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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.

By Nelson Valderrama

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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