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Inventory Management

Keys to Actively Manage Your Inventory Portfolio for Financial Yield

Now is the time for distributors to abandon their “just-in-case” mindset, argues Nelson Valderrama. Today’s (and future) markets and competition require strategic inventory management that optimizes the return on investment in countless SKUs with shifting values.

January 26, 2026

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Image: Vecteezy.com

Editor's Note: This is the second of a two-part series. See part 1 here.

In Part 1, we established that the warehouse — a mid-sized distributor’s largest asset — has become a massive financial liability. Why? Inventory, often 45% of total assets, traps 20-40% of working capital, creating a significant financial burden. This problem, known as the Cash-Service Paradox, stems directly from two core operational failures: an ingrained "Just in Case" Thinking mindset and poor Product Life Cycle Management, which leads to crippling SKU proliferation. To escape the defensive stance on inventory, you…

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