Most inventory programmes are a flat cut. Everyone is told to buy fifteen percent less. Availability drops on the products that were selling, and the stock that was already stuck stays stuck.

We took 32% out of a business in six months while it was still growing. It came from four changes.

01 / 04

Cover targets by segment

Most companies set one target for the whole business. Twelve weeks of cover, or a total stock value that finance is happy with.

That target is wrong for most of the range. A core product that sells every week does not need the same cover as a seasonal launch. A product you can reorder in four weeks does not need the same cover as one with a ninety day lead time.

So we set a target for each segment. We looked at how variable the demand was, how long the lead time was, whether the product carried over, and whether we could reorder it.

Once the targets were in, it was obvious where the excess sat. Most of it was in core carryover products. Nobody had questioned those because they always sell eventually.

02 / 04

Phasing the buy

The next change was when the stock lands.

The normal pattern is one buy, placed early, arriving before the season. You commit everything months before you know anything. Whatever you get wrong sits in the warehouse until it gets discounted.

We split the buys. A first drop for the opening weeks, then top ups placed against real sell through.

This takes work with suppliers. They have to reserve capacity and commit to a shorter lead time on the top up. Some will not do it. The ones who will are worth more to you than a slightly cheaper unit price.

You hold less stock at any point in the season, and half the buy gets decided with real information.

03 / 04

Buy discipline

Targets slip. Every business we have worked in drifts back within two seasons unless someone owns this.

What worked was checking each buy against its segment target before it was placed. That needs an open to buy people can see, and someone senior willing to say no.

We also stopped rounding orders up to reach a price break.

Then we started reviewing the last buy before placing the next one. What was ordered, what sold, what was left, what it cost. That review changed behaviour faster than the targets did.

04 / 04

Service levels

Cover is a service level decision, and most companies never make it out loud.

Going from ninety five to ninety eight percent availability costs a lot of stock. Most of that stock protects products nobody would miss.

B2B is different. You have confirmed orders, so you know what is coming and you can hold far less buffer than you need for a hero product online.

We set the service level by segment and by channel, and wrote down what we were willing to run out of. That conversation is uncomfortable. It also frees up the most stock.

Once the plan was reliable we could go further. Some B2B orders stopped coming through the warehouse and went from the factory straight to the customer. No inbound freight, no handling, no storage. B2B margin went up by more than 40%.

We did not buy a system for any of this. We agreed the targets, held people to them, and were honest about what we were willing to be out of stock on.

One warning. Inventory reduction is a means to an end. The point is to grow with less capital tied up. If a target starts costing you sales on products that are selling, change the target.