Inventory is the largest and probably the most important asset of many distributors. More money is probably tied up in inventory than in buildings or equipment. And inventory is usually less "liquid" than accounts receivable. That is, it is harder to turn inventory back into cash to pay employees and expenses. If distributors do not have this money invested in the right amount of the right products, they cannot provide the service to customers necessary to be successful. It is crucial that every distributor develops and uses a comprehensive set of tools that allows them to closely monitor the performance of their investment in inventory. This paper will discuss several simple measurements that will help ensure that you are maximizing the profitability and productivity of your investment in inventory.
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