Inventory and DIO reduction.
Inventory is cash on a shelf. We find where the excess sits, reset planning part by part, and move high-usage parts onto supplier stocking agreements so you hold what production needs and no more.
- 32%lower days inventory outstanding through material planning
- 2,500+SKUs in an aerospace and defense supply chain
- 900+SKUs across 40+ active suppliers
From our founder’s operating roles. Not client results.
Why inventory reduction stalls.
Excess inventory builds from planning settings set once, padded lead times, price-break buying, and stock nobody reviews.
Settings set once
Reorder points, safety stock, and order quantities were set when the part was launched and never revisited as demand changed.
Padded lead times
Planning lead times longer than suppliers quote today release orders early and inflate both pipeline stock and safety stock.
Buying to price breaks
Minimum order quantities and price breaks bring in months or years of stock on low-usage parts, and the unit price saving is lost to carrying cost.
Slow-moving and obsolete stock
Engineering changes and ended programs leave stock nobody dispositions. It inflates DIO and hides how much inventory is really working.
How we measure DIO and set stock levels.
One DIO definition and one set of planning rules, built from your own ERP data and agreed with Finance before any setting changes.
- Metric
- Days inventory outstanding (DIO): average inventory value divided by cost of goods sold, multiplied by the days in the period
- Source
- Item master, on-hand, open orders, and 12 to 24 months of usage from your ERP. Our founder has worked in Infor LN, Shoptech E2, and Fishbowl
- ABC
- Parts ranked by annual usage value, so planning effort goes where the cash is
- XYZ
- Parts ranked by demand variability, so stable and erratic parts get different rules
- Safety stock
- Set from demand variability, supplier lead time and its reliability, and the service level you choose for each class
- Reorder
- Min/max or reorder point and order quantity for each part, loaded back into the ERP
- Excess
- On-hand beyond an agreed number of months of demand, flagged by part and value
- Slow and obsolete
- No usage in a set period, or no remaining demand after an engineering or program change, with a disposition for each part
- Supplier stock
- Stocking agreements for high-usage parts, so the supplier holds finished stock and ships against releases
How it works.
Baseline
Calculate DIO from your financials and ERP, then break inventory down by part, ABC and XYZ class, and months of coverage.
You receive: DIO baseline and an excess and slow-moving stock list by value
Reset
Recalculate safety stock, reorder points, and order quantities by class, and correct planning lead times, using lead time reduction work where suppliers can deliver faster.
You receive: New planning settings by part, ready to load
Shift
Move high-usage parts onto stocking agreements and long-term agreements, with releases set against forecast instead of large lot buys.
You receive: Stocking agreement terms and a supplier shortlist
Sustain
Tie the new settings into S&OP so demand changes reach the plan, and review exceptions on a set cadence.
You receive: A monthly inventory review your planners run
From operating experience.
- 32% lower days inventory outstanding through material planning programs that freed working capital and improved cash flow.
- Lower on-hand inventory through fixed-frame contracts with key U.S. suppliers that also locked in pricing.
- Long-term and inventory stocking agreements with suppliers in China, India, Portugal, Brazil, UK, and Germany to shorten lead times and secure pricing.
- Component lead times cut from 8 to 12 weeks down to 1 to 3 weeks through an S&OP process built with Sales.
Our founder delivered these results while running supply chain organizations between 2017 and 2026. They are operator results, not client results. See all results
What you receive.
- DIO baseline and target by inventory class
- ABC/XYZ segmentation of every active part
- Safety stock and min/max settings ready to load into your ERP
- Excess, slow-moving, and obsolete stock list with a disposition plan
- Stocking agreement terms for high-usage parts
- Monthly inventory review report for planners and Finance
Standards, contracts, and systems our founder has worked within
- DIO
- ABC/XYZ analysis
- Safety stock
- Min/max planning
- Stocking agreements
- S&OP
- Infor LN
- Shoptech E2
- Fishbowl
Inventory and DIO reduction questions.
How is days inventory outstanding calculated?
Average inventory value divided by cost of goods sold, multiplied by the days in the period. We use the same formula every month, so a change in DIO reflects a real change in stock, not a new method.
Will inventory reduction hurt on-time delivery to our customers?
It should not when it is done part by part. Safety stock stays on parts with variable demand or unreliable supply. The cuts come from overstock on stable, low-risk parts.
Should we cut safety stock first?
Usually not. Order quantities and stale planning lead times drive more excess than safety stock does. Safety stock is reset after supply reliability is measured.
What do we do with slow-moving and obsolete stock?
Each part gets a disposition: use it in place of new buys, return it to the supplier where terms allow, sell it, or write it off with Finance. Leaving it on the books hides how much stock is really working.
How do stocking agreements lower our inventory?
The supplier holds finished stock for agreed parts and ships against your releases. You commit to volume over a period instead of buying large lots up front. The terms cover stock levels, release lead time, and what happens to remaining stock when the agreement ends.
What DIO reduction is realistic?
It depends on where the excess sits. In our founder’s operating roles, material planning programs cut DIO 32%. We set your target after the baseline, not before.
Start with a 30‑minute conversation.
Describe what you buy and where the problem is. We reply to every message directly.