How to Convert Inventory from Cost to a Competitive Advantage

Inventory continues to be the lifeblood of supply chains. Properly managed, it drives revenue and efficiency for companies. While a majority of companies still view inventory as a cost-related item, 27% of companies think of inventory as a way of gaining market share through superior service and product availability.

 

The truly visionary companies are leveraging inventory as a competitive weapon and have moved to network-based inventory management versus a facility level operation. They use inventory to optimally position supply when and where it is most needed and most profitable. By performing segmentation of their customer channels and products, these companies are able to attain significantly higher return on assets than their competitors.

 

Best-in-class companies are defined as companies that have customer service levels above 96% and that have simultaneously reduced inventory carrying costs (which correspond to the top 10% of respondents). A best-in-class company is twice as likely as its peers to: