate future deliveries, move the product to another place, have a clearance sale, change prices, develop bundles of products, negotiate a return with the supplier, and conduct a product discontinuation process.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Why is a general inventory reduction not a good approach?<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">A general inventory reduction target could be a good financial indicator because it reflects how much capital is occupied by the inventory at the moment. However, the target itself does not tell which positions need to be reduced.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">Reducing the inventory levels of all products proportionally means that the company will lose the opportunity to have enough supply of the most important, the fastest moving, or the highest revenue products. This will cause problems such as lost sales, customers&#8217; dissatisfaction, urgent purchases from suppliers, higher costs of transportation, delays in production, and additional work for the purchasing and sales departments.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">However, the decision to reduce excess inventories is rarely implemented quickly. Reducing future orders does not mean that excess products will be quickly sold from the warehouse. Additional actions are required: transfer, clearance sale, price change, kitting, return to supplier, or discontinuation.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">The opposite situation is also possible: a company may have a high total inventory value while constantly facing shortages of its most important products. In this case, the issue is not only the overall amount of inventory, but also its poor allocation across SKUs, locations, and the wrong products.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">Inventory management is therefore a balance between customer service, cost, and working capital. Some critical products require a greater investment in availability. For others, excess stock only reduces liquidity and increases the risks of storage costs, obsolescence, and write-offs.<\/p>\n\n\n\n<p class=\"has-theme-primary-color has-text-color has-link-color wp-elements-17 wp-block-paragraph\" style=\"font-size:18px\">Inventory is more than one number<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">Management often sees the total value of inventory and asks whether it is too high. But this question is too broad to support a precise decision.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">A company may have an overall inventory value that appears acceptable at first glance, while its inventory structure is still unsuitable:<\/p>\n\n\n\n<ul style=\"font-size:14px\" class=\"wp-block-list\">\n<li>too much inventory is held in slow-moving SKUs;<\/li>\n\n\n\n<li>too little inventory is available for fast-selling or strategically important products;<\/li>\n\n\n\n<li>one location holds excess stock while another experiences shortages;<\/li>\n\n\n\n<li>high inventory volumes were created by supplier requirements rather than actual consumption;<\/li>\n\n\n\n<li>safety stock for the same need is held at several points in the supply chain.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">For this reason, inventory should be assessed at SKU and location level. Only then is it possible to understand exactly where money is tied up, what function a particular inventory position serves, and which action is most appropriate.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1000\" height=\"563\" src=\"https:\/\/www.stockm.eu\/wp-content\/uploads\/2026\/09\/ar-atsargos-yra-investicija.webp\" alt=\"Ar atsargos yra ivesticija?\" class=\"wp-image-6506\" srcset=\"https:\/\/www.stockm.eu\/wp-content\/uploads\/2026\/09\/ar-atsargos-yra-investicija.webp 1000w, https:\/\/www.stockm.eu\/wp-content\/uploads\/2026\/09\/ar-atsargos-yra-investicija-300x169.webp 300w, https:\/\/www.stockm.eu\/wp-content\/uploads\/2026\/09\/ar-atsargos-yra-investicija-768x432.webp 768w\" sizes=\"auto, (max-width: 1000px) 100vw, 1000px\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"padding-top:20px;font-size:16px\">When assessing inventory, it is useful to monitor not only its total value but also:<\/p>\n\n\n\n<ul style=\"font-size:14px\" class=\"wp-block-list\">\n<li>inventory turnover or days of inventory on hand;<\/li>\n\n\n\n<li>availability of the most important products;<\/li>\n\n\n\n<li>stockout incidents and lost sales;<\/li>\n\n\n\n<li>fast-moving, slow-moving, and non-moving products;<\/li>\n\n\n\n<li>lead-time and delivery reliability;<\/li>\n\n\n\n<li>the product\u2019s importance to the business;<\/li>\n\n\n\n<li>inventory value by SKU and location;<\/li>\n\n\n\n<li>the risk of write-offs and obsolescence.<\/li>\n<\/ul>\n\n\n\n<p class=\"has-theme-primary-color has-text-color has-link-color wp-elements-18 wp-block-paragraph\" style=\"font-size:18px\">How does StockM help make this practical?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">Our experience working with clients shows that most companies want to reduce inventory. In many cases, they even know how much of their inventory is non-moving or slow-moving. However, this information alone is not enough to manage inventory effectively.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">The main challenge is usually not identifying that there is too much inventory. The harder part is understanding:<\/p>\n\n\n\n<ul style=\"font-size:14px\" class=\"wp-block-list\">\n<li>which specific products and locations are creating the problem;<\/li>\n\n\n\n<li>which products are most important for sales and availability;<\/li>\n\n\n\n<li>whether excess inventory has been caused by a change in demand, unsuitable parameters, supply conditions, or poor allocation between locations;<\/li>\n\n\n\n<li>what specific action is needed in each case;<\/li>\n\n\n\n<li>how to prevent the same issue from recurring in the future.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">Once <a href=\"https:\/\/www.stockm.eu\/en\/\">StockM system<\/a> has been implemented, initial parameters have been set, and the system has been allowed to operate for at least several replenishment cycles, a detailed view of inventory becomes available at SKU and location level. The analysis distinguishes critical products and their availability or stockout risk, fast-moving products, slow-moving products, and non-moving inventory positions.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">This makes it possible to move away from one blanket solution for every item. Instead, the company can establish clear procedures for different situations so that employees know exactly which actions to take.<\/p>\n\n\n\n<style>\n  .toc-table-wrap {\n    width: 100%;\n    overflow-x: auto;\n  }\n\n  table.toc-table {\n    display: table !important;\n    width: 100% !important;\n    max-width: 100% !important;\n    table-layout: fixed !important;\n    border-collapse: collapse !important;\n    font-size: 14px !important;\n    line-height: 1.5;\n  }\n\n  table.toc-table thead {\n    display: table-header-group !important;\n  }\n\n  table.toc-table tbody {\n    display: table-row-group !important;\n  }\n\n  table.toc-table tr {\n    display: table-row !important;\n  }\n\n  table.toc-table th,\n  table.toc-table td {\n    display: table-cell !important;\n    box-sizing: border-box;\n    padding: 8px;\n    border: 1px solid #ccc;\n    text-align: left;\n    vertical-align: top;\n    font-size: 14px !important;\n    white-space: normal !important;\n    overflow-wrap: anywhere;\n    word-break: break-word;\n  }\n\n  table.toc-table th {\n    font-weight: 700;\n  }\n\n  table.toc-table td:first-child {\n    font-weight: 600;\n  }\n<\/style>\n\n<div class=\"toc-table-wrap\">\n  <table class=\"toc-table\">\n    <colgroup>\n      <col style=\"width: 42%;\">\n      <col style=\"width: 58%;\">\n    <\/colgroup>\n\n    <thead>\n      <tr>\n        <th>Situation<\/th>\n        <th>Possible action<\/th>\n      <\/tr>\n    <\/thead>\n\n    <tbody>\n      <tr>\n        <td>An important product repeatedly approaches a stockout<\/td>\n        <td>Increase the buffer; review replenishment lead time or supply reliability.<\/td>\n      <\/tr>\n\n      <tr>\n        <td>A fast-moving product has insufficient availability<\/td>\n        <td>Increase the inventory buffer and replenishment priority.<\/td>\n      <\/tr>\n\n      <tr>\n        <td>A product has been moving slowly for an extended period<\/td>\n        <td>Reduce future orders, review the buffer, or consider product-discontinuation options.<\/td>\n      <\/tr>\n\n      <tr>\n        <td>A non-moving product no longer has a clear demand<\/td>\n        <td>Stop replenishment; initiate a clearance sale, return, or product discontinuation.<\/td>\n      <\/tr>\n\n      <tr>\n        <td>One location has excess stock while another has a shortage<\/td>\n        <td>Centralise replenishment and supply products based on demand.<\/td>\n      <\/tr>\n\n      <tr>\n        <td>Demand for a product has declined, but replenishment parameters remain unchanged<\/td>\n        <td>Reduce the buffer and adjust replenishment rules.<\/td>\n      <\/tr>\n    <\/tbody>\n  <\/table>\n<\/div>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">StockM helps not only identify these situations but also manage inventory levels systematically. For products facing a recurring risk of stockouts, the system can signal the need to increase the inventory buffer. For products whose inventory remains excessive for a long period, buffers can be reduced, and replenishment can be stopped so that money is no longer invested in inventory with declining demand.<\/p>\n\n\n\n<p class=\"has-theme-primary-color has-text-color has-link-color wp-elements-19 wp-block-paragraph\" style=\"font-size:18px\">TOC methodology: where should inventory be held?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">The fundamental question every company needs to answer is: where should it focus attention and invest in inventory to protect product flow, and where can that investment be safely reduced?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">This is a more precise approach to working-capital management. In the <a href=\"https:\/\/www.stockm.eu\/en\/buffer-inventory-management\/\">Theory of Constraints (TOC) methodology<\/a>, an inventory buffer is deliberately defined protection for a specific product at a specific location. Its purpose is to hold enough inventory to support sales or production while replenishment is taking place. The aim is not to hold the maximum possible quantity for every product.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">This approach helps companies:<\/p>\n\n\n\n<ul style=\"font-size:14px\" class=\"wp-block-list\">\n<li>retain inventory where it protects sales, customer service, or production continuity;<\/li>\n\n\n\n<li>review products that repeatedly face a stockout risk;<\/li>\n\n\n\n<li>identify products whose inventory remains high for a long period relative to real demand;<\/li>\n\n\n\n<li>reduce or stop replenishment when excess inventory becomes persistent;<\/li>\n\n\n\n<li>make clearance-sale, return, pricing, or assortment decisions for products that no longer have a clear role;<\/li>\n\n\n\n<li>work with suppliers on more appropriate order quantities, delivery frequency, and replenishment conditions.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\"><a href=\"https:\/\/nscpolteksby.ac.id\/ebook\/files\/Ebook\/Accounting\/Cost%20Management-Accounting%20and%20Control%20(2006)\/22.%20Chapter%2021%20-%20Inventory%20Management%20Economic%20Order%20Quantity-JIT-and%20the%20Theory%20of%20Constraints.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">TOC-based inventory management<\/a> uses buffers to protect product flow against disruption and focus attention on conditions that may affect availability. The business value is not merely lower inventory. More importantly, it is better control over where and why the company\u2019s working capital is being used.<\/p>\n\n\n\n<p class=\"has-theme-primary-color has-text-color has-link-color wp-elements-20 wp-block-paragraph\" style=\"font-size:18px\">Dynamic buffers: adapting to changing conditions<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">An inventory <a href=\"https:\/\/www.stockm.eu\/en\/toc-buffer-zones\/\">buffer<\/a> can be understood as the planned level of investment for a specific SKU at a specific location. However, it should be a dynamic target that responds to what is happening in the market and in the supply chain.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">As demand and supply conditions change, the appropriate level of inventory investment must change as well. A product whose consumption is steadily increasing, whose replenishment lead time has lengthened, or whose business importance has grown may require a larger buffer. A product with declining demand, increasingly reliable supply, or consistently excessive inventory may require a smaller buffer and a lower investment.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">A 2021 simulation study, \u201c<a href=\"https:\/\/www.tandfonline.com\/doi\/abs\/10.1080\/21681015.2021.1931493\" target=\"_blank\" rel=\"noreferrer noopener\">Evaluation of dynamic buffer management for adjusting stock level: a simulation-based approach<\/a>,\u201d found that <a href=\"https:\/\/www.stockm.eu\/en\/buffer-inventory-management\/\">dynamic buffer management<\/a> can reliably balance two inventory-management objectives: product availability and control of excess inventory. The study also emphasises that buffers should be adjusted in response to recurring changes, rather than a one-off fluctuation in demand.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">In practice, this means that a company should not increase or reduce inventory merely because of one unusual order. It is important to determine whether the change is recurring and whether it reflects new customer demand, seasonality, a change in lead time, or another real operational factor.<\/p>\n\n\n\n<p class=\"has-theme-primary-color has-text-color has-link-color wp-elements-21 wp-block-paragraph\" style=\"font-size:18px\">Effective inventory management is a shared business objective<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">If inventory is viewed as a business investment, then involvement in inventory management should not be limited to the supply function. The best inventory-investment outcomes are achieved when finance, purchasing, sales, and supply teams assess it together.<\/p>\n\n\n\n<style>\n  .toc-table-wrap {\n    width: 100%;\n    overflow-x: auto;\n  }\n\n  table.toc-table {\n    display: table !important;\n    width: 100% !important;\n    max-width: 100% !important;\n    table-layout: fixed !important;\n    border-collapse: collapse !important;\n    font-size: 14px !important;\n    line-height: 1.5;\n  }\n\n  table.toc-table thead {\n    display: table-header-group !important;\n  }\n\n  table.toc-table tbody {\n    display: table-row-group !important;\n  }\n\n  table.toc-table tr {\n    display: table-row !important;\n  }\n\n  table.toc-table th,\n  table.toc-table td {\n    display: table-cell !important;\n    box-sizing: border-box;\n    padding: 8px;\n    border: 1px solid #ccc;\n    text-align: left;\n    vertical-align: top;\n    font-size: 14px !important;\n    white-space: normal !important;\n    overflow-wrap: anywhere;\n    word-break: break-word;\n  }\n\n  table.toc-table th {\n    font-weight: 700;\n  }\n\n  table.toc-table td:first-child {\n    font-weight: 600;\n  }\n<\/style>\n\n<div class=\"toc-table-wrap\">\n  <table class=\"toc-table\">\n    <colgroup>\n      <col style=\"width: 42%;\">\n      <col style=\"width: 58%;\">\n    <\/colgroup>\n\n    <thead>\n      <tr>\n        <th>Metric<\/th>\n        <th>What does it help us understand?<\/th>\n      <\/tr>\n    <\/thead>\n\n    <tbody>\n      <tr>\n        <td>Total inventory value<\/td>\n        <td>How much money is currently tied up in inventory?<\/td>\n      <\/tr>\n\n      <tr>\n        <td>Inventory value by SKU and location<\/td>\n        <td>Where exactly is working capital tied up?<\/td>\n      <\/tr>\n\n      <tr>\n        <td>Slow-moving, ageing, or non-moving inventory<\/td>\n        <td>Where demand is weakening or has already disappeared.<\/td>\n      <\/tr>\n\n      <tr>\n        <td>Availability of key products<\/td>\n        <td>Whether the inventory investment protects sales and customer service.<\/td>\n      <\/tr>\n\n      <tr>\n        <td>Stockout incidents and lost sales<\/td>\n        <td>The cost of insufficient product availability.<\/td>\n      <\/tr>\n\n      <tr>\n        <td>Emergency orders and expensive transportation<\/td>\n        <td>Hidden costs created by stock shortages.<\/td>\n      <\/tr>\n\n      <tr>\n        <td>Inventory turnover or days of inventory<\/td>\n        <td>How quickly inventory turns into sales; this should be assessed together with product availability.<\/td>\n      <\/tr>\n\n      <tr>\n        <td>Buffer behaviour over time<\/td>\n        <td>Whether the inventory level for a specific product is too high, too low, or appropriate.<\/td>\n      <\/tr>\n\n      <tr>\n        <td>Supplier lead-time reliability<\/td>\n        <td>Whether inventory levels reflect actual supply conditions.<\/td>\n      <\/tr>\n\n      <tr>\n        <td>Inventory write-offs<\/td>\n        <td>Whether inventory value can still be recovered through sale or use.<\/td>\n      <\/tr>\n    <\/tbody>\n  <\/table>\n<\/div>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">Finance sees the money invested in inventory, cash flow, the risk of write-offs, and the cost of financing. Purchasing sees supplier terms, ordering constraints, lead times, and delivery reliability. Sales sees customer commitments, demand, promotions, and commercial opportunities. The supply team sees production needs, warehouse capacity, and order-fulfilment performance.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">A useful cross-functional review does not need to cover every SKU. It should focus on inventory positions and recurring patterns that require a specific decision.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Example<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">Imagine a distributor with EUR 3 million invested in inventory. Management wants to improve cash flow and proposes reducing inventory by 10%.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">An equal reduction across all categories would theoretically release EUR 300,000. However, it could also reduce the availability of the most important and highest-revenue products. A detailed assessment at SKU and location level may reveal a different picture:<\/p>\n\n\n\n<ul style=\"font-size:14px\" class=\"wp-block-list\">\n<li>several fast-selling A-category products are repeatedly out of stock;<\/li>\n\n\n\n<li>slow-moving products have remained in the warehouse for many months;<\/li>\n\n\n\n<li>some products are overstocked in one warehouse while unavailable in another;<\/li>\n\n\n\n<li>some inventory was purchased in large quantities to obtain supplier discounts or meet minimum order quantities;<\/li>\n\n\n\n<li>some products remained after a promotion or season had ended.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">Such a solution shall involve retaining and possibly improving the availability of A category goods, limiting restocking of persistent surplus inventory, centralizing supplies as much as possible, negotiating better delivery conditions with suppliers, and conducting clearance sales or assortment adjustments for non-moving and declining goods.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">The objective here is not EUR 300,000 of reduced inventory but better cash utilization: less money invested into non-profitable inventory positions and more resources freed for maintaining availability, settling accounts with suppliers, financing further growth or other goals of the company.<\/p>\n\n\n\n<p class=\"has-theme-primary-color has-text-color has-link-color has-large-font-size wp-elements-22 wp-block-paragraph\">Inventory is an integral element of the business and should be managed as such<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">Inventory is an integral element of operations in numerous trading and manufacturing enterprises. It guarantees availability, protects customer service, assists in manufacturing, and helps react to demand.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">But inventory is also an investment, which means that inventory management must be based on business logic. Each position of the inventory should serve some particular purpose: to meet expected demand, safeguard the fulfillment of a critical customer commitment, assure a continuous production process, cover actual replenishment lead time, or prepare for a future event. In case something is changing, the corresponding inventory position should be reconsidered too.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">This is the practical link between inventory management and working capital management. It seeks to channelize funds to those inventories which help in profitable turnover and free up funds from those inventories which don\u2019t do so.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:16px\">By applying the TOC methodology and using a system such as StockM, this becomes a structured, continuous management process: maintaining the necessary inventory where it matters most, identifying excess inventory early, and adjusting investment levels as real demand and supply conditions change.<\/p>\n\n\n\n<p class=\"has-theme-primary-color has-text-color has-link-color has-large-font-size wp-elements-23 wp-block-paragraph\">FAQ: is inventory an investment?<\/p>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1784885747144\"><strong class=\"schema-faq-question\">Is inventory an investment of the company?<\/strong> <p class=\"schema-faq-answer\">Yes, since inventory is a current asset that appears in the balance sheet of the company. It turns into a valuable investment because inventory secures the existence of popular goods, avoids sales losses, and allows for a continuous production process or meeting commitments to customers.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1784885763924\"><strong class=\"schema-faq-question\">Why does the inventory impact working capital?<\/strong> <p class=\"schema-faq-answer\">Usually, a company purchases products, raw materials, or spare parts before generating income from their sale or consumption. As long as the inventory is not sold, used, returned to the supplier, or written off, it will take part of the working capital of the company.<br\/>Having too much inventory can lead to lower liquidity of the company and limit its opportunities to pay suppliers, grow, or buy best-sellers.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1784885724920\"><strong class=\"schema-faq-question\">Does low inventory mean good cash flow?<\/strong> <p class=\"schema-faq-answer\">No. If the reduction in inventory is equal for all types of products, it may lead to an insufficient amount of fast-moving and important production components, hence causing losses in sales, downtime of production and additional purchasing and transportation costs due to rapid delivery of the goods.<br\/>The aim is not just a reduction of the overall inventory. The aim is to have a proper amount of inventory for each particular product and in each location.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1790168517962\"><strong class=\"schema-faq-question\"><strong>When does inventory bring value?<\/strong><\/strong> <p class=\"schema-faq-answer\">Inventory brings value when it fulfills a certain business purpose, such as preventing losses from sales of a fast-moving product, securing production from downtime with the use of critical components, and supporting high peaks of demand in case of seasonal inventory.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1790168529257\"><strong class=\"schema-faq-question\"><strong>When does inventory become excess stock?<\/strong><\/strong> <p class=\"schema-faq-answer\">Excess stock is a situation where the amount of inventory does not correspond to current demand and supply. It occurs because of declining demand, the end of a promotion or season, reduced lead times, increasing reliability of the suppliers, and a changing assortment of the products.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1790168542472\"><strong class=\"schema-faq-question\"><strong>Why can there be a situation when a company has excessive inventory and at the same time experiences shortages?<\/strong><\/strong> <p class=\"schema-faq-answer\">Most often, the problem lies not in the total quantity of inventory but in its structure and distribution. There may be a situation when one warehouse is overfilled with slow moving products and another warehouse lacks fast-moving products.<br\/>This is why it is important to analyze inventory not only by its total value but also on an SKU-by-warehouse basis.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1790168556665\"><strong class=\"schema-faq-question\"><strong>What should a company do with slow-moving and obsolete products?<\/strong><\/strong> <p class=\"schema-faq-answer\">The company should start taking action right away. First of all, it should stop or limit future supply so that this type of inventory does not accumulate further.<br\/>According to the situation, the products can be moved to the warehouse where there is demand, reduced in price, combined with other products, sold via a clearance campaign, sent back to the supplier, or simply eliminated from the assortment. The sooner the action is taken, the more options are available to the company to recover the money.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1790168568468\"><strong class=\"schema-faq-question\"><strong>Why could a supplier discount raise inventory costs?<\/strong><\/strong> <p class=\"schema-faq-answer\">A volume discount, a minimum order quantity, or the need to order in full pallets may result in reduced cost per item. At the same time, such a discount may stimulate the company to order more items than it needs in the short term.<br\/>The extra stock will occupy capital, space, incur additional handling costs, and become subject to the risk of becoming obsolete. For this reason, the decision about making an order should take into account not just the cost per item but the overall cost of ordering more inventory than the business needs.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1790168577637\"><strong class=\"schema-faq-question\">What KPIs should be tracked when controlling inventory and working capital?<\/strong> <p class=\"schema-faq-answer\">The important KPI to track are: inventory value by SKU and location; inventory turns or days on hand; losses from lost sales and out-of-stock situations; slow-moving and obsolete inventory; suppliers&#8217; reliability in meeting lead times; inventory write-offs and aging issues.<br\/>Altogether, they allow seeing where money is tied up, what risks exist regarding availability, and what actions should be taken.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1790168589461\"><strong class=\"schema-faq-question\">What is meant by inventory buffer?<\/strong> <p class=\"schema-faq-answer\">Inventory buffer refers to a deliberately created protection level for a certain item at a particular location. It is intended to make sure that there is adequate inventory to facilitate sales or manufacturing till the next replenishment. The aim of a buffer is not to keep the maximum amount possible. Instead, the objective of buffer is to have enough inventory to satisfy current consumption.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1790168603431\"><strong class=\"schema-faq-question\">Why should there be periodic buffer reviews?<\/strong> <p class=\"schema-faq-answer\">The demand pattern, lead time, reliability of the supplier, product significance, and product line all tend to change with time. A buffer that was ideal one year ago might be inadequate or excessive at present.<br\/>Periodic buffer reviews will help keep availability where there is an increased risk of stockout and minimize investments where there is excess inventory.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1790168615286\"><strong class=\"schema-faq-question\"><strong>How is StockM able to enhance the working capital management process?<\/strong><\/strong> <p class=\"schema-faq-answer\">The StockM inventory management solution offers visibility of the inventory positions by SKU and location.<br\/>It identifies potential stockouts, fast\/slow moving products, and obsolete inventory positions. It can prioritize tasks based on the status of the inventory buffers, recommend replenishment amounts, and recognize when the inventory does not represent the current demand. It can recommend changes in the buffer levels or make these adjustments automatically.<br\/>It enables organizations to avoid replenishing excess inventory and safeguard the availability of key products.<\/p> <\/div> <\/div>\n<\/div><\/div>\n\n\n\n<p class=\"has-text-align-center has-larger-font-size wp-block-paragraph\" style=\"padding-top:40px;padding-bottom:20px\">Read more articles<\/p>\n\n\n<ul class=\"wp-block-latest-posts__list is-grid columns-3 wp-block-latest-posts is-layout-grid wp-container-core-latest-posts-is-layout-0fed8f92 wp-block-latest-posts-is-layout-grid\"><li><div class=\"wp-block-latest-posts__featured-image\"><img loading=\"lazy\" decoding=\"async\" width=\"300\" height=\"169\" src=\"https:\/\/www.stockm.eu\/wp-content\/uploads\/2026\/09\/ar-atsargos-yra-investicija-300x169.webp\" class=\"attachment-medium size-medium wp-post-image\" alt=\"Ar atsargos yra ivesticija?\" style=\"max-width:300px;max-height:300px;\" srcset=\"https:\/\/www.stockm.eu\/wp-content\/uploads\/2026\/09\/ar-atsargos-yra-investicija-300x169.webp 300w, https:\/\/www.stockm.eu\/wp-content\/uploads\/2026\/09\/ar-atsargos-yra-investicija-768x432.webp 768w, https:\/\/www.stockm.eu\/wp-content\/uploads\/2026\/09\/ar-atsargos-yra-investicija.webp 1000w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/div><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/www.stockm.eu\/en\/is-inventory-an-investment\/\">Inventory and working capital: is inventory an investment for a business?<\/a><div class=\"wp-block-latest-posts__post-excerpt\">Read more articles<\/div><\/li>\n<li><div class=\"wp-block-latest-posts__featured-image\"><img loading=\"lazy\" decoding=\"async\" width=\"300\" height=\"182\" src=\"https:\/\/www.stockm.eu\/wp-content\/uploads\/2026\/09\/forecasting-vs-dynamic-buffer-management-300x182.webp\" class=\"attachment-medium size-medium wp-post-image\" alt=\"Forecasting vs Dynamic buffer management\" style=\"max-width:300px;max-height:300px;\" srcset=\"https:\/\/www.stockm.eu\/wp-content\/uploads\/2026\/09\/forecasting-vs-dynamic-buffer-management-300x182.webp 300w, https:\/\/www.stockm.eu\/wp-content\/uploads\/2026\/09\/forecasting-vs-dynamic-buffer-management-768x466.webp 768w, https:\/\/www.stockm.eu\/wp-content\/uploads\/2026\/09\/forecasting-vs-dynamic-buffer-management.webp 900w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/div><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/www.stockm.eu\/en\/toc-dynamic-buffer-management-or-forecasting\/\">TOC or forecasting: TOC dynamic buffer management should drive day-to-day inventory decisions<\/a><div class=\"wp-block-latest-posts__post-excerpt\">Companies that already use demand forecasting often ask whether it can be used alongside inventory management based on TOC dynamic buffer management.\nIt can. The key is to define clearly what each method is responsible for.\n<\/div><\/li>\n<li><div class=\"wp-block-latest-posts__featured-image\"><img loading=\"lazy\" decoding=\"async\" width=\"300\" height=\"169\" src=\"https:\/\/www.stockm.eu\/wp-content\/uploads\/2026\/09\/gut-feeling-excel-inventory-management-300x169.webp\" class=\"attachment-medium size-medium wp-post-image\" alt=\"Gut feeling + excel vs TOC dynamic buffer management\" style=\"max-width:300px;max-height:300px;\" srcset=\"https:\/\/www.stockm.eu\/wp-content\/uploads\/2026\/09\/gut-feeling-excel-inventory-management-300x169.webp 300w, https:\/\/www.stockm.eu\/wp-content\/uploads\/2026\/09\/gut-feeling-excel-inventory-management-768x432.webp 768w, https:\/\/www.stockm.eu\/wp-content\/uploads\/2026\/09\/gut-feeling-excel-inventory-management.webp 1000w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/div><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/www.stockm.eu\/en\/excel-gut-feeling-vs-toc-inventory-management\/\">How to move from \u201cExcel + gut feeling\u201d to TOC inventory management<\/a><div class=\"wp-block-latest-posts__post-excerpt\">For many wholesalers, distributors, and manufacturers, inventory planning sits somewhere between Excel files, ERP exports, supplier emails, and the experience of a few key people.\nThis makes a difference. The person buying or planning for a line of products that has been in the market for years will have an understanding of the suppliers, customers, seasonality, and common issues that goes beyond anything in a spreadsheet. <\/div><\/li>\n<\/ul>","protected":false},"excerpt":{"rendered":"<p>Read more articles<\/p>\n","protected":false},"author":3,"featured_media":6506,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_editorskit_title_hidden":false,"_editorskit_reading_time":0,"_editorskit_is_block_options_detached":false,"_editorskit_block_options_position":"{}","_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[450],"tags":[],"class_list":["post-6527","post","type-post","status-publish","format-standard","has-post-thumbnail","category-articles","entry"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v23.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Is inventory an investment for a business? - StockM<\/title>\n<meta name=\"description\" content=\"The objective is to manage inventory as an investment: to hold enough stock to protect the flow of the most important products, but not more than current ...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Is inventory an investment for a business? - StockM\" \/>\n<meta property=\"og:description\" content=\"The objective is to manage inventory as an investment: to hold enough stock to protect the flow of the most important products, but not more than current ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/\" \/>\n<meta property=\"og:site_name\" content=\"StockM\" \/>\n<meta property=\"article:published_time\" content=\"2026-10-06T07:00:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2026-09-23T13:09:09+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.stockm.eu\/wp-content\/uploads\/2026\/09\/ar-atsargos-yra-investicija.webp\" \/>\n\t<meta property=\"og:image:width\" content=\"1000\" \/>\n\t<meta property=\"og:image:height\" content=\"563\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/webp\" \/>\n<meta name=\"author\" content=\"StockM\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"StockM\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"35 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/\"},\"author\":{\"name\":\"StockM\",\"@id\":\"https:\/\/www.stockm.eu\/#\/schema\/person\/90c431a9c43ddb4223e3ee93fc053dce\"},\"headline\":\"Inventory and working capital: is inventory an investment for a business?\",\"datePublished\":\"2026-10-06T07:00:00+00:00\",\"dateModified\":\"2026-09-23T13:09:09+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/\"},\"wordCount\":7744,\"publisher\":{\"@id\":\"https:\/\/www.stockm.eu\/#organization\"},\"image\":{\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.stockm.eu\/wp-content\/uploads\/2026\/09\/ar-atsargos-yra-investicija.webp\",\"articleSection\":[\"Articles\"],\"inLanguage\":\"en-US\"},{\"@type\":[\"WebPage\",\"FAQPage\"],\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/\",\"url\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/\",\"name\":\"Is inventory an investment for a business? - StockM\",\"isPartOf\":{\"@id\":\"https:\/\/www.stockm.eu\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.stockm.eu\/wp-content\/uploads\/2026\/09\/ar-atsargos-yra-investicija.webp\",\"datePublished\":\"2026-10-06T07:00:00+00:00\",\"dateModified\":\"2026-09-23T13:09:09+00:00\",\"description\":\"The objective is to manage inventory as an investment: to hold enough stock to protect the flow of the most important products, but not more than current ...\",\"breadcrumb\":{\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#breadcrumb\"},\"mainEntity\":[{\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885747144\"},{\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885763924\"},{\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885724920\"},{\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790165865365\"},{\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790165897664\"},{\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790165935834\"},{\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790165982534\"},{\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790166054638\"},{\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790166142102\"},{\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790166252976\"},{\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790166296802\"},{\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790166344569\"},{\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885747144\"},{\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885763924\"},{\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885724920\"},{\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168517962\"},{\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168529257\"},{\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168542472\"},{\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168556665\"},{\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168568468\"},{\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168577637\"},{\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168589461\"},{\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168603431\"},{\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168615286\"}],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#primaryimage\",\"url\":\"https:\/\/www.stockm.eu\/wp-content\/uploads\/2026\/09\/ar-atsargos-yra-investicija.webp\",\"contentUrl\":\"https:\/\/www.stockm.eu\/wp-content\/uploads\/2026\/09\/ar-atsargos-yra-investicija.webp\",\"width\":1000,\"height\":563,\"caption\":\"Ar atsargos yra ivesticija?\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.stockm.eu\/en\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Inventory and working capital: is inventory an investment for a business?\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.stockm.eu\/#website\",\"url\":\"https:\/\/www.stockm.eu\/\",\"name\":\"StockM\",\"description\":\"Atsarg\u0173 valdymo sistema\",\"publisher\":{\"@id\":\"https:\/\/www.stockm.eu\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.stockm.eu\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/www.stockm.eu\/#organization\",\"name\":\"StockM\",\"url\":\"https:\/\/www.stockm.eu\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.stockm.eu\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/www.stockm.eu\/wp-content\/uploads\/2020\/03\/stockm-logo.png\",\"contentUrl\":\"https:\/\/www.stockm.eu\/wp-content\/uploads\/2020\/03\/stockm-logo.png\",\"width\":277,\"height\":50,\"caption\":\"StockM\"},\"image\":{\"@id\":\"https:\/\/www.stockm.eu\/#\/schema\/logo\/image\/\"}},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.stockm.eu\/#\/schema\/person\/90c431a9c43ddb4223e3ee93fc053dce\",\"name\":\"StockM\"},{\"@type\":\"Question\",\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885747144\",\"position\":1,\"url\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885747144\",\"name\":\"Is inventory an investment of the company?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"Yes, since inventory is a current asset that appears in the balance sheet of the company. It turns into a valuable investment because inventory secures the existence of popular goods, avoids sales losses, and allows for a continuous production process or meeting commitments to customers.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885763924\",\"position\":2,\"url\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885763924\",\"name\":\"Why does the inventory impact working capital?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"Usually, a company purchases products, raw materials, or spare parts before generating income from their sale or consumption. As long as the inventory is not sold, used, returned to the supplier, or written off, it will take part of the working capital of the company.<br\/>Having too much inventory can lead to lower liquidity of the company and limit its opportunities to pay suppliers, grow, or buy best-sellers.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885724920\",\"position\":3,\"url\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885724920\",\"name\":\"Does low inventory mean good cash flow?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"No. If the reduction in inventory is equal for all types of products, it may lead to an insufficient amount of fast-moving and important production components, hence causing losses in sales, downtime of production and additional purchasing and transportation costs due to rapid delivery of the goods.<br\/>The aim is not just a reduction of the overall inventory. The aim is to have a proper amount of inventory for each particular product and in each location.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790165865365\",\"position\":4,\"url\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790165865365\",\"name\":\"When does inventory bring value?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"Inventory brings value when it fulfills a certain business purpose, such as preventing losses from sales of a fast-moving product, securing production from downtime with the use of critical components, and supporting high peaks of demand in case of seasonal inventory.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790165897664\",\"position\":5,\"url\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790165897664\",\"name\":\"When does inventory become excess stock?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"Excess stock is a situation where the amount of inventory does not correspond to current demand and supply. It occurs because of declining demand, the end of a promotion or season, reduced lead times, increasing reliability of the suppliers, and changing assortment of the products.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790165935834\",\"position\":6,\"url\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790165935834\",\"name\":\"Why can there be a situation when a company has excessive inventory and at the same time experiences shortages?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"Most often, the problem lies not in the total quantity of inventory but in its structure and distribution. There may be a situation when one warehouse is overfilled with slow moving products and another warehouse lacks fast-moving products.<br\/>This is why it is important to analyze inventory not only by its total value but also on an SKU-by-warehouse basis.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790165982534\",\"position\":7,\"url\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790165982534\",\"name\":\"What should a company do with slow-moving and obsolete products?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"The company should start taking action right away. First of all, it should stop or limit future supply so that this type of inventory does not accumulate further.<br\/>According to the situation, the products can be moved to the warehouse where there is demand, reduced in price, combined with other products, sold via a clearance campaign, sent back to the supplier, or simply eliminated from the assortment. The sooner the action is taken, the more options are available to the company to recover the money.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790166054638\",\"position\":8,\"url\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790166054638\",\"name\":\"Why could a supplier discount raise inventory costs?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"A volume discount, a minimum order quantity, or the need to order in full pallets may result in reduced cost per item. At the same time, such a discount may stimulate the company to order more items than it needs in the short term.<br\/>The extra stock will occupy capital, space, incur additional handling costs, and become subject to the risk of becoming obsolete. For this reason, the decision about making an order should take into account not just the cost per item but the overall cost of ordering more inventory than the business needs.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790166142102\",\"position\":9,\"url\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790166142102\",\"name\":\"What KPIs should be tracked when controlling inventory and working capital?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"The important KPI to track are: inventory value by SKU and location; inventory turns or days on hand; losses from lost sales and out-of-stock situations; slow-moving and obsolete inventory; suppliers' reliability in meeting lead times; inventory write-offs and aging issues.<br\/>Altogether, they allow seeing where money is tied up, what risks exist regarding availability, and what actions should be taken.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790166252976\",\"position\":10,\"url\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790166252976\",\"name\":\"What is meant by inventory buffer?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"Inventory buffer refers to a deliberately created protection level for a certain item at a particular location. It is intended to make sure that there is adequate inventory to facilitate sales or manufacturing till the next replenishment. The aim of buffer is not to keep the maximum amount possible. Instead, the objective of buffer is to have enough inventory to satisfy current consumption.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790166296802\",\"position\":11,\"url\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790166296802\",\"name\":\"Why should there be periodic buffer reviews?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"The demand pattern, lead time, reliability of the supplier, product significance, and product line all tend to change with time. A buffer that was ideal one year ago might be inadequate or excessive at present.<br\/>Periodic buffer reviews will help keep availability where there is an increased risk of stockout and minimize investments where there is excess inventory.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790166344569\",\"position\":12,\"url\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790166344569\",\"name\":\"How is StockM able to enhance the working capital management process?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"The StockM inventory management solution offers visibility of the inventory positions by SKU and location.<br\/>It identifies potential stockouts, fast\/slow moving products, and obsolete inventory positions. It can prioritize tasks based on the status of the inventory buffers, recommend replenishment amounts, and recognize when the inventory does not represent the current demand. It can recommend changes in the buffer levels or make these adjustments automatically.<br\/>It enables organizations to avoid replenishing excess inventory and safeguard the availability of key products.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885747144\",\"position\":13,\"url\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885747144\",\"name\":\"Is inventory an investment of the company?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"Yes, since inventory is a current asset that appears in the balance sheet of the company. It turns into a valuable investment because inventory secures the existence of popular goods, avoids sales losses, and allows for a continuous production process or meeting commitments to customers.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885763924\",\"position\":14,\"url\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885763924\",\"name\":\"Why does the inventory impact working capital?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"Usually, a company purchases products, raw materials, or spare parts before generating income from their sale or consumption. As long as the inventory is not sold, used, returned to the supplier, or written off, it will take part of the working capital of the company.<br\/>Having too much inventory can lead to lower liquidity of the company and limit its opportunities to pay suppliers, grow, or buy best-sellers.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885724920\",\"position\":15,\"url\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885724920\",\"name\":\"Does low inventory mean good cash flow?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"No. If the reduction in inventory is equal for all types of products, it may lead to an insufficient amount of fast-moving and important production components, hence causing losses in sales, downtime of production and additional purchasing and transportation costs due to rapid delivery of the goods.<br\/>The aim is not just a reduction of the overall inventory. The aim is to have a proper amount of inventory for each particular product and in each location.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168517962\",\"position\":16,\"url\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168517962\",\"name\":\"When does inventory bring value?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"Inventory brings value when it fulfills a certain business purpose, such as preventing losses from sales of a fast-moving product, securing production from downtime with the use of critical components, and supporting high peaks of demand in case of seasonal inventory.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168529257\",\"position\":17,\"url\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168529257\",\"name\":\"When does inventory become excess stock?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"Excess stock is a situation where the amount of inventory does not correspond to current demand and supply. It occurs because of declining demand, the end of a promotion or season, reduced lead times, increasing reliability of the suppliers, and a changing assortment of the products.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168542472\",\"position\":18,\"url\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168542472\",\"name\":\"Why can there be a situation when a company has excessive inventory and at the same time experiences shortages?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"Most often, the problem lies not in the total quantity of inventory but in its structure and distribution. There may be a situation when one warehouse is overfilled with slow moving products and another warehouse lacks fast-moving products.<br\/>This is why it is important to analyze inventory not only by its total value but also on an SKU-by-warehouse basis.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168556665\",\"position\":19,\"url\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168556665\",\"name\":\"What should a company do with slow-moving and obsolete products?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"The company should start taking action right away. First of all, it should stop or limit future supply so that this type of inventory does not accumulate further.<br\/>According to the situation, the products can be moved to the warehouse where there is demand, reduced in price, combined with other products, sold via a clearance campaign, sent back to the supplier, or simply eliminated from the assortment. The sooner the action is taken, the more options are available to the company to recover the money.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168568468\",\"position\":20,\"url\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168568468\",\"name\":\"Why could a supplier discount raise inventory costs?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"A volume discount, a minimum order quantity, or the need to order in full pallets may result in reduced cost per item. At the same time, such a discount may stimulate the company to order more items than it needs in the short term.<br\/>The extra stock will occupy capital, space, incur additional handling costs, and become subject to the risk of becoming obsolete. For this reason, the decision about making an order should take into account not just the cost per item but the overall cost of ordering more inventory than the business needs.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168577637\",\"position\":21,\"url\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168577637\",\"name\":\"What KPIs should be tracked when controlling inventory and working capital?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"The important KPI to track are: inventory value by SKU and location; inventory turns or days on hand; losses from lost sales and out-of-stock situations; slow-moving and obsolete inventory; suppliers' reliability in meeting lead times; inventory write-offs and aging issues.<br\/>Altogether, they allow seeing where money is tied up, what risks exist regarding availability, and what actions should be taken.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168589461\",\"position\":22,\"url\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168589461\",\"name\":\"What is meant by inventory buffer?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"Inventory buffer refers to a deliberately created protection level for a certain item at a particular location. It is intended to make sure that there is adequate inventory to facilitate sales or manufacturing till the next replenishment. The aim of a buffer is not to keep the maximum amount possible. Instead, the objective of buffer is to have enough inventory to satisfy current consumption.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168603431\",\"position\":23,\"url\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168603431\",\"name\":\"Why should there be periodic buffer reviews?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"The demand pattern, lead time, reliability of the supplier, product significance, and product line all tend to change with time. A buffer that was ideal one year ago might be inadequate or excessive at present.<br\/>Periodic buffer reviews will help keep availability where there is an increased risk of stockout and minimize investments where there is excess inventory.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168615286\",\"position\":24,\"url\":\"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168615286\",\"name\":\"How is StockM able to enhance the working capital management process?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"The StockM inventory management solution offers visibility of the inventory positions by SKU and location.<br\/>It identifies potential stockouts, fast\/slow moving products, and obsolete inventory positions. It can prioritize tasks based on the status of the inventory buffers, recommend replenishment amounts, and recognize when the inventory does not represent the current demand. It can recommend changes in the buffer levels or make these adjustments automatically.<br\/>It enables organizations to avoid replenishing excess inventory and safeguard the availability of key products.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Is inventory an investment for a business? - StockM","description":"The objective is to manage inventory as an investment: to hold enough stock to protect the flow of the most important products, but not more than current ...","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/","og_locale":"en_US","og_type":"article","og_title":"Is inventory an investment for a business? - StockM","og_description":"The objective is to manage inventory as an investment: to hold enough stock to protect the flow of the most important products, but not more than current ...","og_url":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/","og_site_name":"StockM","article_published_time":"2026-10-06T07:00:00+00:00","article_modified_time":"2026-09-23T13:09:09+00:00","og_image":[{"width":1000,"height":563,"url":"https:\/\/www.stockm.eu\/wp-content\/uploads\/2026\/09\/ar-atsargos-yra-investicija.webp","type":"image\/webp"}],"author":"StockM","twitter_card":"summary_large_image","twitter_misc":{"Written by":"StockM","Est. reading time":"35 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#article","isPartOf":{"@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/"},"author":{"name":"StockM","@id":"https:\/\/www.stockm.eu\/#\/schema\/person\/90c431a9c43ddb4223e3ee93fc053dce"},"headline":"Inventory and working capital: is inventory an investment for a business?","datePublished":"2026-10-06T07:00:00+00:00","dateModified":"2026-09-23T13:09:09+00:00","mainEntityOfPage":{"@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/"},"wordCount":7744,"publisher":{"@id":"https:\/\/www.stockm.eu\/#organization"},"image":{"@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#primaryimage"},"thumbnailUrl":"https:\/\/www.stockm.eu\/wp-content\/uploads\/2026\/09\/ar-atsargos-yra-investicija.webp","articleSection":["Articles"],"inLanguage":"en-US"},{"@type":["WebPage","FAQPage"],"@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/","url":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/","name":"Is inventory an investment for a business? - StockM","isPartOf":{"@id":"https:\/\/www.stockm.eu\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#primaryimage"},"image":{"@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#primaryimage"},"thumbnailUrl":"https:\/\/www.stockm.eu\/wp-content\/uploads\/2026\/09\/ar-atsargos-yra-investicija.webp","datePublished":"2026-10-06T07:00:00+00:00","dateModified":"2026-09-23T13:09:09+00:00","description":"The objective is to manage inventory as an investment: to hold enough stock to protect the flow of the most important products, but not more than current ...","breadcrumb":{"@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#breadcrumb"},"mainEntity":[{"@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885747144"},{"@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885763924"},{"@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885724920"},{"@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790165865365"},{"@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790165897664"},{"@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790165935834"},{"@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790165982534"},{"@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790166054638"},{"@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790166142102"},{"@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790166252976"},{"@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790166296802"},{"@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790166344569"},{"@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885747144"},{"@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885763924"},{"@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885724920"},{"@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168517962"},{"@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168529257"},{"@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168542472"},{"@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168556665"},{"@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168568468"},{"@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168577637"},{"@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168589461"},{"@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168603431"},{"@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168615286"}],"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#primaryimage","url":"https:\/\/www.stockm.eu\/wp-content\/uploads\/2026\/09\/ar-atsargos-yra-investicija.webp","contentUrl":"https:\/\/www.stockm.eu\/wp-content\/uploads\/2026\/09\/ar-atsargos-yra-investicija.webp","width":1000,"height":563,"caption":"Ar atsargos yra ivesticija?"},{"@type":"BreadcrumbList","@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.stockm.eu\/en\/"},{"@type":"ListItem","position":2,"name":"Inventory and working capital: is inventory an investment for a business?"}]},{"@type":"WebSite","@id":"https:\/\/www.stockm.eu\/#website","url":"https:\/\/www.stockm.eu\/","name":"StockM","description":"Atsarg\u0173 valdymo sistema","publisher":{"@id":"https:\/\/www.stockm.eu\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.stockm.eu\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/www.stockm.eu\/#organization","name":"StockM","url":"https:\/\/www.stockm.eu\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.stockm.eu\/#\/schema\/logo\/image\/","url":"https:\/\/www.stockm.eu\/wp-content\/uploads\/2020\/03\/stockm-logo.png","contentUrl":"https:\/\/www.stockm.eu\/wp-content\/uploads\/2020\/03\/stockm-logo.png","width":277,"height":50,"caption":"StockM"},"image":{"@id":"https:\/\/www.stockm.eu\/#\/schema\/logo\/image\/"}},{"@type":"Person","@id":"https:\/\/www.stockm.eu\/#\/schema\/person\/90c431a9c43ddb4223e3ee93fc053dce","name":"StockM"},{"@type":"Question","@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885747144","position":1,"url":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885747144","name":"Is inventory an investment of the company?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"Yes, since inventory is a current asset that appears in the balance sheet of the company. It turns into a valuable investment because inventory secures the existence of popular goods, avoids sales losses, and allows for a continuous production process or meeting commitments to customers.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885763924","position":2,"url":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885763924","name":"Why does the inventory impact working capital?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"Usually, a company purchases products, raw materials, or spare parts before generating income from their sale or consumption. As long as the inventory is not sold, used, returned to the supplier, or written off, it will take part of the working capital of the company.<br\/>Having too much inventory can lead to lower liquidity of the company and limit its opportunities to pay suppliers, grow, or buy best-sellers.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885724920","position":3,"url":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885724920","name":"Does low inventory mean good cash flow?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"No. If the reduction in inventory is equal for all types of products, it may lead to an insufficient amount of fast-moving and important production components, hence causing losses in sales, downtime of production and additional purchasing and transportation costs due to rapid delivery of the goods.<br\/>The aim is not just a reduction of the overall inventory. The aim is to have a proper amount of inventory for each particular product and in each location.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790165865365","position":4,"url":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790165865365","name":"When does inventory bring value?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"Inventory brings value when it fulfills a certain business purpose, such as preventing losses from sales of a fast-moving product, securing production from downtime with the use of critical components, and supporting high peaks of demand in case of seasonal inventory.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790165897664","position":5,"url":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790165897664","name":"When does inventory become excess stock?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"Excess stock is a situation where the amount of inventory does not correspond to current demand and supply. It occurs because of declining demand, the end of a promotion or season, reduced lead times, increasing reliability of the suppliers, and changing assortment of the products.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790165935834","position":6,"url":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790165935834","name":"Why can there be a situation when a company has excessive inventory and at the same time experiences shortages?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"Most often, the problem lies not in the total quantity of inventory but in its structure and distribution. There may be a situation when one warehouse is overfilled with slow moving products and another warehouse lacks fast-moving products.<br\/>This is why it is important to analyze inventory not only by its total value but also on an SKU-by-warehouse basis.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790165982534","position":7,"url":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790165982534","name":"What should a company do with slow-moving and obsolete products?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"The company should start taking action right away. First of all, it should stop or limit future supply so that this type of inventory does not accumulate further.<br\/>According to the situation, the products can be moved to the warehouse where there is demand, reduced in price, combined with other products, sold via a clearance campaign, sent back to the supplier, or simply eliminated from the assortment. The sooner the action is taken, the more options are available to the company to recover the money.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790166054638","position":8,"url":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790166054638","name":"Why could a supplier discount raise inventory costs?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"A volume discount, a minimum order quantity, or the need to order in full pallets may result in reduced cost per item. At the same time, such a discount may stimulate the company to order more items than it needs in the short term.<br\/>The extra stock will occupy capital, space, incur additional handling costs, and become subject to the risk of becoming obsolete. For this reason, the decision about making an order should take into account not just the cost per item but the overall cost of ordering more inventory than the business needs.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790166142102","position":9,"url":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790166142102","name":"What KPIs should be tracked when controlling inventory and working capital?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"The important KPI to track are: inventory value by SKU and location; inventory turns or days on hand; losses from lost sales and out-of-stock situations; slow-moving and obsolete inventory; suppliers' reliability in meeting lead times; inventory write-offs and aging issues.<br\/>Altogether, they allow seeing where money is tied up, what risks exist regarding availability, and what actions should be taken.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790166252976","position":10,"url":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790166252976","name":"What is meant by inventory buffer?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"Inventory buffer refers to a deliberately created protection level for a certain item at a particular location. It is intended to make sure that there is adequate inventory to facilitate sales or manufacturing till the next replenishment. The aim of buffer is not to keep the maximum amount possible. Instead, the objective of buffer is to have enough inventory to satisfy current consumption.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790166296802","position":11,"url":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790166296802","name":"Why should there be periodic buffer reviews?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"The demand pattern, lead time, reliability of the supplier, product significance, and product line all tend to change with time. A buffer that was ideal one year ago might be inadequate or excessive at present.<br\/>Periodic buffer reviews will help keep availability where there is an increased risk of stockout and minimize investments where there is excess inventory.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790166344569","position":12,"url":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790166344569","name":"How is StockM able to enhance the working capital management process?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"The StockM inventory management solution offers visibility of the inventory positions by SKU and location.<br\/>It identifies potential stockouts, fast\/slow moving products, and obsolete inventory positions. It can prioritize tasks based on the status of the inventory buffers, recommend replenishment amounts, and recognize when the inventory does not represent the current demand. It can recommend changes in the buffer levels or make these adjustments automatically.<br\/>It enables organizations to avoid replenishing excess inventory and safeguard the availability of key products.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885747144","position":13,"url":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885747144","name":"Is inventory an investment of the company?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"Yes, since inventory is a current asset that appears in the balance sheet of the company. It turns into a valuable investment because inventory secures the existence of popular goods, avoids sales losses, and allows for a continuous production process or meeting commitments to customers.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885763924","position":14,"url":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885763924","name":"Why does the inventory impact working capital?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"Usually, a company purchases products, raw materials, or spare parts before generating income from their sale or consumption. As long as the inventory is not sold, used, returned to the supplier, or written off, it will take part of the working capital of the company.<br\/>Having too much inventory can lead to lower liquidity of the company and limit its opportunities to pay suppliers, grow, or buy best-sellers.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885724920","position":15,"url":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1784885724920","name":"Does low inventory mean good cash flow?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"No. If the reduction in inventory is equal for all types of products, it may lead to an insufficient amount of fast-moving and important production components, hence causing losses in sales, downtime of production and additional purchasing and transportation costs due to rapid delivery of the goods.<br\/>The aim is not just a reduction of the overall inventory. The aim is to have a proper amount of inventory for each particular product and in each location.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168517962","position":16,"url":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168517962","name":"When does inventory bring value?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"Inventory brings value when it fulfills a certain business purpose, such as preventing losses from sales of a fast-moving product, securing production from downtime with the use of critical components, and supporting high peaks of demand in case of seasonal inventory.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168529257","position":17,"url":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168529257","name":"When does inventory become excess stock?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"Excess stock is a situation where the amount of inventory does not correspond to current demand and supply. It occurs because of declining demand, the end of a promotion or season, reduced lead times, increasing reliability of the suppliers, and a changing assortment of the products.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168542472","position":18,"url":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168542472","name":"Why can there be a situation when a company has excessive inventory and at the same time experiences shortages?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"Most often, the problem lies not in the total quantity of inventory but in its structure and distribution. There may be a situation when one warehouse is overfilled with slow moving products and another warehouse lacks fast-moving products.<br\/>This is why it is important to analyze inventory not only by its total value but also on an SKU-by-warehouse basis.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168556665","position":19,"url":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168556665","name":"What should a company do with slow-moving and obsolete products?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"The company should start taking action right away. First of all, it should stop or limit future supply so that this type of inventory does not accumulate further.<br\/>According to the situation, the products can be moved to the warehouse where there is demand, reduced in price, combined with other products, sold via a clearance campaign, sent back to the supplier, or simply eliminated from the assortment. The sooner the action is taken, the more options are available to the company to recover the money.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168568468","position":20,"url":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168568468","name":"Why could a supplier discount raise inventory costs?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"A volume discount, a minimum order quantity, or the need to order in full pallets may result in reduced cost per item. At the same time, such a discount may stimulate the company to order more items than it needs in the short term.<br\/>The extra stock will occupy capital, space, incur additional handling costs, and become subject to the risk of becoming obsolete. For this reason, the decision about making an order should take into account not just the cost per item but the overall cost of ordering more inventory than the business needs.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168577637","position":21,"url":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168577637","name":"What KPIs should be tracked when controlling inventory and working capital?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"The important KPI to track are: inventory value by SKU and location; inventory turns or days on hand; losses from lost sales and out-of-stock situations; slow-moving and obsolete inventory; suppliers' reliability in meeting lead times; inventory write-offs and aging issues.<br\/>Altogether, they allow seeing where money is tied up, what risks exist regarding availability, and what actions should be taken.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168589461","position":22,"url":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168589461","name":"What is meant by inventory buffer?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"Inventory buffer refers to a deliberately created protection level for a certain item at a particular location. It is intended to make sure that there is adequate inventory to facilitate sales or manufacturing till the next replenishment. The aim of a buffer is not to keep the maximum amount possible. Instead, the objective of buffer is to have enough inventory to satisfy current consumption.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168603431","position":23,"url":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168603431","name":"Why should there be periodic buffer reviews?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"The demand pattern, lead time, reliability of the supplier, product significance, and product line all tend to change with time. A buffer that was ideal one year ago might be inadequate or excessive at present.<br\/>Periodic buffer reviews will help keep availability where there is an increased risk of stockout and minimize investments where there is excess inventory.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168615286","position":24,"url":"https:\/\/www.stockm.eu\/ar-atsargos-yra-imones-investicija\/#faq-question-1790168615286","name":"How is StockM able to enhance the working capital management process?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"The StockM inventory management solution offers visibility of the inventory positions by SKU and location.<br\/>It identifies potential stockouts, fast\/slow moving products, and obsolete inventory positions. It can prioritize tasks based on the status of the inventory buffers, recommend replenishment amounts, and recognize when the inventory does not represent the current demand. It can recommend changes in the buffer levels or make these adjustments automatically.<br\/>It enables organizations to avoid replenishing excess inventory and safeguard the availability of key products.","inLanguage":"en-US"},"inLanguage":"en-US"}]}},"_links":{"self":[{"href":"https:\/\/www.stockm.eu\/en\/wp-json\/wp\/v2\/posts\/6527","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.stockm.eu\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.stockm.eu\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.stockm.eu\/en\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.stockm.eu\/en\/wp-json\/wp\/v2\/comments?post=6527"}],"version-history":[{"count":11,"href":"https:\/\/www.stockm.eu\/en\/wp-json\/wp\/v2\/posts\/6527\/revisions"}],"predecessor-version":[{"id":6544,"href":"https:\/\/www.stockm.eu\/en\/wp-json\/wp\/v2\/posts\/6527\/revisions\/6544"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.stockm.eu\/en\/wp-json\/wp\/v2\/media\/6506"}],"wp:attachment":[{"href":"https:\/\/www.stockm.eu\/en\/wp-json\/wp\/v2\/media?parent=6527"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.stockm.eu\/en\/wp-json\/wp\/v2\/categories?post=6527"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.stockm.eu\/en\/wp-json\/wp\/v2\/tags?post=6527"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}