Case Study:

Inventory Optimization

Manager analyzing €200M excess inventory with aging stock and low turnover risks – Nextshift Leadership inventory optimization case study

Initial Situation

  • Significant inventory buildup due to pandemic-related safety concerns and long lead times
  • Inventory levels increased drastically in value
  • High „Months of Supply“ for multiple vendors
  • Low inventory turnover in many product groups
  • Increased risk of aging stock, write-downs, and cash flow impact
Team reviewing inventory trends dashboard with KPIs on stock levels, months of supply and turnover ratios – Nextshift Leadership inventory optimization actions

Actions & Approach

Structured Inventory Optimization Approach

1. Inventory Transparency

Weekly dashboard with all relevant KPIs:

Inventory Total / Projected Inventory Trends / Months of Supply / Turn Ratios / Overdue Backlog

  • Vendor-specific analysis & urgency classification

2. Targeted Inventory Actions

  • Prioritized measures for the tier 1 manufacturers
  • Initiated inventory promotions, vendor returns and customized reallocations

3. Cross-Functional Collaboration

  • Coordination with Sales, Finance & Demand teams on push/pull scenarios
  • Integrated financial criticalities (e.g. Shipment Blocks)
  • Analyzed backlog risks & initiated reallocations for at-risk inventory

4. Structured Decision Reviews

  • Weekly performance reviews at SKU/vendor level
  • Early warning system for aging stock
  • Included risk backlog in action planning

Results & Impact

  • Significant inventory reduction with Tier1 suppliers within 3 months
  • Reduced inventory reach
  • Improved turn ratio in strategic product groups
  • Avoided write-downs on excess inventory
  • Improved transparency for management decisions and controlling
Executive presenting positive business review on inventory reduction, turn ratio improvement and supply transparency – Nextshift Leadership inventory optimization results
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