Your stock is your bank. But without the IBAN
Theory and practice
In a business, what seems “normal” is often what locks up liquidity. And among all the invisible blockages, there is one that keeps making itself felt without saying a word: inventory.
You have tied-up capital. It is there, sitting on a shelf, full of good intentions but empty of real value when you really need it. You cannot use it to pay salaries. It does not help you with the banks. And above all it does not generate interest: it absorbs it, eats it up, drains it dry.
In many SMEs, inventory is the company’s largest “current account”… with the difference that nobody monitors its balance in real time, nobody calculates the cost of keeping it full and, worse still, nobody knows exactly what is in it.
And yet every box, every pallet, every item code has a direct impact on cash, not as a matter of philosophy but of mathematics.
What did we see when we walked into the company through the lens of controlling?
- Stock that turns over every 180 days but in reality does not turn over at all.
- Raw materials bought “just in case” and left there to become historical relics.
- Bills of materials updated in the office but ignored in the warehouse, with stock that keeps being replenished “because that’s how it’s always been done”.
- Reorders placed “by eye”, with fear in place of data.
- Saturated spaces that force new leases, new shelving, new costs, instead of new ideas.
In many cases inventory grows slowly without anyone really perceiving the overall economic impact: more space taken up, more capital tied up, more hidden costs and less financial flexibility. These are not organisational flaws: they are holes in liquidity.
But when operations and controlling work together, the warehouse is transformed. You can:
- free up cash without touching a single line of turnover;
- reduce stock while maintaining (or improving) the service level;
- introduce simple, understandable KPIs: stock turnover, obsolescence, coverage ratio;
- define min/max stock policies based on logic, not on gut feeling;
- map “non-productive” stock and decide what to do with it on sound criteria, not out of resignation.
The real point is this: the warehouse is not a physical place. It is a financial indicator, which can put pressure on liquidity when nobody analyses the tied-up capital in a structured way, because every product that sits idle for too long represents economic resources locked up that the company cannot use for investment and development.
If your cash is suffering, very often the problem is not outside but inside: in what you have bought, accumulated and forgotten.
So the question to ask yourself isn’t “what’s missing?”, but: how much cash could I free up without selling a single extra unit?