Inventory, whether it be in the form of Raw Material, Work in Progress (WIP) or Finished Goods, has the potential to significantly impact a company’s operational and financial performance. Whether that impact is positive or negative depends on a number of factors.

When managed effectively, inventory can provide a company with a strategic advantage over its competitors. Reduced lead times, improved order fill rates, less stock-outs, reduced administrative cost and the ability to meet unforeseen changes in demand can lead to increased levels of customer service, improved customer retention rates and growth in market share and profitability. In some cases, companies can even charge a price premium for items they can supply ex stock rather tha...