We’ve recently shifted our inventory strategy in our electronics parts store — we used to keep a large backstock of everything, just in case. But now, we’re trying to move to more of a just-in-time approach to free up space and hopefully cash. It’s been a bit of a balancing act though, especially with lead times from suppliers being all over the place. I’ve noticed our available cash flow looks a bit healthier, but I’m still not 100% sure how it’s affecting our operating working capital overall. Has anyone else changed their inventory approach and seen a clear difference in how it impacts day-to-day cash use?
I hear you — I run a small business selling fitness gear, and we did something very similar last year. We went from overstocking to cutting inventory by about 30%, and it made a noticeable difference in how much cash we had on hand each month. One thing I learned is that reducing inventory directly lowers your operating working capital, which can be a good thing if it’s done right. It helped us avoid unnecessary storage costs too. If you want a clearer idea of how this all ties together, there’s a solid breakdown here on how to calculate operating capital
. It really helped me understand the relationship between inventory levels and short-term working capital.
Just reading through this thread and found it really interesting. I work in accounting, mostly with service-based businesses, so inventory’s not really something I deal with day to day. But it’s always cool to see how these operational changes actually play out in real businesses. Definitely picking up some useful insights from you all.
