Date Added: Jan 2010
Inventory is the largest balance sheet asset in your business. It's obvious: If your margin is 50 percent, that means your cost of goods is 50 percent; in other words, 50 percent of your net sales are spent on inventory and inbound freight. But if it's obvious that inventory is so important, why aren't we more aggressive in dealing with it? Why don't we do more to liquidate aging inventory? Why don't we look at how to achieve the optimal balance point between high order fill rate and increased inventory? Owners and senior management need to take a fresh look at their financial approach to measuring and managing inventory.