The 10–25% Excess Inventory Problem Many COOs Are Fighting Today
Across many mid-market plants, COOs are managing a familiar tension. Warehouses look full, yet production teams still chase materials. Finance reports rising inventory value, while customer service teams continue to feel delivery pressure.
Industry benchmarks indicate manufacturers often carry 10–25% excess inventory as protection against uncertainty. At the same time, plants with lower inventory turns typically experience 15–25% higher expediting activity.
From an operations perspective, the concern is not just how much inventory exists. The real issue is flow stability. When materials do not move predictably through the system, buffers quietly expand to protect production.
Why Inventory Turnover Matters to the COO
Inventory Turnover is often treated as a finance metric. In reality, it is one of the clearest indicators of how smoothly materials flow across procurement, production, and fulfillment.
When turnover slows, COOs typically see:
- More last-minute material expedites
- Higher buffer inventory across plants
- Frequent production schedule adjustments
- Uneven warehouse utilization
- Increasing working capital pressure
A plant operating at 6 turns instead of 8 turns can carry millions in additional inventory without improving service reliability. This is why many operations leaders now treat turnover as a core flow efficiency signal.
Where Operational Efforts Alone Hit a Ceiling
Most COOs respond quickly when inventory rises. Teams tighten supplier follow-ups, review safety stock policies, and push planners to clean up slow-moving SKUs. These actions help initially, but improvements often plateau.
Across multiple mid-market teams, a common pattern observed is that planners are working hard, yet inventory buffers continue to fluctuate. The reason is subtle but important.
Material flow decisions are still based on delayed or batch planning signals, while shop-floor consumption changes daily. This timing gap quietly forces operations teams to carry protective inventory.
At this stage, the challenge moves beyond execution discipline into real-time visibility.
The Hidden Friction Slowing Inventory Velocity
Many organizations treat inventory as purely an operations responsibility. In practice, inventory flow depends heavily on how quickly consumption signals reflect actual plant activity.
A typical environment looks like this:
- ERP maintains inventory balances
- Demand planning refreshes weekly or monthly
- Shop-floor consumption posts in batches
- Procurement reacts after shortages appear
Individually, each process works. Collectively, they introduce delay.
Supply chain benchmarks show that even 12–24 hours of delay between material consumption and planning refresh can increase required safety stock by 5–10%. Over time, this directly suppresses inventory turnover.
For COOs, this delay shows up as firefighting on the floor.
How Leading COOs Improve Inventory Turnover
Sustainable improvement does not come from cutting inventory aggressively. It comes from stabilizing material flow and improving decision timing.
Three capability shifts consistently deliver measurable results.
Real-Time Material Consumption Visibility
When planners see consumption late, they compensate with higher buffers. Plants that connect shop-floor usage with planning systems in near real time typically achieve 8–15% reduction in excess inventory.
The operational benefit is confidence. When teams trust the signal, defensive stocking reduces and production schedules stabilize.
Variability-Aware Safety Stock
Static safety stock is one of the biggest silent drivers of slow turns. Demand variability changes frequently, but many buffer policies remain fixed for months.
What we’ve seen while working with mid-sized manufacturing clients is that variability-based safety stock models can improve inventory turns by 12–22% while maintaining service levels.
For COOs, the impact is visible quickly through fewer expedites and more predictable material availability.
Early Detection of Slow-Moving Inventory
Most ERP systems can show aging inventory. Few clearly explain why certain SKUs stop moving.
Advanced analytics environments correlate demand shifts, order frequency, and production mix changes. Organizations that implement automated slow-mover detection often reduce obsolete inventory exposure by 15–30%.
Operationally, this frees warehouse space and prevents working capital from quietly accumulating in low-velocity stock.
The Operational Discipline That Sustains Results
Inventory performance improves fastest when day-to-day execution and real-time visibility work together.
COO focus areas typically include:
- Production stability
- Supplier performance
- Service level discipline
- Inventory policy governance
Where this operational rhythm is strong and supported by timely visibility, inventory turns improve steadily. Where visibility remains delayed, gains often reverse within a few quarters.
Measurable Impact Observed in Mid-Market Manufacturing
When system-led inventory visibility supports operations, the business impact becomes visible quickly.
Typical ranges observed include:
- 15–25% reduction in excess inventory
- 20–30% improvement in inventory turnover
- 10–18% reduction in expediting activity
- 8–12% working capital release
- 20–35% faster planner response to demand changes
The key advantage is sustainability. Improvements hold because the system continuously reflects real demand signals.
Practical Example (With Numbers)
Consider a mid-size manufacturer with:
- Annual COGS – (Cost of Goods Sold): $150 million
- Average inventory: $25 million
- Current turnover: 6 turns
- Expediting incidents: 120 per quarter
After improving consumption visibility, enabling dynamic safety stock, and deploying slow-mover analytics:
- Inventory reduced to: $19.5 million
- New turnover: 7.7 turns
- Expediting incidents dropped to: 78 per quarter
- Working capital released: $5.5 million
From the COO perspective, the most visible change was smoother production flow, fewer material surprises, and significantly less firefighting across planning and operations.
Final Perspective for Manufacturing COOs: Why Inventory Turnover Is Now a Core Flow Stability Metric
Inventory Turnover is no longer just a finance measure. For manufacturing COOs, it has become a real-time signal of how smoothly materials are flowing across procurement, production, and fulfilment.
Plants that depend mainly on periodic reviews and manual cleanup efforts typically continue to carry protective buffers. In contrast, organizations that combine strong operational discipline with timely, real-time visibility consistently achieve higher inventory turns with lower execution risk.
For COOs, the opportunity is both practical and measurable. The next wave of inventory improvement will come from stabilizing material flow through better operational visibility and faster response to demand and consumption changes.
If you want to explore how system-led analytics can improve inventory flow and reduce working capital pressure, visit the page to learn more: https://addendanalytics.com/contact-us
Frequently Asked Questions (For Manufacturing COOs)
1. What is a good Inventory Turnover ratio for manufacturing plants?
For most discrete manufacturers, 6–10 turns per year is considered healthy, while process manufacturers often target 8–12 turns. The right benchmark depends on product mix and demand variability.
2. Why is my inventory high even when planners are working hard?
In many plants, the issue is delayed consumption visibility. When planning systems receive updates late, teams increase buffers to protect production, which quietly raises inventory levels.
3. Can we improve inventory turnover without risking stockouts?
Yes. Leading manufacturers improve turnover by improving signal timing and dynamic safety stock, not by cutting inventory blindly. This maintains service levels while reducing excess stock.
4. What is the first operational signal that inventory flow is unhealthy?
Frequent material expedites despite high inventory is one of the earliest warning signs. It usually indicates visibility gaps rather than pure supply shortage.
5. How quickly can operations teams see results?
In many mid-market environments, early improvements appear within one to two planning cycles, especially in expediting reduction and buffer stabilization.
6. What should COOs monitor weekly to sustain gains?
Key indicators include expediting frequency, slow-moving SKU count, inventory aging trends, and schedule adherence. Consistent monitoring keeps turnover improvements stable.
