Why excess inventory damages market share and how to use it to your advantage

Published on August 6, 2023

Many companies are facing an extended period of unprecedented inventory risk. For those with complex Routes-to-Market (RTM), inventory accumulation among distributors and retailers presents a challenge for both your organization’s stability and its commercial performance – and it can be a problem that remains unseen until it’s too late to react.

While some RTMs are already emerging from a period of excess inventory, others appear to still be very much in the thick of it.

The challenge for distributors and retailers is the inverse relationship between inventory size and free cash flow: as inventory accumulates, the channel partner has less free cash flow available to invest in operations.

This relationship is particularly challenging in high interest rate environments, because the natural reaction to increased interest rates is to then increase the cost of working capital (which further tightens free cash flow).

Many manufacturers…

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