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Playbook · Industrial Distribution

How to free up working capital tied in inventory in Industrial Distribution (2026)

Last updated September 2026

The short answer

Release the cash frozen in stock without hurting service. 4 steps, in order, for a industrial distribution operation.

What you are working against in Industrial distribution

  • Overstocked in one branch, out of stock in another
  • Dead stock accumulating across the network with no owner
  • Turns and write-offs scrutinized every quarter

Before you start: where Industrial distribution usually sits

MetricTypical for Industrial distributionWhat good looks like
Days Sales of Inventory 60–120 days Top quartile turns inventory in under 75 days
Inventory Turnover Ratio 3–5 turns Top quartile above 5
Inventory Carrying Cost 25–40% / yr Wholesale holding often exceeds 25%
GMROI 1.8–3.0 Top quartile above 3

Published ranges, not targets. Take your own baseline before step one.

The steps

  1. 1Raise inventory turns / cut DSI on the SKUs holding the most cash
  2. 2Remove excess and obsolete stock that never sells
  3. 3Right-size safety stock without dropping fill rate
  4. 4Give finance one trustworthy view of inventory value and risk

Why it pays off

20–30% / year
Inventory carrying cost typically runs 20–30% of inventory value per year (often 25–40% for wholesale distributors).
Institute for Supply Management (via NetSuite)
20–30%
AI-driven optimization can cut inventory 20–30% while holding service levels, and reduce forecasting error up to 50%.
Epicor / MDM
~25% / year
Excess and obsolete inventory costs the typical distributor about 25% of its value every year in storage, shrinkage, and cost of capital.
Industrial Supply Magazine

Frequently asked questions

How do you tell whether this is working in industrial distribution?

Recompute the same way each period. Days Sales of Inventory: DSI = (Average Inventory ÷ Cost of Goods Sold) × 365. Inventory Turnover Ratio: Inventory Turns = Cost of Goods Sold ÷ Average Inventory. Inventory Carrying Cost: Carrying Cost % = (Capital + Storage + Service + Risk costs) ÷ Average Inventory Value. GMROI: GMROI = Gross Margin $ ÷ Average Inventory Cost.

What does Industrial distribution start from?

Days Sales of Inventory of 60–120 days is the published band for industrial distribution — top quartile turns inventory in under 75 days. The 4 steps above are the same in any sector; the band you start from is not.

See what your inventory is really costing you.

Tell us where the cash is trapped — excess stock, idle surplus, slow RFQs — and we'll show you the outcome Maintained can unlock.

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