Manufacturing Blog / Supply Chain & Finance
· Core Alliance Group
The short answer
Separate inventory by business purpose and risk. Verify the records, identify the components that stop shipments and review replenishment assumptions before cutting stock everywhere.
The total hides the problem
A large inventory balance does not mean the right material is available. Stock may be obsolete, allocated to another order, awaiting inspection or recorded in the wrong location. A shortage report and a full warehouse can both be accurate.
Start with a few repeatedly disrupted orders. Compare the bill of materials, usable quantities, reservations, actual locations and supplier commitments. Keep quantity accuracy separate from whether the replenishment policy makes sense. Buying more of an inaccurate record rarely improves confidence.
Segment before deciding
Distinguish critical purchased components, common replenishment items, work-in-process, finished goods and slow-moving stock. Consider lead time, demand variability, substitute availability and the consequence of a shortage. A cheap component can stop an expensive shipment.
NIST MEP's supply-chain guidance includes inventory management and supplier performance among the issues manufacturers can address. The practical review should connect those decisions with operations and finance rather than assigning purchasing an isolated inventory-reduction target.
Make the cash discussion concrete
Finance can show where cash is tied up and distinguish book value, potential recoverable value and any approved accounting treatment. Operations can explain which buffers protect a real constraint. Supply chain can challenge old lead times and minimum quantities. Technology can make adjustments traceable.
Use a clearly labeled scenario to compare alternatives: reducing an overstocked item is different from reducing the only approved long-lead component for a committed order. Do not assume a lower month-end balance proves a better operating result if premium freight and missed shipments rise.
Choose one controlled improvement
Select one inventory segment with a known owner. Reconcile a sample, review consumption and receipts, confirm actual replenishment behavior and propose a limited policy change. Define when the team will reverse or adjust the experiment if service deteriorates.
This week's assignment: pair one recurring shortage with one slow-moving stock item. Explain why each exists and who can change the underlying rule. The useful result is a better decision about material and cash, not an instruction to make every shelf look emptier.
Common question
Should a manufacturer reduce every inventory category by the same percentage?
An equal reduction can ignore criticality, lead times and customer commitments. Review each segment's purpose and risk before changing policy.
Source and application
NIST MEP: Supply Chain Management. Sources reviewed October 29, 2026. The leadership checklist and weekly assignment are Core Alliance Group guidance; examples are illustrative and do not describe client results.
Connect the next decision
Bring Supply Chain, Operations, Finance and Technology into the same conversation. Core Alliance Group coordinates independent executive expertise around the business priority; an engagement identifies the responsible providers.
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