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Playbook · Oil & Gas Distribution

How to free up working capital tied in inventory in Oil & Gas Distribution (2026)

Last updated September 2026

The short answer

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

What you are working against in Oil & gas

  • Long-lead spares and project demand inflate inventory
  • High-value surplus idle in yards, unvalued
  • Regional imbalance across field locations

Before you start: where Oil & gas usually sits

MetricTypical for Oil & gasWhat good looks like
Days Sales of Inventory 90–150+ days Long-lead spares push DSI high; under 90 is excellent
Inventory Turnover Ratio 2–4 turns Long-lead spares cap turns; above 4 is strong
Inventory Carrying Cost 25–40% / yr High-value idle spares raise the risk component
GMROI 1.4–2.4 High-value spares cap GMROI; above 2.4 is strong

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 oil & gas 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 Oil & gas start from?

Days Sales of Inventory of 90–150+ days is the published band for oil & gas distribution — long-lead spares push DSI high; under 90 is excellent. 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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